The Brief

The Brief: The push and pull of sustainable aviation fuel

ImpactAlpha · March 6, 2025
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Greetings Agents of Impact!

🔌 PluggedIn: Investing for a just climate transition, with Amir Kirkwood. With Greenhouse Gas Reduction Fund awards in limbo, Justice Climate Fund and other intermediaries are in the dark about what they can finance. But that won’t stop the work. Justice Climate Fund’s Amir Kirkwood joins Sherrell Dorsey on ImpactAlpha’s PluggedIn to share strategies from Black and brown LPs and GPs who are transforming climate investing. On the docket: the critical role of community development financial institutions in financing equitable access to clean energy. Tune in on Wednesday, March 12, 10am PT / 1pm ET/ 6pm London. RSVP now.

In today’s Brief:

  • Supply and demand of sustainable aviation fuel
  • Marketplace for farmers in South Africa
  • AI-powered infrastructure inspection
  • Small win for US aid

Cloudy Skies: DOE backs sustainable aviation fuel, but airline demand is slow to take off. The billions of dollars of federal funding for critical climate technologies has come to a screeching halt in the Trump administration. The sustainable aviation fuel sector became the first to buck that trend when the Department of Energy’s Loan Programs Office last month released the first tranche of a $1.44 billion loan guarantee to Montana Renewables to expand its biofuels refinery in Great Falls, Montana. The expansion would position the company among the largest producers globally of sustainable aviation fuel, or SAF. It’s the only disbursement since Trump took office of some $50 billion in LPO conditional loans that were inked during the Biden administration. 

  • Crossover appeal. The loan guarantee was unfrozen after Montana Republican Sen. Steve Daines sought White House approval by emphasizing “energy dominance” and the 500 or so jobs it would create. Biofuels, despite their dubious climate benefits, have enjoyed bipartisan backing. Support for corn-based ethanol, for example, is de rigueur for candidates in the critical Iowa presidential caucuses. And because biofuels like SAF use existing oil and gas infrastructure, they are generally embraced by the ‘drill, baby, drill’ crowd. “We’re a new novel technology with crossover appeal,” said Vikrum Aiyer of Heirloom Carbon, which just inked a deal with United Airlines to provide carbon for SAF. 
  • Corn and captured carbon. SAF can be produced from feedstocks including used cooking oil, animal fats, corn, municipal solid waste, algae and agricultural wastes like corn stover. Such biofuels still release emissions when burned; their lower carbon footprint comes from the more sustainable inputs. A competing SAF production process is attracting investors to companies such as Twelve, Air Company, Infinium, and Sora Fuels, which use captured carbon dioxide and water in a process powered by renewable energy to create synthetic fuels, rather than biofuels. Such “e-fuels” can lower emissions as much as 90% from conventional fuels. Berkeley, California-based Twelve last week secured $83 million in equity and project financing to build out its first plant in Moses Lake, Washington. The funding tops up the company’s $645 million Series C haul in September.
  • Fuel prices. The Department of Energy is still holding up a $1.46 billion LPO loan guarantee for Englewood, Colorado-based Gevo to finance construction of a 60 million-gallon per year sustainable aviation fuel refinery in South Dakota. Also at risk: the Inflation Reduction Act’s 45Z Clean Fuel Production Credit, which provides a $1.25-per gallon credit for fuels that meet certain sustainability criteria. The tax credit is critical in addressing the No. 1 barrier to widespread adoption of SAF: costs. Price is a major barrier in an industry running on razor-thin profit margins. SAF prices currently run around $6 per gallon, as much as three times higher than conventional jet fuel. Airlines have been willing, up to a point, to pay that premium to reach sustainability goals and meet carbon-reduction mandates in Europe and China. States, including Illinois and Minnesota have stepped up to offer a tax credit of $1.50 a gallon directly to airlines that purchase SAF. United Airlines has signed offtake deals for up to 4 million gallons to be used at O’Hare Airport. “It’s a voluntary market, so these state-based incentives really matter,” said United’s Lauren Riley at a recent BloombergNEF Summit.
  • Supply side. Just 343 million gallons of SAF were produced globally in 2024, a big increase, but still short of the expected 500 million gallons. A Biden-era goal of supplying 10% of jet fuel domestically-produced SAF by 2030 would require up to a dozen commercial scale SAF facilities to come online by 2030. Startups and policymakers are scrambling to make the economics work. Even if the airline industry reaches its emissions reduction goals—a big if—in large part through increased use of SAF, the rapid growth in air travel threatens to outpace those gains. Air travel grew by 10% in 2024. Still, overseas SAF mandates and declining cost curves are poised to reward patient investors. “We know it’s the right thing for United, we know it’s the right thing for our shareholders,” said Riley. “We’re going to continue to invest in sustainable aviation fuels.”

Sponsored by Morgan Stanley

Applications close on March 14. Morgan Stanley Inclusive & Sustainable Ventures provides early-stage innovators with access to capital, powerful networks and hand-picked mentors to help them develop and scale their startups. Morgan Stanley Inclusive & Sustainable Ventures includes two in-house accelerator programs – the Lab, designed for startup founders, and the Collaborative to support emerging nonprofits. 

Through March 14, the Lab and Collaborative are accepting applications for their 2025 cohorts. Learn more about the mission to foster a more equitable and sustainable investment landscape.

  • “The Collaborative helped transform The Soil Inventory Project from a promising concept into a resilient organization with clear growth strategies.” – Kris Covey, Co-Founder and President of The Soil Inventory Project
  • “The Lab helped us develop a cohesive strategy for our new acquisition, enabling us to integrate rapidly and with clarity.” – Felix Manford, CEO and Co-Founder of Tendo
  • “The Lab provides very hands-on and purpose-driven support to help founders tackle their individual challenges.” – Natalia Tomiyama, CEO and Co-Founder of NÜWIEL

Dealflow: Smallholder Ag

PepsiCo backs Khula’s marketplace for farmers in South Africa. Investors have reupped in Johannesburg-based Khula, an online platform connecting commercial and smallholder farmers to suppliers, financiers and offtakers. PepsiCo’s agriculture fund, Kgodiso Development Fund, along with South African bank ABSA, the E Squared impact fund and agri-chemicals company AECI backed Khula’s 126 million Rand ($6.7 million) Series A round. Khula is opening up the round in the hopes of reaching a 200 million Rand ($11 million) close. The startup has increased its valuation by 10x since its $1.3 million seed round in 2021. It will leverage the funding to expand its team, strengthen its presence in South Africa and venture into new markets in Africa and Latin America. 

  • Supporting emerging farmers. Kgodiso launched in 2022 as part of PepsiCo’s public interest commitments to spur economic growth in South Africa, following its acquisition of South African food and beverages company Pioneer Foods in 2020. The five-year, 600 million Rand ($33 million) fund aims to catalyze local job creation and procurement in South Africa via the agricultural value chain. The fund will help emerging farmers and small agribusinesses scale to commercial viability and integrate into supply chains by providing low-interest rate debt and technical support. Half of the fund is earmarked for Black farmers and agribusinesses. Last year, Kgodiso backed Stokka Fela, which distributes national and international fast moving consumer goods to over 2,000 “tuck” shops within South Africa’s townships.  

Climate Investment leads a $60 million round for AI-powered infrastructure inspection. California-based Zeitview uses AI to cut inspection times and costs for solar and wind farms, telecommunications and other critical infrastructure to help extend their lifespans. US and UK-based Climate Investor, which backs decarbonization solutions, led a $60 million round to help the startup speed development of its AI and customer support software. Existing investors including Valor Equity Partners, Energy Transition Ventures and family office Euclidean Capital joined in. 

  • Infrastructure longevity. Physical infrastructure inspection is a hidden source of emissions, Zeitview says, involving transportation of staff and equipment to remote areas. The company’s digital inspection solutions minimize travel and enable clients to take a proactive infrastructure maintenance approach, reducing the frequency of on-site inspections. The AI-based system captures and analyzes visual data to help assess risk and prevent catastrophic failure. Zeitview doubled the number of assets it has inspected to more than 200,000 across 80 countries last year. “Infrastructure owners, operators, and OEMs need inspection solutions that can serve their entire portfolio – spanning multiple asset types, operating globally, and supporting the full asset lifecycle,” said Climate Investment’s Mike Bishop. 

Dealflow overflow. Investment news crossing our desks:

  • Energy Impact Partners led a $15 million Series A round for San Diego-based VIE Technologies, which provides energy monitoring and maintenance solutions for transformers. (Utility Dive)
  • French development financier Proparco extended a $400,000 loan via its bridge facility to Kenya’s Badili to offer refurbished phones that cut electronic waste (Proparco)
  • London’s Epoch Biodesign, which uses enzymes to convert plastic into chemicals for reuse, raised €17 million ($17.7 million) in a Series A round to build its first plant. Berlin-based climate investor Extantia Capital led the round; the UK made a €929,000 grant. (EU Startups)
  • Calvert Impact sold out its third, and largest, issuance of Cut Carbon Notes, with an insurance company, pension funds, and an advisory firm putting up $45 million. The total raised for the fixed income notes, which finance sustainable upgrades for commercial and multifamily buildings, is now $100 million. (Calvert Impact)
  • Belgium’s EDFI Management Company, via its impact investment facility ElectriFi, and the Private Infrastructure Development Group invested €4 million ($4.1 million) in Zambian clean cooking solutions company Supamoto to boost its biomass pellet manufacturing. (Empower Africa)

Signals: Policy Corner

SCOTUS weighs in on aid freeze. The Supreme Court handed aid groups a small win on Wednesday. In a 5-4 decision, the Court affirmed a lower court ruling ordering the Trump administration to release nearly $2 billion in foreign aid reimbursements to the Aids Vaccine Advocacy Coalition and other groups. The administration had largely ignored a federal judge’s temporary restraining order on the president’s broad-based freeze of appropriated federal funds, upending countless federally funded projects and lives. Chief Justice John Roberts and Justice Amy Coney-Barrett joined the three liberal judges in an unsigned opinion handing the Trump administration the narrow rebuke. 

  • Aid thaw. The ruling kicks the case back to US District Court Judge Amir Ali to set a new deadline for the payments, which are for work completed by the groups prior to February 13th. The case before Ali continues with a hearing today regarding a motion for a preliminary injunction, which, if granted, could lead to the release of frozen foreign assistance funds moving forward – a decision that would almost certainly send the case right back up to the Supreme Court. It’s unclear what effect Wednesday’s ruling will have on other organizations affected by the freeze.
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Agents of Impact: Follow the Talent

BlueMark adds Nick O’Donohoe, the former CEO of British International Investment, to its board of directors…  Eli Kasargod-Staub, who stepped down recently as head of Majority Action, has launched Capital Ideas, LLC, a strategy consultancy… Energy Impact Partners welcomes Lauryn Poyser, previously with Salesforce Ventures Impact Fund, as an investment associate… H&M Group has an opening for a head of social impact in Stockholm… BFA Global is on the hunt for a project finance manager in Nairobi. 

The Nature Conservancy is looking for a remote impact investing manager and a conservation and climate finance policy senior director… Environmental Defense Fund seeks an institutional partnerships officer in Washington, DC… Also in DC, The Lincoln Institute of Land Policy is recruiting a community investment-focused associate director… Symbiotics is hiring a Latin America and Caribbean investment analyst in Mexico City…. SecondMuse and NextCorps are accepting applications from early-stage climate tech innovators for the 2025 Venture For ClimateTech Global Innovation Challenge. 

Women’s History Month events: Impact Investment Exchange (IIX) is hosting a Linkedin LIVE conversation, “Capital for climate: Women leading the green and blue revolution,” Friday, March 7 at 3:00am ET… 60 Decibels will host a virtual discussion on the future of gender-lens financing with Roots of Impact’s Natasha Dinham, Gates Foundation’s Raania Rizvi and Dalberg Advisors’ Rachana Saxena, Tuesday, March 11 at 10:00am ET… ImpactPHL will host a webinar on the intersection of place-based and gender-lens investing, featuring Heading for Change’s Sana Kapadia, Nimrit Kang of NorthStar Asset Management and Artha Impact’s Audrey Selian, Wednesday, March 26 at 12:00pm ET.

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– Mar. 6, 2025