Need for change: Start-ups brew up fermented alternatives to unsustainable palm oil

23 Dec 2022 --- In the contentious and turbulent world of sustainability efforts, the conventional palm oil industry is under pressure to adapt to an increasingly hostile political and literal environment. As a leading cause of deforestation, and with EU regulations provisionally restricting or fining goods imported from high-deforestation risk areas, palm oil’s traditionally unsustainable practice is invigorating tech start-ups to find a viable, sustainable alternative. 

FoodIngredientsFirst talks to leading start-ups within the alt-palm oil space. 

Shara Ticku, CEO and co-founder of New York-based C16 Biosciences, discusses Palmless, its first palm oil alternative.

We also talk to Thomas Kelleher, Ph.D., CEO of Xylome corporation in Wisconsin, which has commercialized two products with its palm alternative Yoil. NoPalm Ingredients in Wageningen is producing an upcycled alternative. We speak to co-founders of NoPalm, Lars Langhout (CEO) and Jeroen Hugenholtz (CTO).

Then we hear from Edwin Mahatir Muhammad Ramadhan, once a policy analyst at the Coordinating Ministry for Economic Affairs for the Republic of Indonesia, now a Ph.D. candidate at the Public Administration and Policy Group at Wageningen University.

Shara Ticku with C-16 Biosciences' alt-palm product Palmless.

Exploring the alternatives
Ticku expands on C16’s alt-palm process, which she feels is tough and scalable.

“C16 has developed a platform for decarbonizing consumer products through next-generation oils and fats, and our first product is an alternative to palm oil. We’ve developed a proprietary, robust yeast strain which we grow using precision fermentation to produce lipids,” she explains. 

“Our products are not produced from oils and fats. Rather, we are reimagining how we produce oils and fats – using biology instead of industrial agriculture or animal husbandry.”

Similarly, Xylome’s production process leverages yeast and fermentation to produce its palm alternative Yoil.

“Yoil is produced by yeast in a pure-culture fermentation. It is a white, nearly bioidentical replacement for Refined-Bleached-Deodorized (RBD) tropical palm oil,” Kelleher explains. 

“According to the Malaysian Palm Oil Board in Washington DC, more than 95% of the palm oil used for consumer products is white RBD palm oil. To succeed on a commercial scale, a replacement for white RBD palm oil must be at near theoretical yields and at a purity that exceeds the economic and quality expectations of the current market.” 

Additionally, Langhout explains how NoPalm’s upcycling process differs from these fermentation systems.

“Our business model is unique in our industry: essentially, we’re a solution provider where others are ingredient providers,” he states. 

“We offer a solution to the palm oil and food waste problems. We have developed a technology using an efficient fermentation process that produces sustainable palm oil alternatives by upcycling agri-food waste streams. Our yeasts can produce various oils and fats on any substrate containing sugars, organic acids or alcohol. As a result, our fermented oils and fats are cost-competitive.”

Lars Langhout champions an upcycling approach to alt-palm development. 

Roadblocks for start-ups 
Yield and economic viability are two primary challenges facing alt-palm start-ups. Ramadhan outlines the roadblocks for challengers to the conventional palm industry. 

“Innovation is inevitable and needed in the modern age of food and agriculture. It does not mean that palm oil alternatives will be free of problems,” he underscores. 

“There are at least four major challenges for palm alternatives: regulations, especially consumer protection and food safety, gaining consumer trust, providing traceability of its material sources and accountability, and improving cost efficiency and upscaling industrial production so that alternatives can compete economically with conventional palm oil.”

Kelleher can see these roadblocks ahead, especially in achieving competitive scalability.

“The major challenge is the large capital expense (CapEx) for commercial-scale fermentation facilities,” he continues. “To achieve a global game-change, the cost of Yoil must be significantly lower than the cost of crude palm oil in the field in Malaysia.” 

Despite a fast start, Langhout sees similar issues ahead. 

“In only ten months after the foundation of our company, we leapfrogged to scalability (fermentation at 2000L biomass volume) and customization by demonstrating that we can produce different fatty acid compositions to deliver custom-made oils and fats,” he explains. 

“The key challenges for the next phase will be to scale up our entire process to 100,000 liters and unlock commercial opportunities by finalizing the necessary regulatory approvals.”

Ticku, however, feels that political support is crucial. “The main challenges are production capacity and political will,” she says. 

“While there is progress in both these areas, we still need stronger political will to combat the power of the highly concentrated and entrenched palm oil industry. I was thrilled to see the passage of the recent European Union provisional deal to minimize the risk of deforestation.” 

Edwin Ramadhan believes a diplomacy of sustainability is the best path forward between alternative and conventional palm oil producers. The politics of palm oil 
Ramadhan understands the indivisibility of palm oil and politics and hypothesizes the impact palm oil alternatives may have.

“Currently, palm oil alternatives are technology-intensive and researched in developed countries, while conventional palm oil is labor-intensive and produced mostly in developing countries,” he says. 

“For producing countries, palm oil is not just an agricultural and trade commodity but also involves political issues.” 

Ramadhan understands and supports the progress of palm alternatives but argues that rapid change may displace workers and industries dependent on palm oil.

“It is better to have a transition mechanism from conventional to alternative palm oil. The transition should be fair and involve all the stakeholders, including the government of palm oil-producing countries,” he says. 

Jennifer Kaplan, director of sustainability at C16, pictures this future: “Imagine only needing a twenty-acre industrial complex – which can be located anywhere on the planet – to feed 200 people instead of the 200 acres we need now.”

Ticku also champions speedy change. 

“We’re challenging the status quo by presenting a more responsible and innovative food-making process. A key part of our sustainability stance is that we must act now to preserve tropical forests from existing and future destructive palm oil production,” she reflects.

Thomas Kelleher is confident Xylome’s alt-palm Yoil will be able to compete economically with conventional palm oil.

Offering a palm branch
Deforestation has haunted palm oil’s reputation and caused significant political strife. Ramadhan stresses that palm alternatives may offer a political peace offering between the EU and Indonesia. 

“The rise of alternative palm oil could further accelerate the production and spread of sustainable palm oil, that is, palm oil that does not lead to negative environmental and social effects,” he explains. 

“If alternative palm oil is developed by joint EU-Indonesia ventures, it could help to depolarize the debate and benefit both the EU and Indonesia.” 

Foundations of sustainability
The shared motivation driving these players is sustainability. 

“Xylome was founded to make sustainable ingredients for large markets using the power of yeast synthetic biology,” adds Kelleher. 

Ticku agrees, saying: “We are building this solution to help drive a new world order where natural resources are not valued solely for their economic value, and economic growth is decoupled from environmental degradation.”

“Our goal is to curb the growth of palm and tropical oils by encouraging the current system to adopt new sustainable solutions like our fermented oils and fats while converting unwanted dominant practices, including food waste,” notes Langhout.

Ultimately, Ramadhan champions diplomacy based on sustainability.

“Sustainability concerns should override not only the need for competition but also be the shared value to foster EU-Indonesia trade and technology partnerships,” he says.

“Sustainability diplomacy should mediate between the domestic interests of producing countries, such as poverty alleviation, with universal norms and international issues, such as climate change.” 

By James Davies