US-based carbon recycling major LanzaTech likens its technology to a brewery, which uses bacteria to ferment pollution and make ethanol. Unilever has used surfactants made from this ethanol in dishwashing liquids, while Zara has made dresses using yarn made from it. In India, LanzaTech is working with energy companies like Indian Oil Corporation (IOC) and Mangalore Refinery and Petrochemicals (MRPL). In an interaction with Sukalp Sharma at the recently-held UAE Climate Tech conference in Abu Dhabi, LanzaTech’s chief executive officer Jennifer Holmgren talked about the future of carbon capture and recycling, its potential in India, and challenges of scalability and affordability. Edited excerpts:
In simple terms, what is it that LanzaTech does?
What we do is fermentation. It is just like making beer from sugar, but we don’t use sugar. We use gases–carbon dioxide, carbon monoxide, and hydrogen–and we ferment them to produce ethanol. Ethanol has a lot of applications beyond blending with gasoline (petrol). You can make ethanol and use it as an intermediate to make sustainable aviation fuel (SAF) and materials like polyester. In the longer term, we can also make other chemicals and materials. That’s the future–the ability to make any product from waste. There is enough carbon above ground for us to make everything we need.
How scalable are technologies like carbon capture and recycling and waste-to-energy?
They are scalable but you have to think differently. In petroleum, you get economies of scale by building as big a refinery as possible. But in this case, you have to think of a distributed model. Suppose you want to use agricultural residue to make ethanol. You don’t want to collect it from all over and take it to one or few large plants. Instead, you want units where the waste is. It involves decentralisation and it is a lot like solar. You can put a small solar unit for village without needing large transmission infrastructure. This decentralised approach also ensures local supply chains, jobs to locals, and some amount of energy autonomy to them. While India is not an oil-rich country, you have enough carbon.
How do you see carbon capture and recycling evolving for India over the next five to 10 years?
I hope that a significant fraction of India’s carbon portfolio will be from local resources. Power can be carbon-free with renewable energy, so forget power. Use carbon only for making things and for flying. I hope in 10 years, India can say that 30 or 40 per cent of what they use is being made in the country from local resources. For instance, there are so many companies that make PET (polyethylene terephthalate, a plastic) in India. Why shouldn’t they make it from recycled carbon? Who do they have to import oil to manufacture it?
What should be the role of the government to push carbon capture and recycling?
These new technologies are currently very expensive, but the more you build, the cheaper they get. So, there needs to be a strong push from governments for building more units based on these processes as that will reduce costs. Viability gap funding (VGF) is essential for building the base load of commercial plants. Risk capital is hard to get and takes time. Once you build more plants, costs will reduce and VGF won’t be needed. In Europe, they have the Innovation Fund and in the US, there is infrastructure funding. In addition to VGF, green premium payments can also help.
But you also need to consider some sort of a carbon mandate. You can either impose a carbon tax or you mandate a certain amount of low carbon products in your fuels and chemicals portfolio. But you have to be careful. You don’t want to put additional costs on consumers. A country like India shouldn’t do that, in fact nobody should. Sustainability should not cost more.
The oil industry is a 100-year-old industry and has benefitted from incentives for a century. To say that we want this new technology or product to compete with oil without incentives would be unfair. And that is why governments have a huge role to play if they want a world where carbon is used differently. They really need to step up. We do not have that much time.
And what about large corporations? What should their role be?
Our partners like Zara and Unilever buy our polyester at a higher price but they do not pass that on to the consumer. They just take smaller margins. I think it is very important for companies to also take the leadership role because I don’t think the regular consumer should pay more for sustainability. It is also important for these companies that are visionary to have supportive shareholders and government. And we as consumers also need to go buy more from such companies
You already have three commercial plants in China and a large demonstration plant in Japan. What about your India plans?
The Panipat facility (in collaboration with IOC) will be the first in India. The unit will use refinery off gas to make ethanol and will be the first such unit in the world. We are also doing a project, designing with MRPL, to manufacture ethanol from agri residue. Such projects have a lot of potential when it comes to scalability. Also, LanzaJet (a LanzaTech spinoff) and IOC are setting up a SAF plant at Panipat. We do want to grow in India. We think India is a great country to do something in this area.
We are talking to steel companies in India (for carbon capture) but I do not have anything more to share on that at this stage.
India is a very price sensitive market, particularly in terms of fuel. What are the other challenges that you see in India with regard to carbon capture and recycling?
I don’t think India is any different from anybody else in that sense. Your refineries can make a choice to capture carbon. But you are right, the country is price-sensitive. And it is so because there are more people who cannot afford. You need early movers, you need visionaries who can afford to pay more, and India has as many of those people as any other country. Those are the people that need to step up to enable the technology to deploy and the price to go down, so that everybody else can also afford it.
SAF is touted as the next big thing in aviation and there are indications that the Indian government might introduce SAF blending mandates. Are mandates the right way to go for a country like India, given that SAF is expensive?
I think the reason India wants to do something with mandates is because CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) is going to be mandatory in 2027. It is going to be very bad for India and Indian airlines if the government does not push the carriers in that direction. Apart from mandates, the government should also look at things like VGF and other incentives, as costs are very high globally currently.
So, there are two ways to do it. There are mandates but there are also incentives. In the US, there are incentives for using SAF. India has to choose whether it prefers to provide incentives to enable cost parity or whether they prefer to have mandates. But you need something. It’s not going to just happen on its own.
