LanzaTech Going Public
LanzaTech is a chemical company of the future
Hi There 👋,
Welcome back to another issue of the newsletter focused on green chemistry and circular materials. In case you haven’t heard LanzaTech is going public. All the chemistry news sources are writing about it, but I don’t think anyone has really captured the ambition that LanzaTech is trying to achieve. Here’s my attempt.
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LanzaTech is going public via a SPAC according to the Wall Street Journal. If you don’t know what LanzaTech does they utilize waste carbon dioxide to make both commodity and specialty chemicals. Their concept is to capture waste carbon dioxide from emitters like steel and cement production facilities and make useful stuff. LanzaTech utilizes biology in the form of fermentation to convert carbon dioxide into higher order carbon materials such as ethanol.Â
LanzaTech has been BUSY throughout the past few years. I did a quick email search for The Column when I started writing this and it conveniently pulled up a great timeline of what LanzaTech has been up to in the past few years. LanzaTech has been using waste carbon dioxide to make plastic bottles with Total and L’OReal, omega-3 fatty acids with IndianOil, jet fuel with Shell (spun off as LanzaJet), laundry pods with India Glycols and Unilever to name a few.Â
When I first started graduate school (2012) I attended a talk from George Whitesides about the future of chemistry and utilizing waste carbon dioxide as a feedstock for chemical production and it was the first time I was exposed to the idea. LanzaTech was actually founded in 2005 (maybe where Whitesides got the idea) by Sean Simpson and Richard Forster in New Zealand because they had lost their jobs and needed something else to do and after landing some funding they brought in Jennifer Holmgren from Honeywell as their CEO. Holmgren is leading LanzaTech to their public debut via a special purpose acquisition vehicle or SPAC.
The deal is valued at about $2.2 billion. Amrith Ramkumar reported that
As part of its merger, LanzaTech is expected to raise a $125 million private investment in public equity, or PIPE, from investors including ArcelorMittal, BASF and Khosla Ventures.
That money and the $150 million the AMCI SPAC raised in August could be used to expand the business, though SPAC investors can withdraw their money before deals go through.
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LanzaTech is a chemical company of the future. Capturing their feedstock of carbon dioxide is good for the planet and they can turn that feedstock into things that we use everyday. LanzaTech has a benefit over their competition in that they could be paid to take a company’s carbon dioxide and then get paid again to sell their product. Oil prices are hitting multi-decade highs right now too so all chemicals derived from petroleum will become significantly more expensive which I wrote about earlier.
What will LanzaTech do with this SPAC money?Â
I suspect Holmgren will use the cash infusion to get the costs on their products down. One drawback of fermentation is that the production rates or titers can be slow and massive fermentation tanks (30,000 gallons or bigger) could be a way to take advantage of economies of scale. Fermenting chemicals such as ethanol and acetone isn’t a new concept.
During World War II, Chaim Weizmann (who would later become president of a newly formed country of Israel) figured out a way to convert starch to acetone, a critical chemical to produce smokeless gunpowder. At the time acetone was mainly produced via German chemical companies, but that wasn’t really an option for the Allied Forces. We find ourselves in another wartime situation with the unlawful and unprovoked Russian invasion of Ukraine and our petroleum feedstock prices are still climbing.
Holmgren and LanzaTech are not necessarily making chemicals to be used in production of war efforts with a country, but LanzaTech will be an important player in transitioning the world away from petrochemical feedstocks. Dependence on oil as a feedstock and energy source to make chemicals is a significant generator of carbon dioxide.Â
Further, LanzaTech’s route to chemicals is not dependent on starch or biomass from agriculture. Wheat prices are skyrocketing and we may be experiencing a global grain crisis and higher prices for food. Any chemical production from food sources such as corn to ethanol takes up valuable agricultural space that could be used to produce things that people could eat. Production of chemicals from a waste feedstock carbon source that doesn’t impact food prices is the type of technology we need to scale.