A young start-up called Mango Materials has won a Green Challenge prize of $630,000 for its plan to use bacteria to turn the most abundant organic compound on earth, methane, into a biodegradable material that would be a low cost substitute for plastic.

CEO and engineer Molly Morse says her patented process would also benefit the environment because it consumes methane, a potent greenhouse gas.

The 2012 winner of the Postcode Lottery Green Challenge was announced at a dinner this week in New York City during the Clinton Global Initiative. The sixth annual prize is sponsored this year by the Netherlands branch of the charitable lottery, which dreamed up the idea for the contest after Bill Clinton spoke to the group about the challenge of mitigating climate change.

The Mango Materials biopolymer product would be useful in toys, packaging and construction materials.

The Green Challenge jury, made up of seven international experts, selected Mango Materials out of a field of over 500 entries.

Two other finalists of the Postcode Lottery Green Challenge won $125,000 each for their CO2-reducing business ideas. Daan Weddepohl of Amsterdam will develop his app and website that enables consumers to rent goods from people nearby. Peerby uses Facebook, email and smartphone notification to connect the user and borrower/renter and helps them negotiate a deal.

New Zealander Nick Gerritsen was a finalist for CarbonScape, which uses fast, efficient industrial microwave technology to transform waste biomass, such as timber site residue, into carbon-neutral products like green coke, activated carbon, biochar and graphite.

"Thanks to this generous prize, soon consumers will be able to buy goods made from biodegradable plastic for an affordable price," Morse said. "And that's going to be so much better for the environment (because) they don't pile up in garbage dumps."

Every year, entrepreneurs around the world are invited to enter the Postcode Lottery Green Challenge, by sending in their plans for sustainable, creative, innovative businesses that will reduce CO2 emissions.

The United Postcode Lotteries in The Netherlands, in Sweden and in the UK have raised more than $6.5 billion for people and the planet with their charitable lotteries.

WATCH the video below from the presentation yesterday…