Zen and the Art of Biofuels Development

July 13, 2010 |

Steel mills in Benxi, in China's Liaoning province

Does LanzaTech represent a new way to extract value, or a new way to understand it?

In recent weeks the Digest reported that Vinod Khosla, in a keynote at BIO, pooh-poohed a wide-assortment of technologies in biofuels with a special focus on critiquing the high cost of enzymes, while focusing his praise on fuels produced by magic bugs.

We also have reported on the vast increase in focus on China as a source of near-term commercialization efforts in bioenergy (a trend especially evident in the stories appearing in Biofuels Digest Asia), as well as the rising popularity of co-location and symbiosis as a “capital light” strategy for reducing the cost of building out demonstration and commercial-scale projects.

We also reported that the predominant news coming out of BIO was “chemicals, chemicals, chemicals and chemicals.”

Finally, Digest readers would have noted that Jennifer Holmgren, formerly driving the biofuels strategy at Honeywell’s UOP division, was lured away to become the CEO of the Khosla-backed LanzaTech, which powered its way into the 2009-10 “50 Hottest Companies in Bioenergy” despite being located in New Zealand, and just as the company opened its pilot project in Auckland.

The links between the five trends were made even more obvious yesterday with the news that LanzaTech, a company pursuing the conversion of industrial waste gases into fuels and chemicals using bacteria, officially announced a $18M USD Series B financing, led by Qiming Ventures, a well known China focused venture capital firm.

Qiming Ventures was joined by Softbank China Venture Capital and two existing investors from the Series A round, Khosla Ventures in the USA and New Zealand based K1W1.

The LanzaTech technology?

When we first looked closely at LanzaTech last year, we noted that it has been developing its proprietary bacteria since 2005, with a goal of utilizing the low-hydrogen, carbon monoxide-rich waste gas streams from steel mills. The company did a Series A capital round in 2007, notably attracting support from Khosla Ventures, and subsequently proved out its its ethanol process using unconditioned ‘dirty’ gas streams.

LanzaTech’s near term commercialization work? It will have its pre-commercial facility open in 2011, and expects thereafter to quickly develop a 52 Mgy (200 million liter) capacity ethanol plant, and at that time will expand from using strictly waste gases from steel to including the use of CO2 as a feedstock gas.

But moving beyond steel to CO2 is more about diversifying the base of potential partners and locations, more than achieving commercial-scale sources of feedstock. Steel mill gases – well, there are a lot of them. Enough, according to LanzaTech’s internal surveys, to produce as much as 31 billion gallons of ethanol per year, or more than is currently produced worldwide from corn and sugarcane put together.

The China connection

Digest readers who follow the steel industry know that New Zealand does not figure amongst the world’s top 40 steel producers, and the few million tons produced domestically were sufficient for pilot scale only. While 8 million tons were produced in nearby Australia, the 98 million tons produced in the US, or Japan’s 120 million tons were appealing production bases.

But, overwhelmingly, with 500 million tons representing more than 35 percent of global production, China is the right country for taking LanzaTech’s technology to commercial scale. The huge amounts of waste CO2 produced by China’s coal-fired power plants provide a long-term base for considerable expansion, and finally, there is the fact that China wants to diversify its fuel supply but does not want to utilize food crops.

The gasification and pyrolysis connection

For some time, the DOE has been signaling an increased interest in pyrolysis, gasification, and other technologies that use catalysts and microbes to reform syngas into fuels and chemicals of interest. The stumbling block, for some time, has been the cost and the energy return, largely a function of the energy that has to be invested in converting biomass, in the first place, into a syngas by heating it up in a low-oxygen environment that prevents combustion.

One of the appealing aspects of some of the newer technologies, such as this approach from LanzaTech, is the use of gases that are already being created in the industrial process, in this case by steel production.

Waste: noun or verb?

We are calling them waste gases, but they are anything but. The nabobs at Waste Management continue to encourage us to regard them as material streams rather than waste — that the terms “waste” is simply reflecting that we do not have a feasible way to use some materials at the present time. That advanced thinking would have us reposition “waste” as a verb rather than as a noun – for it we who “waste” valuable materials rather than materials having some inherent “waste” quality.

We simply lacked a technology. Until lately that is, when LanzaTech (among others in the microbial liquid fuels race) turned to our friends, the bacteria, for the answers. Turns out that our friends have had the answer for millennia (though we sometimes help them along with some genetic upgrades) – we simply lacked the microscopes to see them, an industrial process to harness their talents, and the perspective to understand.

Looking under our feet

Of course, Western civilization has always been looking far and away – across the seas, into the stars, for so many answers for which often lay in the very ground we are walking upon, and the discovery of the power of microbes, and the power of waste, begins with the humble recognition that great answers may come in tiny packages.

Eastern philosophers always understood, this, so it is unsurprising that the East is recognizing the value of technologies that are developing in the West.

A favorite Zen Buddhist koan goes:

Two monks were arguing about the temple flag waving in the wind.
One said, “The flag moves.”
The other said, “The wind moves.”
They argued back and forth but could not agree.

Hui-neng, the sixth patriarch, said: “Gentlemen! It is not the flag that moves. It is not the wind that moves. It is your mind that moves.”

Print Friendly, PDF & Email

Tags: , , , ,

Category: News Analysis, Top Stories

Thank you for visting the Digest.