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Exclusive: Terragia raises $6M for next-gen biofuels

Illustration of a dollar sign being formed by jet streams.

Illustration: Maura Losch/Axios

Startup Terragia Biofuel has closed a $6 million seed round to start producing ethanol from waste biomass, a process that could be key to making sustainable aviation fuel.

Why it matters: The aviation sector is looking for more sustainable aviation fuel as it seeks more cost-effective and renewable resources.

Catch up quick: A wave of so-called cellulosic ethanol startups, which use waste as a feedstock, emerged in the mid-aughts flush with cash and with big ideas to disrupt fossil fuels.

  • The reality was most of them weren't able to grow production at a low enough cost to compete with oil and diesel, and many crashed and burned.
  • The companies also made other missteps like trying to build huge plants with venture money and focused largely on fuels for road transportation.
  • Now, the idea of using ethanol for sustainable aviation fuel has emerged as a promising way to break the fuel log jam.

What they're saying: "The time has come to have cellulosic biofuels 2.0, learning from the lessons of the past," said Lee Lynd, Terragia co-founder and chief technology officer, who formerly was the co-founder of early biofuel startup Mascoma.

Zoom in: Engine Ventures and Energy Impact Partners led the round for Terragia, which was founded in 2022.

  • Kristin Brief joined the company as its CEO in March. Brief formerly was a fellow at Breakthrough Energy, a co-founder of biotech startup Virex Health, and an executive at battery startup Ambri.
  • Brief says the company has a joint development agreement with a major U.S. biofuels producer. The company declined to name the producer.

How it works: Hanover, New Hampshire-based Terragia uses genetically engineered bacteria to break down biomass like sugar cane waste.

  • "It makes a great deal of sense to start with nature's best solutions to take plants apart," says Lynd.
  • Lynd said the company's process removes two steps from traditional methods, slashing costs. Specifically, the process doesn't thermochemically pretreat or use enzymes on the biomass.
  • Terragia is also looking to prioritize partnerships when commercializing its technology, which is different from prior efforts.

The big picture: After the failures of many cellulosic ethanol startups, investors largely stayed away from the sector and in biofuels in general.

  • The emergence of the sustainable aviation fuel market, and the potential of using ethanol for it, has drawn new investor interest to the space.

What's next: Certain challenges that the original wave of cellulosic ethanol companies faced aren't going away.

  • Fuel is still a commodity and scale business. Producers need to make sustainable aviation fuels at the lowest cost at the largest scale possible to make a dent in the market.
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