Episode 004 | January 31, 2022 | Duration: 26:05
Transcript
Note: This transcript has been auto-generated and lightly edited for readability. It may contain minor errors or inaccuracies.
004 – Waste into High Value Mateials with Luna Yu, CEO of Genecis – Joachim Almdal, Luna
004 \- Waste into High Value Mateials with Luna Yu, CEO of Genecis \- Joachim Almdal, Luna
Joachim: \[00:00:00\] Welcome to the podcast, Luna.
Luna: Thank you for having us.
Joachim: I’m really excited about that, all the way from Canada. So maybe first off, tell me what’s going on with the face mask?
Luna: Good question. So, well COVID hit hit. So when we were here just last week, we actually had a business meeting where we were potentially exposed to someone who tested positive, and that’s why we wanted to take the precautions we quarantined.
Week or so, and today it’s our, sort of our first day back out into the world and we wanna make sure that just in case we wear face masks and ensure that no one else tests positive because of us.
Joachim: Yeah, of course. That’s the responsible thing to do and I really appreciate it personally. I just had Christmas canceled as it turned out. Some relatives from Norway and Sweden were supposed to visit, but Norway just had a lockdown. So \[00:01:00\] that’s not going to happen. Too bad. But that’s just the way it is. Luna, you’re the CEO and the founder of Genesis. And I was wondering if you could share a little bit about your own story.
So what’s the story behind Luna before we go into the nitty gritty of Genesis?
Luna: Sure. Great question. So I grew up in China up until eight years old. One of the most polluting cities in China is actually where I grew up. So I really saw climate change firsthand myself.
Joachim: What was that city?
Luna: Shandong Province near Beijing.
It’s very known for its industrial nature. So there’s a lot of pollution, lots of smog everywhere. People are always burning crops and I really got a chance to witness it firsthand. So that was when I was eight years old. I came with my family to Canada where I realized I loved science and loved technology.
So I studied science as well as technology back in school. \[00:02:00\] And went for a master’s in environmental science at the University of Toronto where I looked at various different kinds of renewable energies as well as bio technologies and how to use those to create a better planet.
Joachim: Wow. So that’s the story about growing up close to industrial pollution and then starting to educate yourself on how to change that. That is super cool. Thanks for sharing that. When you mentioned that you’re looking at renewable energy and bioengineering.
So how do you see renewable energy and bioengineering playing together? What’s the connection there?
Luna: Yeah, I think they’re super related. So during my master’s, I actually got a chance to discover bioenergy, creating biogas from food waste. Right.
Joachim: Ah,
Luna: I really got a chance to work with biogas plants who \[00:03:00\] essentially operated these huge fermentation baths where you take food waste and then make it into bio methane, which can then be used as a renewable natural gas.
And pretty quickly into that field, I learned that it was actually a very unprofitable business. They really struggled to make a lot of money out of that endeavor, even though it was such a sustainable and great endeavor. So I thought
Joachim: Maybe you can walk us through the different kinds of gas because I’m not sure everyone who’s listening knows what the applications of gas are and what the difference is between natural gas and biogas, for instance.
Luna: Okay. Sounds good. So I think gas in general is just something that you can burn to create energy. And that’s what all forms of gases are used for, whether it’s petroleum gases or natural gas or biogas. Biogas is essentially a type of gas made from organic materials as opposed to petroleum or crude oil.
And for us, bio energy has lots of different use cases, most notably in electricity. So it’s a great way of producing power from a renewable biomass generation of the feedstock. \[00:04:00\]
Joachim: Okay. So you can essentially grow what will turn into the electricity-producing energy source, in a way.
Luna: Exactly.
Joachim: Alright, cool. So seeing that as being insulated linked and recognizing that the business case wasn’t really there for biogas, what seemed to be the obstacles for it to become profitable?
Luna: really good question. I think the biggest obstacle was really the bacteria, and usually in fermentation what happens is that you actually feed some sort of a carbon source to bacteria within the fermentation bats, where then they produce the end product, right?
For biogas, they would feed food waste to bacteria to generate \[00:05:00\] methane. Right?
Joachim: Okay. Yeah. So I’m just wrapping my head around this. The carbon input will typically be food waste. So that’s the organic waste where most things have carbon on this planet. And you take some of that organic material, put it into the fermentation process.
And the byproduct from that fermentation. Normally we know fermentation from baking and from making beer or wine. But in this case, we’re trying to get methane as the byproduct.
Luna: Exactly.
Joachim: Or end product, I suppose.
Luna: Exactly. And even though it’s such a great and cool process, the biggest challenge actually lies in that process in the sense that the bacteria you use to make methane is very slow moving.
It takes roughly 28 days for it to grow and produce methane. And methane as a product is also a very low value product. So that was really the biggest challenge. Bacteria was not efficient enough to generate a high value \[00:06:00\] product. And that’s where we really saw an opportunity. We thought, what if?
There’s such a great carbon source within food waste, very similarly to how petroleum is a great source of carbon. If we can feed it to much more efficient bacteria to make a higher value product instead, we can really help to divert a lot more food waste from landfills and make them into renewable and sustainable products.
Joachim: Okay. So actually in this business case you’re managing to avoid the political elephant in the energy room, which is the subsidy of fossil fuels. And you’re even able to circumvent that by providing a business case that’s so good that it can actually beat a heavily subsidized industry.
Luna: Exactly.
Joachim: Wow. That is super cool. I’m really blown away by that, Luna. \[00:07:00\] I’ve cheated a little bit and I know what Genesis is doing, but I always feel a little bit foolish when I try to explain to someone what it is you’re doing, because I end up sounding like a kid reading a science fiction cartoon.
But if you were to explain the concept behind Genesis to a 5-year-old? How would you go about it?
Luna: Yeah. It’s really quite simple. So what we do is we make compostable or biodegradable plastics from food waste. And how that works is through two types of bacteria cultures.
The first type you feed food waste to. And it produces carbon sources as a precursor. And the second type of bacteria essentially eats those carbons and makes PHAs within their own cells. And the last step is just to take the PHAs from the bacteria cells and make them into granules, much like the one that you see over here.
This is really the PHA
Joachim: So this is the actual plastic. When you say PHA, that’s an acronym for Poly \[00:08:00\]
Luna: Polyhydroxy alkaloid.
Joachim: Yeah, everyone knows that.
Luna: That’s right. Okay. And the really interesting thing is that what PHAs actually are is they’re the fat of bacteria.
So all we’re doing is growing bacteria, extracting their fats, which have polymer-like properties or plastic-like properties, and making them into renewable plastic.
Joachim: It’s very hard for me still, even having heard this story time and time again during the past two years where I’ve been involved with Genesis, it still gets me. It’s completely blowing my mind every time I hear that story.
So you have a two-step process. You start feeding food waste into a reactor. Can you say that it’s kind of making a more linear form of the carbon?
Luna: Yeah, exactly.
Joachim: So it is the first step of the blender in a way where it makes sure that everything comes out in the same shape or \[00:09:00\] form that can then be fed to the second part of the process where it’s essentially grown into the end product by being fed to bacteria. And those bacteria grow a kind of fat, that looks a lot like plastic. So it has the same properties. And if you were to walk us through how we make plastics today, what’s the common way of making plastics?
Luna: Yeah. The most common way is using petroleum products. And it’s usually synthetic chemistry, a multi-step process. Very polluting and takes quite a lot of energy as well as a lot of dollars to actually build these large plants. That’s how you typically make plastics. With our process, it’s a lot more natural and much simpler in the sense that everything is done within the cells of the bacteria as opposed to huge mechanical processes that take a lot of energy.
Joachim: So instead of finding \[00:10:00\] an oil field and drilling for the oil, pumping the oil out, refining it, and then going through steps to turn crude oil into plastic, you can basically remove those steps.
And then on top of that, there’s the whole problem that the traditional oil-based polymers we’re using don’t degrade in nature. And hence plastic pollution becomes a problem. In our line of work in green innovation group, we often busy ourselves with everything relating to greenhouse gas emissions.
And not necessarily so much to environmental pollution, but the plastics problem is. In a way, it is or can be both. There’s both an emission factor, but more than anything \[00:11:00\] there’s a huge environmental pollution problem in that the waste is not handled properly.
And that is a problem because it doesn’t degrade in nature. Whereas if we had the same problem with food waste and it turned into the oceans, it would degrade in the oceans and the problem wouldn’t stay visible for as long as it does with plastic.
Luna: Exactly, you summarized it perfectly.
Joachim: Thanks. I appreciate that. Now I feel like a winner. So you mentioned to me earlier that your vision of Genesis, what you’re trying to build here is a company that can be accelerating the world’s transition into biodegradable plastics or non-polluting plastics.
Can you tell me more about that vision?
Luna: For sure. So what we’re trying to do here at Genesis is make these PHA biodegradable plastics \[00:12:00\] a lot more affordable. And why we want to make them more affordable is so that the world can actually buy them much more easily than right now.
Currently, all PHAs are made from sugar sources, sugar feed stocks, which compete with human food crops. But it’s also really expensive. Things like corn and sugar cane used to make PHAs are extremely expensive to purchase on a very large scale.
So with us, by producing them from food waste instead, which is actually a cost-negative feedstock, we can drastically reduce the production price point of PHAs by almost 40%. And that’s what we want to do for the future, so we can help the world get access to affordable PHAs that can then be used to make a variety of different products, including most notably single-use plastics like 3D printing filaments, food ware, premium food ware, as well as biomedical applications.
And that’s where we want to be in the next 10 years: being able to be the \[00:13:00\] leading producer of affordable PHAs in these three major markets.
Joachim: That’s amazing. And you have, I don’t know if I’m going out of bounds in terms of strategy, but you’ve also found a way to scale that and figure out where in the supply chain you fit in.
Can you share something about that, or is that confidential?
Luna: No, that’s definitely something we love to share. So two years ago, during the Y Combinator program, we were advised by the YC partners to figure out a way to sell our products into the market as quickly as possible.
That seemed like a really daunting goal at the time because in the plastic industry, typically you need to have hundreds of kilos or even thousands of kilos of your product to give to people to test for free before they can say they can use it for a specific application.
Joachim: So that means in the plastics industry right now, the buyers of \[00:14:00\] plastic materials are used to being able to get a test sample of a couple of hundred kilos.
Luna: Exactly.
Joachim: And at that time, two years ago, you were able to produce
Luna: A couple of grams.
Joachim: A couple of grams. So you would be able to bring me one of those and I would essentially need a metric ton in order to make my purchasing decision.
Luna: Exactly.
Joachim: Okay. So how do you overcome something like that? That sounds like an impossible task.
Luna: That’s what we thought too. But that’s where we discovered that we can’t put these limitations on ourselves. So what we did was call hundreds of different brands who produced high-end plastic products and see who was willing to support us in doing R&D projects or customization projects to work with us at such a small scale, being able to fund us and co-develop a product to take to market together. And that was quite a long process. \[00:15:00\] We talked to hundreds of companies and found that we ended up having the fortune of working with some of the industry leaders in premium food packaging, 3D printing filament, and biomedical spaces who really urgently needed the properties that only PHAs could offer. And they wanted to be industry leaders in sustainability as well, so they were willing to pay a premium in the very beginning and actually help develop our company and product forward together. So that’s what really drove our early partnerships, seeing where customers were willing to do this as a first-mover advantage.
Joachim: I think something that I’ve found quite interesting in figuring out where you belong in the supply chain is that a lot of the collaborations that I know about are doing something so different that it’s actually in their best interest to help you develop the material rather than you having to worry about intellectual property rights being compromised in the process because you can actually trust that they’re not going to go into plastic production. \[00:16:00\] Because they’re already busy being world leaders in something quite different. Can you share, when we’re looking at what we’re doing now, we understand why this is a problem. We have the waste associated with plastic production. We have the degradability issue with traditional oil-based, fossil-based plastics. We have a solution here that is both addressing the food waste problem and producing a high-value product that’s also biodegradable and we \[00:17:00\] have industrial interest that’s helping speed up this innovation.
What’s a case example of something you’ve done and what is your production capacity by the end of 2021?
Luna: Great set of questions. So for us, one of the best case studies we have right now is our collaboration with Novo Nordisk. We were super lucky to have won their 2020 innovation challenge, and now we’re going to be able to help them produce more PHAs, which is biodegradable material that they can use in their devices. But we’ve also been able to figure out a way to valorize their internal insulin production waste, yeast waste essentially, and convert that into making PHAs that can then go into their devices. That’s a great circular story and it’s a project that we’re super excited about working further with them going forward.
And in terms of production capacity, by the end of 2022, we’re looking to have our first demonstration plant set up in \[00:18:00\] Canada, funded by a recently awarded $6 million Canadian project from the Canadian government to integrate our technology with one of the largest biogas plants in Canada.
And over here in Denmark, we’re really looking to see if we can have an even larger scale by 2023. Yeah, so it’s super exciting. The next steps are really just about how we can get to scale as quickly as possible.
Joachim: What kind of tonnage can be derived from that plant in Canada by the end of 2023? Will it have a production capacity and how much will it be able to produce?
Luna: Yeah. We’re looking at at least around 10 to 15 tons of PHAs per year. However, we’re also going to be compounding that or blending that with other biodegradable resin and additives so that we can actually produce more for our customers in the short term.
Joachim: Yeah. So you’re going to be able to deliver something in the market without producing all of it yourself.
Luna: Exactly. And that’s something that’s really exciting in the entire biodegradable plastics market today, because if \[00:19:00\] you look at it from a macro perspective, bioplastics right now is less than 1% of the entire plastics market.
There’s more to go around than anyone can handle, and we really see that in order for us to move as quickly as possible, we need to be collaborating with each other as much as possible.
Joachim: Yeah. And when you say bioplastics, it’s all plant-based plastics and not just biodegradable plastics, how much of that 1% would you say is biodegradable and how much is non-biodegradable?
Luna: Yeah, good question. I’d say the majority of the pie right now is non-biodegradable, mostly just plant-based bioplastics. And it really depends on the application you’re trying to make. Are you looking to make something that’s home compostable, which is one of the highest in terms of biodegradability?
Or are you looking for something that’s more industrially compostable, or potentially just plant-based? So I think there’s a solution for every application, and our dream, of course, is to make sure that we can \[00:20:00\] gradually and as quickly as possible increase the market share of biodegradable plastics in general.
Joachim: And I think that’s a great vision. I think the true believers of the circular economy and the double butterfly diagram by MacArthur will also ask: when you have a material that’s this biodegradable, will it also keep its form if we want it to?
So will we be able to bring it back into circulation and give it shape again, or is it destined to degrade once it’s been used for that single use?
Luna: So I think that’s a really interesting question, and I think one of the best solutions out there is something like PHAs, which is what we call a foolproof product.
In the sense that if you put PHA into a composting facility, it will compost within \[00:21:00\] the timelines and can actually be used to make fertilizer that will return back to the soil. If PHAs are degraded in a landfill or put into a landfill by accident because they went into the trash stream, they will degrade within a landfill also within 12 months, just returning back to earth, without creating any residues or pollution. And also because PHAs have properties super similar to polypropylene and polyethylene, technically speaking, those
Joachim: Are just for the ones that don’t get it. Those are oil-based polymers.
Exactly. Polyethylene and polypropylene.
Luna: Exactly. And that’s what the existing recycling infrastructure is based on. So if PHA also goes into the recycling stream by accident, it could actually be recombined with polypropylene and polyethylene to form recycled resin too. So that’s what we want to be doing in the future: making sure that PHAs can go into all these different kinds of waste streams across various countries so that they can be taken care of no matter which stream they end up in.
Joachim: Wow. So you’re saying there’s even a potential that you could take a biodegradable plastic, grind it, and recirculate it into a recycled plastic that combines with recycled fossil fuel-based plastics? \[00:22:00\]
Luna: Exactly. Yeah.
Joachim: Amazing. Without compromising the quality. Wow.
That would be truly amazing. Luna, I feel like we’ve touched upon all of the subjects, but just wrapping up, I would love to hear from you. We’ve spoken about the near-term projects, the two years behind us and the two years in front of us.
But if I ask you to take a time machine to 2030, what does the world look like in terms of biodegradable plastics and where is Genesis?
Luna: Well, by 2030 we’d love to see if we can grow the entire biodegradable plastics market to at least 5% of the entire petroleum plastics market. \[00:23:00\]
Really increasing that market share to upwards of $50 billion USD in terms of the entire biodegradable plastics market. And we’re really focusing on the three markets where we see the most traction and the most need for our plastics today: number one, 3D printing filaments. Number two, premium food packaging. Number three, biomedical applications. And it’s really something that we’re super excited to do with our existing partners as well as more partners to be able to launch products together in these markets. That would be amazing to see in 2030.
Joachim: Amazing. And that’s both the dream and the company vision that market share is going to grow through partnerships. And you’re going to grab your slice of that pie that we mentioned before. Do you think you will have deployed it in 3D filaments by 2030, or will it be \[00:24:00\] in a very near deployment pipeline, or will it for certain be in the market by then?
Luna: For certain, in the market by then. Yeah. I’ll say this. I think there’s a lot of use of PHAs in all these three markets already. It’s just the question of how much more we can make by making PHAs affordable and scaling that up, making sure that we have enough supply to meet the demand that we’re seeing right now exploding in the market.
Joachim: Do you want to put some dollar estimates on what the costs are now and what you see them being?
Luna: Sure. The cost of PHAs right now is roughly $5 per kilo USD. By 2030, we’re looking to at least reduce that by half. Yeah. And I think that’s something we really need to set as a goal, not only to strive to hit, but it’s something that has to happen to really accelerate the world into that transition.
Joachim: And what is the price comparison in the market right now for fossil-based plastics?
Luna: $5 per kilo is roughly four times more than PPME, which is the most commonly used plastic today. Yeah. So even by 2030, we’ll still be quite a while away from \[00:25:00\] actually being directly competitive with commodity-based plastics.
But we’d love to get there step by step.
Joachim: Yeah. But I’d also say that if we get a carbon tax, I think a lot of the fossil-based products are going to be very challenged in their business models as the entire byproduct from oil extraction industry is going to face a huge challenge in terms of survivability.
If we manage to pull off subsidies, we’re also standing a better chance of improving those economics. But thanks a lot for giving some insights into the market. I wasn’t aware of those prices, so that really helped me get a sense of perspective. And thanks for sharing your story and what you’re doing with Genesis. It’s amazing to follow it on the sidelines.
Luna: Oh, thank you so much again for having us today. Really appreciate it.
Joachim: Any day you’re in Denmark, you know that
Luna: I’ll take you up on that offer for sure.
Joachim: \[00:26:00\] Cheers.