Bill Gates just invested in this company that grows palm oil in a lab—not the rain forest

By Adele Peters

On a typical trip to the grocery store, you probably buy at least one product made with palm oil, which is found in everything from shampoo and detergent to pizza dough, ice cream, and instant ramen. It’s the most widely used vegetable oil in the world, with 75.7 million metric tons of production expected globally each year. And despite commitments from food companies to improve sourcing, it’s still a major driver of deforestation as palm oil plantations continue to cut and burn down tropical forests to make more room to grow oil palms.

In New York City, a startup called C16 Biosciences is using bioreactors to grow an oil that’s chemically almost identical to palm oil and functions in the same way. This week, the company announced a $20 million Series A round of investment led by Breakthrough Energy Ventures, the fund that Bill Gates established along with other investors to support innovations that fight climate change. Each year, deforestation caused by the palm oil industry emits around half a billion tons of CO2.

Bill Gates just invested in this company that grows palm oil in a lab—not the rain forest |
[Photo: courtesy C16 Biosciences]

Palm oil “is a really good, functional oil,” says Shara Ticku, cofounder and CEO of C16 Biosciences. “The problem comes in the way that it’s produced. The oil palm tree can only grow within about five to 10 degrees of the equator. And when you look around the equator, most of the land that we find is actually rain forest.”

As production has increased, quadrupling between 1995 and 2015, rain forests have continued to shrink. In Indonesia, one of the leading producers of palm oil, fires set to the rain forest are one of the world’s largest sources of greenhouse gas emissions. (Emissions come not only from the trees but also from the rich peatlands in the area, which store huge amounts of carbon and under normal circumstances act like a sponge, preventing the forest from burning.) Last summer, more than 900,000 people went to hospitals with acute respiratory problems from the smoke. Expanding palm plantations have pushed orangutans and other species to the edge of extinction; the industry has also been called out for human rights abuses, including child labor on plantations.

Two hundred and fifty companies have pledged to stop using irresponsibly produced palm oil, and the Roundtable on Sustainable Palm Oil, an industry group, has been working on the problem since 2004. “They’ve been trying for the last decade to solve this through supply chain traceability, and it’s largely failed,” Ticku says. While it’s possible to use other existing oils, she says, there are cost tradeoffs, and other oils also have their own sustainability challenges. (Food company Barilla, one of the startup’s investors, has switched to other ingredients, but that came at a financial cost.) “I think there’s tremendous appetite for an alternative which can solve their sustainability challenge and the supply chain challenge overall, and can give them equal or better performance at a cost-competitive price.” The company has spoken to around 100 brands that have a strong interest in the new product.

While palm oil production today requires a lot of land, growing big trees, and hacking down fruits to squeeze out oil and then refine it into a usable ingredient, the startup uses a fermentation process similar to brewing beer—or producing other biotech products such as cultured meat. The yeast grows in steel tanks, and the new oil grows in the cells of the yeast.

Bill Gates just invested in this company that grows palm oil in a lab—not the rain forest |
[Photo: courtesy C16 Biosciences]

C16’s aim is to replace all of the palm oil that’s currently linked to deforestation, which Ticku says is a small percentage of total production, perhaps around 3 million metric tons a year. That’s still, of course, a huge amount, and demand is projected to grow as much as four times by the year 2050. The company is starting small. “We have to introduce this technology into the market in a way that makes it most likely to succeed,” she says. “So that means starting with smaller production volumes, but getting it into the market faster.” It’s already producing the product on a small scale, and when it comes to market, it will work with products that use small amounts of palm oil first. The company may begin by supplying oil to personal care product companies, where there’s already strong demand for “clean beauty” products now. Before it can be used in food, the company will get a “generally recognized as safe” designation from the FDA.

While a lab at the University of Bath is also working on another palm oil alternative, as is a startup called Kiverdi, it’s possible that C16 will be first to market. It’s working as quickly as possible to help have a chance of preserving what’s left of the rain forest. “Our real mission is ending the need for deforestation that’s driven by the palm oil industry,” Ticku says. “We believe that it is totally unacceptable to be burning the planet to make a vegetable oil. It just doesn’t make any sense, and it’s totally unacceptable. There has to be a better way. And we want to provide that solution.”

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