The race is on to find alternatives to tropical fats such as palm oil, but is it economically viable to produce them in a fermentation tank?
The answer is yes, but only if you have a highly efficient microbial strain that already naturally produces significant amounts of oil, cheap feedstocks, food-grade fermenters, and a downstream process that won’t break the bank, claims Dutch startup NoPalm Ingredients.
AgFunderNews caught up with cofounder and CEO Lars Langhout at the SynBioBeta conference in San Jose to find out what progress he’s making on all three fronts…
Tailored fatty acid profiles
Founded in 2021 in Wageningen by Lars Langhout and Jeroen Hugenholtz PhD, NoPalm Ingredients works with oleaginous yeast strains that naturally produce high amounts of lipids. It does not genetically engineer them but uses directed evolution to enhance their performance, achieving fat accumulation of 60%.
It initially plans to scale mid-fraction palm-type oils, although its platform is capable of producing a wide range of fatty acid profiles, says Langhout.
“The way we’ve been able to do this so cheaply is by setting up low-capex fermentation, using brewery type fermenters and food industry waste streams as an input, which lowers the cost of raw materials, energy, and equipment.”
To tailor the profile of the fats, which he says could be labeled as fermentation-based yeast oils, NoPalm can change the parameters of the fermentation process, altering temperature, pH, and other conditions, he adds.
“We’re basically putting the yeast [cells] under stress so they make different types of oil and fat, some solid, some more liquid, enabling us to make different fatty acid profiles.”
Food industry waste streams as feedstock
NoPalm is initially targeting the EU market, where firms will soon be required under the EUDR to prove that goods they are importing do not result from recent deforestation, forest degradation, or breaches of local environmental and social laws, says Langhout.
“Customers in Europe are looking for an alternative to palm oil that’s sustainable and deforestation free, but at price parity with the same functionality. And that’s what we are bringing.”
NoPalm’s yeast strains can feed on food industry side streams such as potato waste and whey permeate as feedstocks to reduce input costs and create a circular solution, says Langhout.
“We’ve been using this technology on about 20 different types of feedstock, so we know it works, but we have to pick one to scale, because every feedstock requires different protocols. We’re planning to scale a second and third feedstock later this year and the beginning of next year. Using lower-cost feedstocks is key in getting this technology to price parity.”
No ‘green premium’
NoPalm has a pilot line with a 400-liter fermenter in-house but has scaled to 120,000-liters with a contract manufacturer, says Langhout. “The next step for us is to build a demo factory with two fermenters of about 50,000-liters so that we’ll be able to produce about 1.2 kilotons a year.”
Asked what kind of premium buyers are prepared to pay for a ‘no palm oil’ positioning, he says, “In order to make real impact in this market, you need to be at price party, or even offer a green discount.
“What I’ve learned in the past three and a half years is the single most important buying criteria is price. So that’s why, when we started, my cofounder and I knew we needed to have a process producing oils with the same functionality but also the same price. So we made design decisions [accordingly] to ensure price parity at scale, which would be around six fermenters of 150,000-liters each.”
Asked about efforts to improve the unit economics of its process, Langhout explains: “Our team is looking at alternative ways of downstream processing in a way that we can lower costs of the downstream processing part by about 90%. I can’t disclose how we’re doing that yet, but the first signs are very promising.”
Funding
Raising in this environment is “difficult,” says Langhout, who raised a €5 million ($5.5 million) seed round last year led by Rubio Impact Ventures. “And raising funding in Europe is, I think, even more difficult. But it’s all based on metrics. We need to deliver on our plan and get those first offtake agreements, co-location agreements [for feedstocks] and regulatory confirmations.”
He adds: “Our business model is to co-locate [with providers of ag sidestreams NoPalm can use as feedstocks for its yeast]. Our vision is to have small factories across the globe upcycling food industry waste streams on site, and us selling and distributing the oils and fats.
“Having that footprint allows us to scale quickly and fast, whereas if you source glucose you probably choose to build one big factory. And I think we’ve all seen that building big factories in this industry is pretty darn difficult. We’re reducing complexity by that co-location, decentralized approach.”
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