‘Precision fermentation’ start-ups pursue palm oil alternatives

Palm oil’s winning properties — being cheap, versatile and free of unhealthy trans fats — have the food industry hooked. It can be found in everything from peanut butter to pizza. But the environmental cost is high. Across south-east Asia, rainforests are being felled to make way for palm oil plantations, with dire consequences both for biodiversity and for efforts to curb carbon emissions.

So, as demand for palm oil rises, the race is on to find more sustainable replacements. Scientists believe they can replicate the properties that make palm oil so widely used, without the need for plantations — though whether they can do so affordably remains to be seen.

“We cannot continue to burn down rainforests and we have limited land,” says Shara Ticku, chief executive of C16 Biosciences, a US-based start-up working on palm oil alternatives. “We have to innovate radically new infrastructures for producing nutritious, sustainable food.”

Like a handful of other start-ups, C16 Biosciences is using a process called “precision fermentation” to produce palm oil. This involves growing yeast in fermentation tanks, similar to the way beer is brewed, though with the difference that C16’s yeast strains produce oil, not alcohol.

The yeast is fed on sugars and other nutrients under carefully controlled conditions. “The yeast spends four or five days getting really big and fat,” says Ticku. “Then, we take one day to extract the oil.” She says the resulting oil has the same qualities that make palm oil so desirable — notably, that it is a solid at room temperature and a liquid at body temperature.

However, its production is untainted by deforestation and avoids the other environmental downsides of conventional palm oil, such as the methane — a potent greenhouse gas — emitted by the effluent from processing plants. And, unlike legacy producers, precision fermentation start-ups can “design in” green energy usage from the start.

Such advantages may erode as conventional producers strive to embrace more sustainable practices. But the investors backing C16 and its peers see a lucrative opportunity.

“Palm oil is a $70bn industry today, but demand continues to grow rapidly — it is projected to be a $100bn industry by 2030,” says Sila Kiliccote, an investor from Breakthrough Energy Ventures, a venture capital fund started by Microsoft co-founder Bill Gates that has invested in C16 Biosciences. 

Despite all the potential benefits, however, no precision fermentation-produced palm oil product has so far been approved for human consumption. While companies wait for the green light, many are focusing on supplying the cosmetics and personal care industry, which uses palm oil for products such as lipstick and toothpaste.

Even if regulatory approval is granted, the precision fermentation start-ups face an additional hurdle: reaching price parity with palm oil from plantations.

“Ever since palm became this wonder oil, and we realised we could get it into anything, we have been driving the price down,” points out Chris Chuck, a professor of bioprocess engineering at the University of Bath in the UK and co-founder of palm oil alternative start-up the Clean Food Group. 

“To compete with that price is really, really challenging. You have to be at parity with other oils because consumers do not want to see the price of their food basket go through the roof for a sustainable alternative,” he says.

Aerial view of a palm oil plantation bordering an area of burnt woodland in Indonesia

The main cost for lab-grown palm oil is the sugars needed to feed the yeast. Chuck’s company is working on using waste streams from the bakery industry as a feedstock, such as breadcrumbs, flour or discarded crusts. To scale up, though, start-ups would need to tap other streams. Chuck is also working on using agricultural waste, such as grass. 

Scaling up production should, in principle, help drive down costs — though there are problems to tackle there, too. At laboratory scale, it is easy to keep the fermentation process sterile, but, as companies move to 1,000-litre fermenters, the risk of bacterial contamination increases. Companies will need to find ways to maintain the health of their yeast and the purity of their product as an industry emerges.

If the start-ups can secure regulatory approval and scale up to a price point similar to plantation-derived palm oil, then the benefits to the food industry could be numerous, says Tom Kelleher, chief executive of US-based Xylome, another palm oil start-up.

The lab-grown alternatives are healthier than plantation-derived palm oil, Kelleher says, because they don’t contain harmful bleaching agents — and can be modified to contain less saturated fat than plantation-derived options.

Lab-grown palm oil could also help bring price stability to the food industry, he says. Although plantation-derived palm oil is a relatively cheap commodity, its price fluctuates significantly, depending on currency movements and export tariffs. Producing it in fermenters means diversifying production capacity, thereby potentially stabilising the price.

But the biggest win — if companies can pull it off — will be in preventing further destruction of rainforests and boosting food security for a growing population. 

“There’s going to be about 10bn people on the planet by 2050,” says Chuck. “We have to guarantee consumer goods and calorific food for all of those people. These fermentation technologies are about curbing growth in the agricultural sector and preventing the need for future agricultural land, so we can use it for reforestation or to grow other crops.”

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