Breakthrough Energy's project financing group kicks off investments

The project financing group of Bill Gates-backed Breakthrough Energy has made its first investment into a sustainable aviation fuel project in West Texas.

Why it matters: Breakthrough Energy Catalyst has more than $1 billion to deploy into mostly first-of-its-kind demonstration projects, helping fill a much-needed financing gap.

Details: Breakthrough Energy Catalyst invested $75 million in project equity into Infinium's Project Roadrunner, a plant that will convert waste carbon dioxide into sustainable aviation fuel.

• The companies said when built, Project Roadrunner will be the largest of its kind in North America.
• In addition to the project financing, American Airlines also agreed to a long-term offtake agreement for the project, purchasing the fuel to power its planes.
• Breakthrough Energy Catalyst head Mario Fernandez told Axios that he hopes the combination of the project financing and the long-term offtake agreement will provide a model for how sustainable aviation fuel projects can get built in the U.S.

Of note: In addition to project equity, Breakthrough Energy Catalyst can also give grants for projects where the product has a green premium.

Big picture: The climate tech venture ecosystem is readily funding tech innovation, but when it comes to mature companies that need to grow production, there's a financing gap.

• Big banks won't commonly fund first-of-its-kind demonstration projects, seeing them as too high-risk.
• Other investors have emerged in recent years to back climate infrastructure projects as well, including Generate Capital and Spring Lane Capital.
• There's a major shortage of sustainable aviation fuel in the U.S. and airlines and logistics providers are buying up as much as they can.