New Grease: making tropical oils more sustainable
TLDR;
🌴 Palm oil is used everywhere, and market demand keeps growing.
🌏 Palm crops are linked to deforestation affecting climate and biodiversity.
👀 Consumer awareness and new regulations are driving demand for palm oil substitutes and for a deforestation-free supply chain.
🚀 Innovators working on alternatives include C16, Zero Acre, NoPalm, Colipi, Circe, Kern-Tec, Farmsow, Green-On, and more.
💲It is hard to replicate all the palm oil exceptional properties (texture, taste, odor, melting point, etc), but even harder to do it at scale and at a competitive price.
Market growing like grease lightning
As I enjoyed a mouthful of vanilla ice cream to cool down from this summer heatwave week, I caught myself wondering what made the creaminess of that heavenly refreshing dessert I was savoring. Then it hit me: palm oil.
Palm oil can be found in nearly everything, from pizza and chocolates to the summer’s favorite: ice creams. In fact, half of the packaged products in supermarkets contain palm oil. It is also used in cosmetics like deodorant, shampoo, toothpaste, and lipstick. Furthermore, it is used as animal feed and biofuel. The palm oil global market is already over $ 50 billion, and it is expected to represent almost $ 100 billion by 2030.
What makes palm oil magical?
Two attributes make palm oil particularly attractive. First, its low price. Even if prices recently soared after the COVID crisis, the Ukraine war and Indonesia’s brief but impactful export ban, palm oil is still cheaper than most vegetable oil alternatives.
Second, its physical properties and sensory profile make it extremely versatile.
- It is odorless and colorless and therefore it does not interfere with the look or smell of food products.
- It resists well to oxidation, which gives products a longer shelf-life
- It has a special density and a semi-solid texture at room temperature. This is what makes your spoon of Nutella so easily spreadable.
- It remains stable at high temperatures. This gives that fried snack you love its crispy crunchy texture.
What’s the problem?
While palm oil demand is ubiquitous, supply is concentrated in the tropics, in particular, in Indonesia and Malaysia, which are responsible for over 85% of global production. Palm oil provides a livelihood for millions of smallholder farmers and generates tax revenue for developing countries, but the palm oil value chain is often tainted with poor working conditions and indigenous land conflicts.
The expansion of palm crops plays a significant role in deforestation and contributes to biodiversity loss and climate change. Growers often burn forests to clear the land, thus destroying carbon sinks, releasing CO2, and polluting the air. Replacing biodiversity-rich areas with palm monocultures contributes to soil erosion, and is also linked to water and soil pollution.
Not as simple as a boycott
Consumer awareness is driving a market shift towards more sustainable value chains and we may also expect new regulations for palm oil. For instance, the European Union, which had already limited crop-based biofuels, recently defined a mandatory diligence process requiring strict traceability of crops’ geographic coordinates to ensure only deforestation-free products enter the EU market. Major palm oil buyers like Ferrero are now considering sustainability aspects when purchasing their ingredients while groups like Unilever are investing in alternatives to eliminate palm oil from some products. Yet, global efforts are still far from enough to ensure sustainability standards.
Many believe that boycotting palm oil is climate action, but this is not necessarily true. Palm crops are remarkably more efficient compared to other vegetable oils like coconut or sunflower. Palm trees produce almost all year round, with lower costs and smaller land requirements. According to the WWF, palm trees supply about 40% of the global vegetable oil demand on 6% of the land used to produce all vegetable oils.
Fostering more sustainable palm oil
More effective action is to make oil production more sustainable, for instance through monitoring, verification, and certification schemes. Launched in 2004, the Roundtable on Sustainable Palm Oil (or RSPO), is the most well-known certificate for sustainable practices in palm production and has the buy-in from many industrial players. It certifies that plantations initiated after 2005 (i) have not replaced primary forests (ii) have not destroyed areas rich in biodiversity, and (iii) have avoided land clearance through fires.
Helping growers increase the yield of existing palm crops can also potentially limit deforestation. Millions of smallholder farmers depend on palm oil for their livelihoods. Increasing their output can create both social and environmental value. This is a strategy adopted by the YC-backed startup Releaf, which brings industrialization to thousands of smallholder farmers in Nigeria through their patented small-scale de-shelling palm nut cracker and imagery-based installation. Their infrastructure can lead to higher income for smallholder farmers while ensuring a traceable supply chain.
The next generation of palm oil
Innovators are exploring new pathways to make palm oil sustainably, using food byproducts, insects, modified plants, or fermentation. Founded in 2017, the startup C16 stood among the first movers to use microbial fermentation to produce a new generation of palm oil equivalent and had raised $ 24 million in its last round to pursue this mission. Launched in 2020, Zero Acre Farms recently raised $ 37 million. It claims its cultivated oil is not only better for the environment but also healthier for humans and its product became available for purchase this week.
To further reduce global greenhouse gas emissions and land use, early startups are looking for different carbon sources to feed the microorganisms responsible for the fermentation process. Among these new players, we see companies like NoPalm exploring waste biomass, Corbion exploring algae, and Colipi incorporating industrial sidestreams with their carbon capture and utilization (CCU) solution to provide a carbon source for their yeast fermentation. Another example is Circe which is also betting on the gas fermentation approach engineering microorganisms to produce different types of oils and fats.
Based on electrochemistry instead of living organisms, Power-to-Food is yet another promising approach, which combines CO2, clean electricity, and water to produce oil sustainably. The Swedish startup Green-On is converting power into saturated fat to replace coconut oil, palm oil, and animal fat.
Tell me more, tell me more, is the tech very far?
Fermentation is a technique used in food production for millennia. Different families of microorganisms can be used for fermentation, such as microalgae, bacillus, and fungi (molds and yeast). Those with the ability to produce and accumulate lipid content above 20% of their dry mass are classified as ‘oleaginous’ (here some microorganisms’ oil content). The Good Food Institute identifies three main fermentation processes and five opportunity areas for their optimization:
Processes
- Traditional fermentation uses intact live microorganisms to modulate and process plant-derived ingredients.
- Biomass fermentation uses the microbial biomass itself as an ingredient, with the cells intact or minimally processed.
- Precision fermentation uses microbial hosts as “cell factories” to produce functional ingredients with specific sensory, functional, or nutritional properties. It can produce enzymes, flavoring agents, vitamins, natural pigments, and fats.
With the advances in precision fermentation, we may expect some of these startups to be able to produce multiple types of fats and oils, as they can also engineer the process in a way that fits their needs for the final product. Opportunities to further improve fermentation processes include (i) target selection and design, (ii) strain development, (iii) feedstock optimization, (iv) bioprocess design, and (v) end-product formulation and manufacturing.
Key challenges ahead
We may not have yet the answer to exactly how the next generation of palm oil will be produced, but what is certain is that palm oil is both a quintessential ingredient and a real source of concern today, so innovators are exploring more sustainable alternatives. Reproducing the magical properties of palm oil to meet the growing demand in a way that does not degrade the environment or put climate at risk is just one piece of the puzzle. Now doing it at scale will be hard.
Today, the main challenge for innovators creating sustainable alternatives to palm oil is achieving long-term scalability and price-parity. Improving the economics of palm oil alternatives to enable large-scale production will require the right set of microbes, technologies as well as a streamlined manufacturing process.
Furthermore, full life-cycle assessments of these new oils must be studied in more detail. It is fair to say that emissions from microbial oils are likely to be lower than palm oil from deforested land, though the provenience of their carbon source and the energy used to power bioreactors will certainly influence the total emissions count.
It is exciting to uncover the mission-driven entrepreneurs dedicated to finding more sustainable solutions that may guarantee our spoons of ice cream remain forever tasty and creamy without advancing extreme heatwaves. Certainly a refreshing thought for a summer day. 🍦
