DEM-COM: LanzaJet takes off on non-stop flight to scale

June 2, 2020 | Jim Lane

After what could be considered a lengthy out-of-town tryout, LanzaJet is now officially launched as a LanzaTech spin-off — Suncor Energy and Mitsui & Co. are investing $15 million and $10 million, respectively, to establish the new venture. All Nippon Airways is also contributing in exchange for accessing off take.

What does LanzaJet do?

It’s not LanzaTech technology, it’s new tech, though built by LanzaTech and can certainly work seamless with that company’s waste gas-to-ethanol tech. LanzaJet upgrades ethanol — anybody’s ethanol — to sustainable aviation fuel. We covered the technology most recently here, and here. And our Multi-Slide Guide to the technology is here.

The next step

The funding will be used to build a demonstration plant that will produce 10 million gallons per year of SAF and renewable diesel starting from sustainable ethanol sources. Production is expected to start in early 2022. This initial investment coupled with participation from ANA will complement the existing $14 million grant from the US Department of Energy, enabling the construction of an integrated biorefinery at LanzaTech’s Freedom Pines site in Soperton, Georgia.

Calling in Jimmy Samartzis

The new CEO of LanzaJet has been announced, too. It’s Jimmy Samartzis, whom the industry came to know during his tenure at United Airlines where he was driving the commercialization of sustainable aviation fuels, it was clear then that he was “Jimmy Smarts“. Samartzis will lead the company through the demonstration and into commercialization.

It’s a new, non-stop financial model

Officially, the word is that Suncor “has contracted to take a significant portion of the SAF and renewable diesel produced at the facility to provide its jet fuel and distillate customers with sustainable energy solutions”. And that Suncor and Mitsui “are aiming to invest further in the construction of commercial production facilities after the demonstration meets all its technical and economic targets.”

Bottom line, as a friend explained, “the investors are committed to build commercial production facilities after the technical and financial KPIs of the commercial demo are met. Passing a stage brings a cash call not a new cash raise.”

That’s going to reduce the cycle time of raising future cash. And if you’ve heard of the model before, it’s being used in pharma right now, and possibly to solve the COVID-19 problem, because it provides speed for the company as it marches towards certification and scale. At the same time, it limits investor exposure.

The world needs gallons, fast, and the bioprocessing industry needs to move, faster, and a plan that looks like “Build out a demo, meet a set of KPIs, followed by a call of committed capital to build commercial plants”, is fastest.

You might call this the Non-Stop Model, to replace the quadruple-connection flight patterns of bioindustrials of the past, wandering from city-pair to city-pair with bewildering directionality and a limp pace. I once took a flight from Reno -> LAX -> Houston -> Honolulu -> Guam -> Cairns -> Brisbane -> Sydney, because the non-stops were all booked by the time I could make my plans. I arrived in Sydney looking like a creature out of Star Trek, and that’s been the case with industrials.

Partners for tough times

Yep, its been an annus hornbills for airlines like ANA, energy companies like Suncor and conglomerates like Mitsui. They’ve taken a gut punch. Interesting to see how they have remained committed to the low carbon economy. Clearly, wise counselors there who can see that COVID-19 will pass but Climate Change will still be here.

The Bottom Line

Robert Rapier wrote this week about exciting news for renewables at a time of economic, health and social crises and noted ruefully, “This seems really inconsequential with all that’s going on in the world.” So let me say this about that.

Important news remains important news, no matter how acute a crisis may feel. COVID will pass, and climate will still be with us. COVID feels like a health crisis, because we are experiencing it that way, but it actually is a market failure. If someone had a vaccine right now, they could easily, easily sell it for $1 trillion and become the most valuable company in the world, not even breaking a sweat. That financiers were taking very chancy long-term risks in oil & gas exploration, but not taking them in building a pandemic-prevention companies (or a sector), is the market failure, which manifested as a health crisis.

Two other market “underperforms” that teeter near to market failure are in US ethanol production and climate change prevention. Ethanol producers wander around like booksellers in the 90s or Blockbuster Video execs in the 00s, or K-Mart executives more recently, wondering “Who Moved My Cheese?”. The climate change prevention companies remind me of something I wrote in the Digest a few years back, “someone in the petrochemical industry, right now, is laughing at your concept of scale.” Both sectors need big solutions for the hard problems. Easy ones like extracting more corn oil or more ethanol per bushel, or converting coal-based power to gas-based power, are what occupy attention. I don’t say that as a criticism of individuals or companies, but as an observation of how our choices in focus usually play out.

With COVID-19, now we are swimming in the consequences of unpreparedness, as the chickens have come home to roost. The time to prepare on climate is not when it is dominating the headlines or our thoughts — by then, history tells us, it will be too late. There’s not much popularity in working on the next crisis while the other one is swamping our metaphorical boats. Yet, how much better the world would have been if leaders in the First World War had been as intent on winning the peace as winning the war. The leaders in the Second World War did a far better job, though not a perfect one.

Always remember:

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

Reaction from the stakeholders

“Suncor is excited to join LanzaTech, Mitsui and ANA in helping LanzaJet take off,” said Mark Little President and CEO of Suncor. “We believe this technology will provide a solid foundation for the commercial production of sustainable aviation fuel and renewable diesel. These products are very complementary to our existing product mix and we see growth potential in both North American and international markets. Suncor is committed to both a low carbon future for our own business and to helping our customers, including in the space of commercial aviation, realize their own vision of a sustainable future.”

“We are pleased to launch LanzaJet along with excellent partners LanzaTech, Suncor and ANA,” Toru Matsui, Managing Officer, COO of Mitsui said. “This partnership demonstrates our continuing commitment to improving the sustainability of the aviation industry and supports our ambition to be the first in Japan to produce SAF on a commercial scale. The SAF produced by LanzaJet will support the development of a global SAF supply chain, which has the potential to significantly reduce emissions from aviation and help to create a low carbon society.”

“ANA is thrilled to work alongside LanzaTech, Mitsui and Suncor on this new venture,” said Akihiko Miura, Executive Vice President of ANA. “We believe that this partnership is a great step forward for carbon-neutral growth initiatives. ANA is happy to share in this innovative endeavor and to be a part of a carbon-free future in the aviation industry.”

Industry leader, Jimmy Samartzis, has joined as CEO, bringing a background in clean energy, public policy, infrastructure and sustainability, as well as a decade at United Airlines including multiple executive roles in operations, commercial, corporate affairs, strategy, renewables, and safety. Currently serving as a Director on the Board for the Fermi National Accelerator Laboratory, he has held various industry roles, including with Airlines for America and the International Air Transport Association, and advised the World Travel and Tourism Council.

“The launch of LanzaJet marks an historic milestone in the clean energy transition that is underway globally. I’ve been part of many renewable energy and sustainability firsts over the last decade, and this one is the most exciting,” said Jimmy Samartzis, CEO of LanzaJet. “The commercialization of LanzaJet – built on the shoulders of LanzaTech, Suncor, Mitsui, ANA and with the support of the U.S. Department of Energy – gives our world, and aviation in particular, an important solution in shaping a cleaner future.”

The LanzaJet process can use any source of sustainable ethanol for jet fuel production, including, but not limited to, ethanol made from recycled pollution, the core application of LanzaTech’s carbon recycling platform. Commercialization of this process, called Alcohol-to-Jet (AtJ) has been years in the making, starting with the partnership between LanzaTech and the U.S Energy Department’s Pacific Northwest National Laboratory (PNNL). PNNL developed a unique catalytic process to upgrade ethanol to alcohol-to-jet synthetic paraffinic kerosene (ATJ-SPK) which LanzaTech took from the laboratory to pilot scale.

“Achieving our global climate goals requires scaling new, transformative technologies rapidly. This requires new methods of financing that enable scaling from lab to pilot to demo to commercial without stopping after each step to raise more cash,” said Jennifer Holmgren, CEO of LanzaTech. “Suncor, Mitsui and ANA are stepping up to show that achieving meaningful scale will require new technologies, new business models and new approaches. I am delighted to see LanzaJet take off and to see Jimmy Samartzis lead the team as it brings this sustainable solution to market.”

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