Investment

The Indian steel dynasty, Bill Gates, carbon capture, and cheap jet fuel

Carbon capture venture LanzaTech is studying its IPO options following a decision by the Mittal family, a global steel producer, to invest in the business.

In an interview with Cipher, a blog published by Bill Gates’s Breakthrough Energy, CEO Jennifer Holmgren said an IPO would help diffuse the technology.

“We’re starting to think about it very seriously.  We’ve got commercial plants running. There is technology. Now it’s time to go fast, really fast.”

A spin-off business, LanzaJet, originally backed by Sir Richard Branson’s Virgin Group in 2011, is on a mission to produce jet fuel which Gates wants to get down in price

Her upbeat stance aligns with Breakthrough’s recent decision to put billions behind a $15 billion programme, also backed by the Mittals, to cut production costs, so green technology can compete with fossil fuels. Climate change legislation and spiralling oil and gas prices are also likely to help the process along. 

LanzaTech nourishes anaerobic bacteria, also found in rabbit droppings, to digest industrial carbon monoxide emissions. They turn it into ethanol suitable for fuel, textiles, rubber and packaging. 

A spin-off business, LanzaJet, originally backed by Sir Richard Branson’s Virgin Group in 2011, is on a mission to produce jet fuel which Gates wants to get down in price. LanzaJet backers include Shell and British Airways.

LanzaTech has teamed up with Carbon Engineering, a pioneer in direct air capture, also backed by Gates, which extracts carbon dioxide from the atmosphere which is then fed to LanzaTech’s microbes. Again, the plan is to manufacture jet fuel, where Holmgren believes that tax credits would make a big difference.

In December 2021 ArcelorMittal’s XCarb VC business agreed to back Holmgren taking total funding for the LanzaTech businesses to $550 million. The Mittal family is currently installing the LanzaTech process at its steel plant in Ghent. It plans to commission the process at the end of 2022. 

A joint steel venture with Shougang Group is already up and working in Hebei province, China. It secured environmental RSB certification in 2021.

LanzaTech has been successful in raising money from the public sector keen to back a process capable of harvesting votes from green campaigners and fossil fuel addicts alike.

Started in New Zealand, LanzaTech’s first backer in 2007 was Khosla Ventures, a cleantech VC pioneer started by Vinod Khosla, co-founder of Sun Microsystems and Breakthrough backer.

Another early backer was K1W1, a family office started by Sir Stephen Tindall, creator of New Zealand’s low-cost retail chain, The Warehouse. Novo Holdings, the Danish $65 billion endowment, is another investor, as is Qiming Venture Partners of China. 

Siemens, BASF and Mitsui are commercial backers. Like ArcelorMittal, they think LanzaTech could help them comply with measures to limit carbon emissions.

Right now, concedes Holmgren, the LanzaTech process could cost double or triple the going rate. But she is encouraged by early adopters like Unilever which uses its ethanol for detergents, Lululemon, for yoga pants and L’Oreal, for packaging. Inditex, run by the Ortega family, recently produced a black Zara dress with LanzaTech.

Holmgreen notes it generally takes 30 years to make new sectors commercial. Mass production is still a dream rather than reality, but Holgren is pleased with progress to date. 

LanzaTech is capable of playing its part in the manufacture of green hydrogen. Holmgren also believes direct air capture will play a big role in feeding her bacteria, leaving open the possibility of open-air mining.

She adds: “It doesn’t freak me out, or bother me when people are greenwashing, because that’s just the first stage. Because they end up being held accountable.”

A while back, companies started making 2050 climate  commitments. 

“Now you get people talking about plans for 2030 or 2025. If you make those near-term commitments you’ve got to start acting now. That’s a huge transition that’s been happening over the last couple of years.” 

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