New Zealand-based LanzaTech has announced its development of a fermentation process in which bacteria consume carbon monoxide and produce ethanol.

This innovative new technology could produce 50 billion gallons of ethanol from the world's steel mills alone, turning the liability of carbon emissions into valuable fuels worth over $50 billion per year at very low costs and adding substantial value to the steel industry. The technology will also be a key contributor to the cellulosic biofuels business as it can convert syngas produced through gasification into ethanol.

"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. Garnering the financial and strategic support of Khosla Ventures is a significant validation of our approach, and we welcome Khosla Ventures Chief Scientific Officer, Dr. Doug Cameron, to our Board of Directors," said Dr. Sean Simpson, Chief Scientist and Founder of LanzaTech.

Khosla Ventures has invested $3.5 million in Lanzatech to establish a pilot plant and perform the engineering work to prepare for commercial-scale ethanol production.

Their bacterium is described as seven nongenetically modified, non-pathogenic bacteria, isolated from natural environments that produce novel bioproducts via small scale fermentation.