LanzaTech: ethanol from carbon monoxide (Syngas)

April 24, 2007— A New Zealand company said Monday that it had secured financing from an investor in Silicon Valley to produce ethanol from an untapped source — carbon monoxide gas.

The company, LanzaTech, based in Auckland, said it had developed a fermentation process in which bacteria consume carbon monoxide and produce ethanol. Ethanol can be used as an alternative fuel or an octane-boosting, pollution-reducing additive to gasoline.

Sean Simpson, LanzaTech’s co-founder and chief scientific officer, said the company would use the $3.5 million investment from the venture firm, Khosla Ventures, to establish a pilot plant and perform the engineering work to prepare for commercial-scale ethanol production.

Vinod Khosla, a co-founder of Sun Microsystems who formed Khosla Ventures in 2004, has invested in more than a dozen start-ups involved in “clean fuel” technologies. He said in a telephone interview that LanzaTech stood out from the scores of proposals he sees each day for both its ability to scale up to industrial proportions and the credibility of the company’s founding scientists.

“When I passed it on to my partners for due diligence, the technology stood up to every test, and the intellectual property protection was awesome,” Mr. Khosla said.

Then, referring to the bacteria that are key to the process, he said, “The performance of the bugs was frankly mind-boggling to me, not something I would have expected from a tiny research effort in New Zealand.” He said his firm “sent the best process engineers we know to evaluate the technology and could it be industrialized, and the answer was yes.”

People have been using yeast to turn sugar into alcohol for thousands of years. Corn, the main source of ethanol in this country, provides carbohydrates that are easily broken into sugars.

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LanzaTech’s innovation lies in using a bacterium to produce ethanol not from a carbohydrate, but from a gas, carbon monoxide. Carbon monoxide is a waste product of a number of industrial processes, including the production of steel.

This technology could produce 50 billion gallons of ethanol from the world’s steel mills alone, turning the liability of carbon emissions into valuable fuels worth over $50 billion per year at very low costs and adding substantial value to the steel industry. The technology will also be a key contributor to the cellulosic biofuels business as it can convert syngas produced through gasification into ethanol.

“We have proven in our laboratories that the carbon monoxide in industrial waste gases such as those generated during steel manufacture can be processed by bacterial fermentation to produce ethanol. Garnering the financial and strategic support of Khosla Ventures is a significant validation of our approach, and we welcome Khosla Ventures Chief Scientific Officer, Dr. Doug Cameron, to our Board of Directors,” said Dr. Sean Simpson, Chief Scientist and Founder of LanzaTech.

Their bacterium is described as seven nongenetically modified, non-pathogenic bacteria, isolated from natural environments that produce novel bioproducts via small scale fermentation.