Palm oil is one of the most destructive ingredients you use every day. These startups are trying to replace it

Palm oil is ubiquitous—it makes ice cream and oat milk creamier and shampoo foamy, holds the color in lipstick, makes ramen noodles cook evenly, and has uses in hundreds of other products. (It often doesn’t show up on labels as palm oil but as one of dozens of derivatives, like sodium lauryl sulfate.) The world now uses more than 70 million metric tons of it every year.

That’s a problem, since palm oil plantations are driving deforestation and biodiversity loss in countries like Indonesia, and slashing and burning tropical forests to make way for palm trees is a huge source of greenhouse gas emissions. Efforts to source more “sustainable” palm oil still haven’t stopped deforestation. But synthetic versions of palm oil could theoretically replace it.

In a factory in Ohio running on renewable energy, a startup called Locus Fermentation Solutions is making palm-free ingredients for products like shampoo and body wash using fermentation. “What we do is very much like a microbrewery,” says Tim Staub, CEO of the company’s Locus Performance Ingredients division. Inside small vessels, yeast fed with sugar make a product called sophorolipids, a type of surfactant.

When it’s added to something like shampoo, the product helps wet hair get cleaned, pulls away oil and grease so it can be rinsed away, and adds foam. “People love foam because it feels like it works,” says Greg Smith, vice president of sales and marketing for Locus Performance Ingredients. “Foam is really a cue.”

In a typical shampoo, the same functions often come from ingredients made from either fossil fuels or palm oil; in either case, the oil has to be processed into derivatives. Even beyond the environmental challenges of growing palm plantations, processing the raw oil uses more energy. “Our processes are very near zero carbon footprint,” Staub says. The feedstocks for the product, currently canola oil and corn, add to the total environmental footprint; the company is working on a complete analysis now. But because the crops can be grown on existing farms, they can avoid more deforestation. And the company is also turning to novel solutions to cut its impact further; another branch of the company, for example, makes“probiotics” for crops that can help them absorb more carbon as they grow.

Because the fermentation platform is efficient and productive, it helps lower cost, and because the ingredient can often replace two or even three conventional ingredients, the total cost for brands may not increase, Smith says. Two large brands are already using the ingredient in face wash and body wash, and another is studying its use in shampoo. (Because of nondisclosure agreements, the company can’t share the brand names.)

The solution can’t replace other uses of palm oil, including in food, although other startups are working on alternatives.C16 Biosciences, an early-stage startup backed by Bill Gates’ Breakthrough Energy Ventures, is using fermentation to produce oil in bioreactors that’s nearly identical to palm oil and can be used in the same way. Kiverdi, another startup, is developingan alternative to palm oil that can be made from captured CO2. In the U.K., researchers at the University of Bath used directed evolution—essentially, plant breeding—to produce another yeast that can pump out a palm oil alternative, and is working with a company that wants to bring it to market. It’s more expensive than palm oil, says University of Bath bioprocess engineering professor Christopher Chuck. But proteins and carbohydrates can also be extracted from the oil and sold separately. “The modeling shows that you are going to have to get all the value out of that before you can to be able to reduce the cost,” he says.

Xylome, another company, is beginning to work with brands to test an alternative called “Yoil,” produced by yeast, that’s almost identical to palm oil. “It’s basically a drop-in replacement,” says Xylome CEO Tom Kelleher. The company is now sending 100-pound samples to brands to test in products, such as ice cream, “so they can convince themselves that it has all the right melt-in-your-mouth sensations you get from palm oil that you don’t get from other types of oils,” he says. While refined palm oil is bleached—which means that chlorinated hydrocarbons end up in the foods that use it, including baby formula—Yoil doesn’t have to be bleached. The FDA is currently evaluating the product for approval for use in food, and the company is looking for funding to scale up manufacturing. Right now, it’s more expensive than palm oil to produce. But the company is also trying to develop another oil that could be made directly from agricultural waste in corn fields; if it can work, it would be substantially cheaper.

Cost is the key for alternatives to succeed. Right now, with conventional palm oil, only a fraction is certified as grown sustainably. But even the certified palm oil on the market can’t all be sold for a premium. Perhaps because it isn’t obvious how widespread the use of palm oil is, or which products contain it, brands may not feel enough pressure to change their sources. But if alternatives to palm oil are cheaper, and perform the same, companies will adopt them at a larger scale. “The minute we’re a penny below [refined] palm, everybody would switch over,” Kelleher says.

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