Philip Siu, Co-Founder and Chief Executive, EcoCeres. Photo: EcoCeres
EcoCeres is one of a handful of companies in the world that can convert waste from plants into different types of sustainable transportation fuels, reducing aviation, maritime, and trucking emissions by as much as 90 percent. The company recently received a significant investment from U.S.-based private equity firm Bain Capital, which it is using to build a biofuel production facility in Malaysia.
Ahead of the Climate Business Forum: Asia Pacific, IFC sat down with EcoCeres Co-Founder and Chief Executive Philip Siu to discuss his company, the benefits of investment in emerging and developing economies, as well as what more needs to happen to scale markets for sustainable transportation fuel.
1. Can you tell us a bit more about EcoCeres and what the company does?
The name EcoCeres comes from ‘Ecology’ and ‘Ceres’, the Roman goddess of agriculture. Initially founded as part of the Hong Kong and China Gas Company (Towngas), we turn biomass waste into biofuels and bioproducts. Plants absorb the sun’s energy through photosynthesis and store it as glucose, and they capture carbon dioxide from the atmosphere and draw water through their roots, which is converted into carbohydrates. Once the fruits of the plants are picked, and the oil is used for cooking, you have two waste materials left over: the used cooking oil and agricultural waste.
Using proprietary technology, we convert the used cooking oil into sustainable aviation fuel (SAF) and hydro-treated vegetable oil (HVO), which can be used as substitutes for aviation fuel and diesel, respectively, and we extract sugar from agricultural waste to produce cellulosic ethanol, which can be used as a blended substitute for gasoline. In this sense, we specialize in providing decarbonization solutions for every major fossil fuel in the transportation sector.
2. How unique is your business model?
We are unique in that we are 100 percent focused on waste-based biomass like used cooking oil and agricultural waste, whereas some companies produce biofuels and bioproducts from foods. Making use of our own technology, we are proudly one of the world’s most credible producers of SAF, which is technologically very challenging to produce, given that its freezing point must be lower than minus 40 degrees Celsius to maintain the cold flow properties at the high altitude that planes fly.
3. How is your business helping to address the climate challenge, both in Asia and globally?
All our products are internationally certified for greenhouse-gas (GHG) emissions reduction, including our SAF, which is currently being produced in our plant in Jiangsu, China, which ranks as the world’s first ISCC Plus[1]-approved SAF processing facility. Our typical reduction in GHG emissions for all our products after certification is 90 percent. That means if you take a flight or drive a car or truck and substitute the existing fossil-based fuel with ours, you can expect a 90 percent reduction in emissions.
4. EcoCeres is based in Hong Kong. What makes Hong Kong a good base for your business?
Hong Kong is an international financial center, which makes it easier to connect with investors and attract financing. Hong Kong also has a very robust legal system and is a good place to find local talent and attract it from overseas. It’s a great place to be headquartered and grow a global business.
5. Is it easy to find financing to expand into emerging and developing markets from here?
Investing in the transition in emerging and developing markets requires a risk-taking mindset. A lot of investors in Hong Kong have that mindset, and a lot of the capital here is increasingly focused on Environmental, Social, and Governance (ESG), and the energy transition. If you have a good story, the capital is there to support your growth in these markets.
6. You recently made a significant investment in Malaysia. Can you tell us more about your plans there? Why did you choose Malaysia?
Following on from the success of our Jiangsu plant and a significant equity investment in our business from private equity firm Bain Capital, we’re now focused on building a biofuel production facility in Pasir Gudang in Johor, which will serve as a production hub for SAF, HVO, and Bio-naphtha. We’ll use used cooking oil and palm oil mill effluent (POME), a wastewater generated from palm-oil milling activities, as feedstocks, which will then be turned into high-value sustainable fuels and chemicals. Historically, the leftover water from the steaming process in palm-oil milling isn’t used, and it evaporates into methane, causing GHG emissions. We’re using it to create renewable fuel.
The project will create more than 260 jobs and employment opportunities in local towns.
Why Malaysia? Because it is one of the most populous countries in the region. The more people eat, the more cooking oil they use, and the more used cooking oil is available.
7. Your business is a great example of a Hong Kong-based company bringing investment and best practice to emerging and developing markets. What would you say to other Hong Kong-based companies considering but cautious about expansion into these markets?
Hong Kong has been a developed market for quite some years, and it has a long history of success. And for some companies to become a success, they need to go outside of their comfort zones to where the growth opportunities are. And there are huge opportunities in emerging and developing markets, in terms of the availability of resources, the relatively lower costs of production, and the appetite from many of these countries for foreign direct investment and new ideas that can help tackle development challenges.
Of course, these opportunities aren’t free from risks. But with the wisdom Hong Kong people have gained from all kinds of past challenges, we’re typically well placed to find ways to handle those risks.
8. What more needs to happen for companies such as EcoCeres to attract the financing they need to scale their businesses to the level needed to achieve a significant impact on climate change?
To tackle climate change, we need to curb our reliance on fossil fuels. To do this, a lot of innovation needs to happen, and for that to happen, we need to have the right policy frameworks in place, similar to what we’re seeing in Europe and North America. Both the European Union and the United States have set targets for reducing the carbon footprint of the transportation sector as a key area of focus in their pursuit of carbon neutrality. In Europe, aviation fuel suppliers must now supply a minimum share of SAF at EU airports, starting at 2 percent of overall jet fuel supplied by 2025 and reaching 70 percent by 2050.
For Asia to catch up with that, there needs to be strong will from governments. Many corporates do have that will, and investors are increasingly focused on opportunities in the transition, but it can only happen and become something that makes economic sense with the right policies and incentives in place. For our business, for example, we need policies put in place that incentivize the collection and delivery of used cooking oils from kitchens after-use and agricultural waste from fields after-harvest at reasonable price levels.
ISCC PLUS certification is a voluntary scheme that is applicable for the bioeconomy and circular economy for food, feed, chemicals, plastics, packaging, textiles and renewable feedstock derived from a process using renewable energy sources: https://www.iscc-system.org/certification/iscc-certification-schemes/iscc-plus/