LanzaTech NZ Ltd., an Auckland, New Zealand company that uses bacterial fermentation to convert carbon monoxide into ethanol, said it has raised $3.5 million (US) in a first round of funding, led by Silicon Valley’s Khosla Ventures.

The technology will contribute to the cellulosic biofuels business by converting syngas produced through gasification into ethanol, the company said. The company wants to produce ethanol from steel mills, turning carbon emissions into fuels — a market as large as 50 billion gallons of ethanol worth over $50 billion per year.

Two existing New Zealand investors participated.

This funding will support further technology development, establishing a pilot plant, engineering work to prepare for commercial-scale ethanol production, the company said.

From the statement:

“We have proven in our laboratories that the carbon monoxide in industrial waste gases such as those generated during steel manufacture can be processed by bacterial fermentation to produce ethanol,” said Dr. Sean Simpson, Chief Scientist and Founder of LanzaTech.

Doug Cameron, Chief Scientific Officer for Khosla Ventures, will join the company’s board.

The company was co-founded in 2005 by Richard Forster, former Chief Scientist of AgriGenesis BioSciences Ltd., and Sean Simpson, former leader of the biofuels initiative at AgriGenesis Biosciences

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