Clean Energy Ventures has led the financing to support UK-based OXCCU in its quest to develop and market sustainable fuel which it believes can be produced at cost parity with kerosene-based jet fuel.
OXCCU, a spin-out from the University of Oxford, has completed a $22.7m (€21m) Series A financing to support its push to commercialise a sustainable aviation fuel (SAF), which the company says should be more affordable for airlines than existing SAFs.
The round was led by US-based venture capital (VC) firm Clean Energy Ventures. Investors include Saudi Arabia’s Aramco Ventures, Italian energy company Eni’s corporate venture arm Eni Next, United Airlines Ventures Sustainable Flight Fund and UK-based VC Braavos Capital.
Also investing are existing investor Kiko Ventures, which is the UK-based IP Group’s cleantech investment platform, as well as the University of Oxford, energy trader Trafigura, TechEnergy Ventures and Doral Energy-Tech Ventures.
OXCCU’s fuel, known as OXEFUEL, is created by combining captured carbon dioxide and renewably sourced green hydrogen using an iron-based catalyst in a one-step process. By contrast, sustainable jet fuel alternatives currently under development are expensive, in part because they tend to involve two capital-intensive steps, according to OXCCU. The company believes its fuel can be produced at cost parity with traditional jet fuel if its forecasts of renewable energy costs at production centres are realised.
OXCCU said it would use the financing to scale-up the technology for SAF and other types of sustainable fuels, expand its facilities, and double the size of its team in the UK.
Andrew Symes, the firm’s CEO, said its team was inspired by the prospect of crossing the Atlantic using sustainable aviation fuel. “Backed by this experienced group of investors, we are confident we can scale this technology into a cost-competitive and globally deployable solution to create a sustainable drop-in product for the global aviation market,” he said.
Daniel Goldman, managing partner at Clean Energy Ventures, said OXCCU’s process was unique among emerging SAF technologies. “We see extraordinary potential for this technology to mitigate new aviation fuel production emissions at gigaton-scale in the near-future,” he said.
Decarbonising aviation, which mostly runs on refined kerosene, is regarded as one of the most complex problems to be resolved as part of efforts to lower global carbon emissions. Aviation contributes around 2.5% of global carbon emissions, but its impact is heightened by the impact of other gases and particulates it emits at high altitudes.
Despite the environmental benefits of SAFs and an increasing drive by regulators in Europe, the US and other jurisdictions to speed up the switch, sustainable fuels still have a tiny share of the overall aviation fuel market.
Global production of SAF totalled 300 million-450 million litres in 2022, accounting for less than 0.2% of total demand for jet fuel. However, that market share will need to increase rapidly, if the aviation industry’s net zero target for 2050 is going to be anywhere close to being met. That would probably require annual production of some 450 billion litres, according to the International Air Transport Associaton (IATA), an industry body representing airlines that account for most of the world’s air traffic.
Critics of the industry say airlines are dragging their feet on the move to SAFs. But the industry says the limited supply and high cost of currently available SAFs – currently up to four times the cost of kerosene – has been a block to uptake. Airlines and e-fuel companies say they are now investing in SAF technologies to bring costs down and build on the improved efficiency of the most modern planes.
Michael Leskinen, president of United Airlines Ventures, said that while sustainable aviation fuel was the best tool available to decarbonise air travel, there was a significant supply shortage which OXCCU’s SAF technology had the potential to resolve.
“This cutting-edge solution could be a cost-effective pathway for United to reach our commitment of net-zero carbon emissions by 2050, without relying on traditional carbon offsets,” he said.
OXCCU is one of several companies seeking to make in-roads into the sustainable aviation fuel market with backing from clean tech investors. In January, Impact Investor reported on SWEN Capital Partners investment in Danish startup Arcadia eFuels, whose facility was said to be the world’s first commercial facility to produce low carbon e-fuels for the aviation sector.