# ZeaChem's Lab: From Termite-Gut Bugs to Biofuel

In an inauspicious building on a strip of offices in Menlo Park, Calif., I recently met with the team behind ZeaChem, a 25-person startup that’s using a common microbe found in termite guts and regular soil to breakdown trees and plants into the next-generation of ethanol. The company is one of a dozen that are moving quickly to build large plants in the U.S. in an attempt to be among the first to produce fuels made from waste plants as opposed to the currently available method using corn. Fresh from raising a sizable round of funding earlier this month, this morning the team walked me around their lab, which makes about 5 gallons of cellulosic ethanol per day.

ZeaChem CEO Jim Imbler described the multistep process in the lab as a set of Legos stacked on top of each other to up one efficient entity. The lab looked more like a complex metallic Erector Set, interspersed with test tubes and beakers filled with a murky brownish liquid that was in various stages of fermentation and purification. At one point Fred Moesler, director of process development, opened up a beaker of the liquid from an early stage of the process and it smelled both sugary sweet and still like the poplar tree from which it came.

The purpose of the lab is to work out the process inefficiencies on the small scale, so that when ZeaChem’s 1.5 million-gallon-per-year demonstration plant in Boardman, Ore. comes online — construction is supposed to start this year — the company can scale up as quickly as possible. The lab is also the place where ZeaChem can test the boundaries of the environment in which its bugs can live, or as Imbler puts it, “We spend a lot of time trying to kill them,” using temperature changes and contamination.

Perfecting the efficiency of the process is key to ZeaChem’s success. The bugs themselves (moorella thermoacetica) are ordinary — they’re not genetically modified, because as Moesler says, nature already built them to be almost perfectly suited to do this task. And the individual steps are simple: Take wood chips or other plant waste, chemically break the material down into a liquid sugar base, add the bugs (hundreds of thousands are sold for cheap in a tiny blue seed), then ferment it, and purify it into an ester, which can then be made into ethanol.

At the same time the company takes a small part of the wood waste that can’t be broken down in the initial chemical process and gasifies it, then adds that into the mix, too. ZeaChem says that small gasification step significantly boosts the amount of biomass that the company can convert, enabling them to produce 40 percent more ethanol per ton of biomass than any known competitor. The gasification is the most expensive part but at the same time makes the process that much more efficient, ZeaChem says.

On a small lab scale, the process seems to run like clockwork. At the end of the tour Moesler showed me the finished ethanol product in a tall retro bottle; he looked like he might just take a swig. But who knows if the company’s efficiency edge will remain once it ramps up to commercial-scale production of 25-50 million gallons per year. At that size, and in commercial production, the company will have to contend with things like picking out dirt from wood waste samples and filling and draining million-gallon vats of fermenting liquid.

The company’s investors, of course, are hoping the process scales well. Earlier this month ZeaChem raised $34 million from Globespan Partners, PrairieGold Venture Partners (a South Dakota firm), Mohr Davidow Ventures, Firelake Capital and giant petroleum refiner Valero Energy. Imbler says the company could end up creating joint ventures with oil refiners like Valero, which could ultimately help the company with its scaling issue. The company’s process can also break down corn, so ZeaChem could work with some of the incumbent corn ethanol guys that already have massive plants, as a stepping stone to cellulosic (when I asked if ZeaChem was working with Poet, Imbler just smiled and said they “talk.” (Update: Imbler wanted to clarify that he meant he talks to the corn-ethanol companies.) There’s also the issue of the difficult economic environment. Building a commercial plant requires money — far more than the$40 million that ZeaChem has raised to date. Back in 2008, many thought 2009 would be a breakout year for the first cellulosic ethanol plants; even GM (s gm) was paying the technology a lot of attention. But 2009 is looking to be more of a holding pattern year for many of the cellulosic ethanol companies. ZeaChem, however, is one of the few that has been able to raise money recently, and seems to be staying on track.