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XFuel, a low-carbon fuel developer, closed a $20 million Series A to develop its first commercial project making marine fuel.

Why it matters: Shipping companies continue to look for lower-carbon fuels that can compete in cost with fossil fuels, despite policy headwinds. 

Zoom in: The round included strategic shipping investors Japan's NYK Line, and Stolt Ventures, the VC arm of Norwegian logistics firm Stolt-Nielsen.

Wagner Carbon, Audacy, Future Planet Capital, Light Ray Ventures, and Overlap Holdings also joined as new investors, with existing investors Union Square Ventures, AENU, and SOSV.

Dublin, Ireland-based XFuel was awarded a $9 million blended-finance grant by the European Innovation Council last April.

The financing is validation of XFuels' tech, given some investor hesitation to back biofuels. 

How it works: XFuel's first project will take waste generated by shipping fuel to create a low-carbon fuel for marine shipping companies. 

The company's circular tech uses a chemical reactant to turn waste into fuels at a low temperature and at low cost.

XFuel has a pilot plant in Mallorca, Spain, where it has an R&D headquarters.

The company, founded in 2022, says it can also make a low-carbon alternative diesel fuel for road transportation, but is first focused on marine. 

Zoom out: A growing number of startups are working on next-gen biofuels like sustainable aviation fuel, but fewer are focused on marine fuel.

The International Maritime Organization has called for the sector to hit net zero by 2050, but late last year, the effort stalled after lobbying from U.S. negotiators. 

Shipping companies are also interested in green ammonia and hydrogen, or for smaller ships and electrification. 

Friction point: Low-carbon fuels companies face the high capital costs of scaling fuel plants that can economically compete with fossil fuels. 

What's next: XFuel is in the delicate stage of commercializing its tech and building a first-of-a-kind facility. 

Exclusive: XFuel closes $20M for low-carbon marine fuel

The Dublin-based company turns shipping waste into fuel

Illustration of a vessel with shipping containers and the earth. 

XFuel, a low-carbon fuel developer, closed a $20 million Series A to develop its first commercial project making marine fuel.Why it matters: Shipping companies continue to look for lower-carbon fuels that can compete in cost with fossil fuels, despite policy headwinds.

Exclusive: XFuel closes $20M for low-carbon marine fuel

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