Green oil: NoPalm-Milcobel deal unlocks whey permeate to create sustainable palm fat substitute

NoPalm Ingredients is partnering with Belgian dairy cooperative Milcobel to scale the production of circular and sustainable palm oil substitutes using fermentation. This move comes as palm oil production grapples with concerns over deforestation and carbon dioxide emissions, along with consumer demands for palm-free products.

NoPalm Ingredients is addressing these demands with its fermentation technology, which produces oils and fats identical to conventional palm and other tropical oils “without using any palm-derived raw materials.”

Instead, the Dutch firm utilizes agro-industrial side streams, such as whey permeate — the leftover liquid after proteins are removed from cheese whey.

According to the European Dairy Association, the EU produces nearly four million metric tons per year of whey permeate, which is mostly pumped into water bodies, leading to environmental pollution. Because whey is rich in lactose and minerals, the food industry is now valorizing it as feedstock for food innovations.

The agreement with Milcobel has two parts. First, Milcobel will supply whey permeate for NoPalm Ingredients’ demo factory in the Netherlands starting in 2026. Second, both companies will explore the possibility of building NoPalm’s first commercial factory at Milcobel’s Langemark, Belgium site by 2028.

Julie Cortal, chief commercial officer of NoPalm Ingredients, tells Food Ingredients First that despite its predominant use in versatile food ingredients and its value for functionality and affordability, palm oil’s “true cost is high: deforestation, biodiversity loss, and massive CO₂ emissions.”

NoPalm’s technology could reshape the industry by creating a green oil economy that  “decouples growth from deforestation,” says Cortal.“Global demand [for palm oil] continues to rise at around 4% CAGR, while no scalable, sustainable alternative exists. This creates growing risks of supply shortages and price volatility; pressures that affect industries and households alike.”

“Our partnership with Milcobel shows how our circular, co-located production model works at an industrial scale. By building our first commercial factory directly at their Langemark site, we turn whey permeate, a dairy side stream that currently has limited value, into high-value sustainable oils,” she continues.

She outlines the collaboration’s “clear” objectives: improving its co-location model to produce right where food side streams are made and securing feedstock at scale to ensure supply reliability while giving farmers and cooperatives “a better valorization route.”

She adds that another goal is fast-tracking commercialization to show the industry that “we can scale quickly and meet demand.”

Targeting circularity & sustainability

NoPalm Ingredients was founded to solve palm oil’s price volatility and supply-related challenges, notes Cortal. 

“Our technology uses fermentation and upcycled side streams to produce sustainable, circular oils and fats that can functionally replace palm oil at price parity. At scale, we reduce CO₂ emissions by up to 90% and land use by 99%.”

“We believe our technology has the potential to reshape the industry by creating a parallel green oil and fat economy; one that decouples growth from deforestation and positions the food industry to meet demand responsibly, competitively, and at scale.”

Valorizing whey streams

Over the past two years, industrial trials conducted by NoPalm have shown the feasibility of using whey permeate as a feedstock for its fermentation process, and confirmed its compatibility with Milcobel’s streams, notes the company.

The companies will leverage dairy whey permeate sidestreams from Milcobel and convert them into circular oils and fats.With the partnership, the companies aim to ensure the scalability and circularity of whey permeate streams from Milcobel.

“Scalability comes down to two things: abundant feedstock and efficient processing. Whey permeate is one of the most available side streams in dairy, with global volumes projected to grow at over 4% CAGR in the coming years,” Cortal emphasizes.

“By placing our factory directly at Milcobel’s site, we transform this resource into high-value oils without the need for extra transport or a drying step.”

She describes this approach as a “short-circuit model,” which ensures true circularity by upgrading on-site waste into a new ingredient stream, reducing costs, and reducing emissions. 

This leads to a “flow back” of value to the dairy chain, which works at scale and “can be replicated across the industry,” Cortal explains.

Infrastructure & regulatory hurdles

NoPalm Ingredients says its association with Milcobel shows how biotech and dairy can join forces to create high-value, sustainable ingredients at scale for a resilient and future-proof food system.

However, Cortal considers building a “first-of-its-kind” factory inside an operational dairy site as ambitious, but also its strength. 

“On infrastructure, the main challenges are integration: aligning utilities, space, and wastewater treatment. We’re working hand-in-hand with Milcobel’s engineering teams to design a facility that fits seamlessly into their operations.”

“On regulation, we take a proactive approach. Our oils must meet stringent food and cosmetic safety standards, and we’re already engaged with the relevant authorities to secure the right approvals well ahead of commercialization,” Cortal adds.

Milcobel will provide whey permeate for NoPalm’s demo factory in the Netherlands starting in 2026 (Image credit: NoPalm Ingredients).

Targeting palm oil price parity

Palm oil is usually priced lower than other oils, with competitors like soybean oil trading at a premium. Therefore, it is important for palm oil substitutes to achieve price parity with palm oil for wider adoption.

“Today, using co-manufacturers, our costs are still above palm oil. But with our own demo factory, we are already on track to reduce production costs sharply, and at full commercial scale, we project cost levels that enable price parity with palm and other tropical fats in many key applications,” Cortal shares.

Regarding the commercialization of the oils, she points to some barriers that are “clear and solvable.” These include end-to-end production in-house, that is, moving from co-manufacturing to NoPalm’s own integrated facilities.

“Scaling fermentation capacity” or ensuring reliability, efficiency, and cost competitiveness at thousands of tons of oil, is another challenge, she adds.

“With the demo factory proving our technology at scale under one roof and partnerships like Milcobel ensuring reliable feedstock and showing the traction of our co-located model, we are confident we can commercialize at cost parity with conventional fats by 2028 and create a resilient, sustainable parallel fat supply chain for the industry,” Cortal concludes.