Grant from Bill Gates-led Fund Will Make Green Jet Fuel as Cheap as Fossil Fuels

byAkshat Rathi (Bloomberg) A $50 million grant will allow LanzaJet to build first-of-a-kind plant and sell sustainable aviation fuel at affordable prices. -- The burgeoning market for sustainable jet fuel will soon reach a milestone, with a plant capable of turning out for the first time a lower-emission fuel at the same price as fossil fuel-based options. But this price parity will only come as result of a $50 million grant from Bill Gates-led Breakthrough Energy, alongside support from discounted loans and other financial subsidies.

LanzaJet, the startup backed by Breakthrough, is building its first commercial plant in the US state of Georgia and expects to begin production next year. The facility will double the current US capacity for making sustainable aviation fuel, or SAF.

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The chemistry to convert alcohol to jet fuel was developed nearly 100 years ago, but it has since been refined to work at much higher efficiency and lower costs. LanzaJet claims it can convert almost every carbon atom coming into the process into usable fuel.

But the process is still energy intensive. That means, without subsidies or other incentives, the cost of LanzaJet’s SAF from the first plant would be about twice as expensive as its fossil-fuel cousin at current prices. To allow LanzaJet’s SAF to compete in the market, the company sought “concessionary capital”—money that comes in the form of grants or low-interest loans.

LanzaJet got a cheap loan worth $50 million from Microsoft Climate Innovation Fund and also secured a grant worth $14 million from the US Department of Energy. The rest of the $200 million it needs to build the plant will come from LanzaJet’s equity holders: LanzaTech, Mitsui & Co., Suncor Energy, British Airways and Shell Plc.

LanzaJet Chief Executive Jimmy Samartzis said that Breakthrough Energy’s $50 million grant comes at a crucial time, two years into construction of the Georgia plant. That’s because inflation in the last year caused the construction costs to balloon. Without that extra money, SAF produced from the plant would still have cost 25% more than conventional aviation fuel. The grant erases that so-called green premium.

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The initial Georgia plant will produce 9 million gallons of SAF and 1 million gallons of renewable diesel annually. That’s a small fraction of the 14 billion gallons of aviation fuel consumed by the US each year. READ MORE

Breakthrough Energy Makes First Catalyst Funding in LanzaJet (LanzaJet)

Breakthrough Energy Announces First Catalyst Project Funding in $50 Million Grant to LanzaJet for the World’s First Alcohol-to-Jet Sustainable Aviation Fuel (SAF) Plant (Bank of America)

Grant From Bill Gates-led Fund Will Make Green Jet Fuel As Cheap As Fossil Fuels (BNN Bloomberg)

Excerpt from LanzaJet: Projected to be operational in 2023, LanzaJet’s Freedom Pines Fuels project is the firm’s first commercial-scale SAF plant and will be the first in the world to produce Alcohol-to-Jet SAF, which will lower emissions by at least 70% compared to fossil jet fuel. Once fully operational, this plant will play a critical role in scaling SAF production and bringing lower-cost sustainable fuels to market. The plant is expected to produce nine million gallons of SAF and one million gallons of renewable diesel annually, roughly doubling current SAF production in the U.S. Construction of the plant will enable the significant scale-up of LanzaJet’s technology within the U.S. and globally, with subsequent projects already in the planning phase in North America, Europe, and Asia that, together, would produce more than one billion gallons of SAF annually.

First-of-a-kind projects for emerging technologies often struggle to access low-cost capital because they have high green premiums and frequently face unforeseen challenges and costs, especially in the current inflationary environment. By providing capital to these types of early commercial facilities, Catalyst funding can reduce risk for follow-on investments and accelerate the deployment of clean technologies. In this case, Freedom Pines Fuels’ Catalyst grant filled a funding gap and will enable the plant to maintain its current development timeline.

Importantly, the grant will also spur further SAF innovation by helping create a new market for scalable, low-carbon ethanol from sustainable sources by setting the expectation that the plant will transition to second-generation ethanol, including from waste-based feedstocks, by its fifth year. This transition will complement work LanzaJet is already doing to build SAF plants using second-generation ethanol in the U.K. and develop strategic partnerships to accelerate the advanced fuel’s development, of which there is currently little supply in the market.

“Breakthrough Energy Catalyst is a new way for the private sector to accelerate the clean energy transition by funding projects that will ensure essential climate solutions get to market on the timeline the world needs,” said Rodi Guidero, Executive Director, Breakthrough Energy & Managing Partner, Breakthrough Energy Ventures. “LanzaJet’s new sustainable aviation fuel plant could play a vital role in decarbonizing aviation while demonstrating how the jobs and businesses of the clean energy economy can power communities. We’re grateful to Catalyst’s partners, who understand climate leadership means supporting the technologies that will eliminate emissions and that solving our climate challenges will require nothing less than mobilizing the world’s economic engine to build a net-zero future.”

“LanzaJet is grounded in innovation, and we work every day with a sense of urgency to address our global climate challenge,” said Jimmy Samartzis, LanzaJet CEO. “To maximize our impact and scale our technology to deliver significant quantities of sustainable aviation fuel worldwide, partnerships matter. We have a real opportunity on our doorstep to significantly scale-up and globally deploy our technology, and we wouldn’t be able to build this plant as quickly or affordably without Breakthrough Energy’s Catalyst grant, which reduced our total cost of capital and is critical to reducing emissions and accelerating the pace of bringing SAF to the global market.”

About LanzaJet Inc.
LanzaJet is a leading sustainable fuels technology company dedicated to accelerating the energy transition by embracing the circular economy. As a Sustainable Aviation Fuel (SAF) technology provider and a sustainable fuels producer with patented technology, LanzaJet is creating an opportunity for future generations by accelerating the deployment of sustainable aviation fuel and other clean technology which is critical in addressing the climate crisis and transform the global economy. Further information is available at lanzajet.com.

About Breakthrough Energy & Catalyst
Breakthrough Energy was founded by Bill Gates in 2015 to accelerate the clean energy transition and help the world reach net-zero emissions by 2050. Through investment vehicles, philanthropic programs, policy advocacy and other activities, Breakthrough Energy is committed to scaling the technologies the world needs to meet its climate goals. Breakthrough Energy Catalyst is a first-of-its-kind model to finance the new solutions that will underpin a zero-carbon economy, focused initially on four technology areas: sustainable aviation fuel, long-duration energy storage, green hydrogen, and direct air capture. Learn more about Breakthrough Energy and Catalyst at breakthroughenergy.org. READ MORE