Business is heating up for agri-tech venture
Hot Lime Labs

Vlatko Materic

Chemical engineer Vlatko Materic’s innovative carbon dioxide capture system is proving a gamechanger for greenhouse growers – and that’s just the start of the tech’s potential.

Ask Hot Lime Labs founder Vlatko Materic what kickstarted his entrepreneurial career, and the answer may surprise you. “Happenstance,” he smiles. It turns out that Vlatko’s innovative agri-tech start-up had its genesis not in a technological breakthrough, but in a chance encounter on a bus.

Supported by a research grant from Callaghan Innovation, the chemical engineer and budding entrepreneur had been working for some years on a carbon dioxide capture system for power plants that used limestone as a CO2 absorbant. However, his research remained “stuck in the lab,” he recalls. “Nobody wanted to pay money to not release carbon dioxide – there was no economic driver.”

Discouraged, Vlatko was on the verge of abandoning his entrepreneurial ambitions when a visit to a greenhouse during a bioenergy conference proved unexpectedly pivotal. En route, he overheard one of the greenhouse growers ask if anyone knew how to source CO2. Greenhouse growers, especially those in high-tech greenhouses, rely on CO2 enrichment to maximise plant growth; it can increase crop yield by up to 20%, boosting grower revenue and profits. However, it has become increasingly difficult and expensive for greenhouse growers to source clean CO2 – and this greenhouse owner was desperate.

It was a eureka moment for Vlatko: “This was the bit that I was missing for my idea to work.” He set about adapting the technology he had previously developed for power plants for this different application. “Although the idea hasn’t changed fundamentally, in practice it changed quite a bit,” he explains. “Greenhouses don’t require a continuous throughput, and they are obviously much smaller than a power plant in terms of power requirements. And the CO2 doesn’t need to be pure – just clean.”

Patented limestone pellets form the basis of Hot Lime Labs’ CO2 capture technology. During the first – or “charge” – cycle of the Hot Lime system, these pellets absorb carbon dioxide released from the combustion of waste wood and biomass in a special burner. During the second cycle, air is blown into the system, causing a reaction in the pellets which makes them release the CO2. The gas, now separated from the fire’s potential pollutants, is then fed into the greenhouse. At both stages of the cycle, heat from the gas is extracted and sent to the greenhouse heating tank. This ingenious solution frees greenhouse growers from a dependency on fossil fuels such as natural gas and liquid CO2, providing them instead with a renewable source of CO2 and heat from a carbon-neutral resource.

Fittingly, the greenhouse that provided Vlatko with the missing piece of his entrepreneurial puzzle – Gourmet Mokai in Taupō – has become Hot Lime Labs’ first customer, with the system successfully trialled at their greenhouse last year. “Our next target is to bring the system up to its full capacity,” says Vlatko. “We’re increasing our output every week and now regularly reaching 90 per cent uptime.”

This can’t happen fast enough for Gourmet Mokai, who are “super happy” with the system, says Vlatko. “Since the Marsden Point oil refinery shut down, the supply of CO2 in New Zealand has become really bad. So they are very happy to have a steady supply of low-cost CO2 and are already asking when they can get more.” Hot Lime Labs is now looking to build and deploy three more units by the end of next year, one of which will go to Gourmet Mokai.

The start-up’s recent fundraising success demonstrates a vote of confidence from investors, too. At the end of 2022, the company raised $4 million in an over-subscribed funding round. They are currently in the process of finalising a Pre-A capital raise, with a lead investor already locked in, ahead of a Series A funding round next year.

It’s a long way from Vlatko’s first forays into entrepreneurship, which came in the form of participation in the programmes delivered by the Business School’s Centre for Innovation and Entrepreneurship (CIE). As a student of chemical engineering – he completed his PhD at Waipapa Taumata Rau, the University of Auckland in 2014 – he was “very much into technical solutions,” he says. “I loved problem solving. But doing these workshops introduced me to things I had never thought about, like intellectual property, markets and solution fit.” What motivates him is a desire to “get stuff done”, he adds. “That’s what drove me to entrepreneurship – if I can envision something amazing and it’s not happening, I ask myself: why isn’t it happening?”

And the potential for the technology is certainly amazing. One possibility Hot Lime Labs is currently exploring is creating biochar – a byproduct of their combustion process – from forestry waste and the green waste that the growers themselves generate. Biochar can be used as a soil enhancer to improve plant growth. “It’s a really interesting byproduct that fits with the greenhouse environment,” explains Vlatko. “We can set up circular, self-supporting production in the greenhouse. It’s not really part of our base technology, but it adds more value.” Similar “add-on” future possibilities for the tech include making hydrogen out of biomass, disposing of forestry slash or cleaning up incinerator gases.

Clearly, it’s an exciting outlook for Hot Lime Labs. For Vlatko, however, the most recent highlight has been more everyday than aspirational. “We’ve had our first invoice, which has been quite a moment,” he laughs. “We actually have some revenue, and we can start repaying our Callaghan repayable grant.” Just like that serendipitous greenhouse visit, this small milestone holds a deeper significance. “We’ve done something that people will actually pay for,” he reflects. “That’s how you know it’s working well, rather than just working. That’s pretty cool.”