Palm oil has become a mainstay in a huge range of products from peanut butter to pizza, soup to soap thanks to its versatility and low cost.

However, its use comes at a high cost to the environment, biodiversity, and efforts to reduce the carbon footprint.

The quest to find viable alternatives has led tech-driven startups to develop palm oil alternatives using precision fermentation in the hope of supplementing or even replacing the €64bn ($70bn) industry one day.

“Edible applications represent roughly 70% of the global $70bn global palm oil industry, making food a critical part of our mission,” said Shara Ticku, co-founder and CEO of C16 Biosciences, a US-based start-up that uses precision fermentation to ‘brew’ palm oil like beer to develop a sustainable palm oil alternative.

C16 Biosciences is one of a number of start-ups and small firms tasked with the challenge of coming up with cost-effective alternatives to palm oil.

The process uses strains of yeast to produce the precious oil that has the desired benefit of being in a solid state at room temperature and a liquid state at body temperature.

Another major benefit is the use of sustainable production processes that do not produce waste gases such as methane and avoiding the need to clear acres of rainforest to set up plantations.

The disruption to such a lucrative industry is one that is worth the risk according to a number of investors, who see such an outlay as tapping into current food movements that advocate green living as well as sustainable food supply chains.

Food industry actively looking to palm oil substitutes

Commenting on its decision to invest €110m ($120m) with biotech firm Geno to scale alternative ingredients to palm oil, Unilever’s chief R&D officer Richard Slater, said the venture would allow the business to grow, “without relying only on palm oil or fossil fuel derivatives, while also making our supply chains more resilient from having access to ingredient alternatives.

“We are building this innovative new venture to have the scale to drive real impact and change in our industry, helping to reinvent the chemistry of home and personal care products for the 21st Century,” he added back in June 2022.

Along with Unilever, other food firms upping their interest in the sustainable palm oil alternative space includes German ingredients supplier Doehler Group.

In 2022, its investment arm Doehler Ventures formed part of a consortium that provided funds to Clean Food Group (CFG), a start-up developing a bio-equivalent cultivated alternative to palm oil.

The UK-based firm go on to describe its proprietary technology’s use of non-GMO yeast strains and food waste developed over 10 years with the aid of €8.7m (£7.5m) of UK Government funding.

Government and regulation

Perhaps the last significant hurdle to widespread acceptance is the role of government and regulatory agencies in approving alternatives to palm oil.

At the current time of writing, no palm oil product or ingredient produced via precision fermentation has received regulatory approval for use in food for human consumption.

While a decision or firmer guidance remains outstanding, the cosmetics industry remains an entry point for palm oil alternative makers as these industries are governed separately.

Indeed, C16 Biosciences Palmless Torula oil is a key ingredient in a soap bar produced by UK material science company Pangaia and skincare firm Haeckels.

For CFG, its yeast-based oil has not been sold within the UK or European area before 1997 and would thus be considered a Novel Food.