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Department of Defense Makes $65 million Bet On Sustainable Aviation Fuel With Latest Startup Investment

In a bid to increase innovation and ultimately reduce costs, the U.S. Department of Defense (DOD) recently invested $65 million in the startup Air Company.

The Toyota Motor Corp.- and JetBlue-backed firm will use the funds to refine its production and ultimately build carbon-capture and fuel-generation facilities on U.S. Air Force bases. This investment is part of a broader push toward sustainable aviation fuels (SAFs).

The need for alternative fuels, combined with aviation's scale, means market opportunity. A report from Market Research Future predicts a $60 billion market for SAFs by 2030. 

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Massive Fuel Waste

In the last nearly 20 years, U.S. airlines burned on average 16 billion gallons of aviation fuel per year. The U.S. Air Force uses approximately 2 billion gallons per year, representing a massive cost and usage that’s higher than many countries. This staggering amount contributes to greenhouse gas emissions and places strain on limited petroleum resources.

Aviation fuel’s impacts on the climate pushed government agencies and airlines to encourage alternatives. Most of these initiatives involve SAFs, which are fuels that can power aircraft and are chemically similar to current fuels, but they’re produced with much lower net emissions.

Sustainable Fuels Out Of Thin Air

Air Company’s process uses industrial fermentation facilities, but its plans focus on direct air capture. By capturing carbon dioxide from the air and mixing it with hydrogen, the company creates a reaction of various kinds of paraffin and alcohols it can separate for a number of uses, including SAF.

While Air Company’s initial focus is on the military sector, it also aims to provide commercial aviation firms with a viable SAF solution.

The company faces several challenges. Airline regulations require companies to use blended SAF fuels that mix pure SAF with traditional fuel. There’s also the scale of use. Military and commercial aircraft use massive quantities of fuel daily, which would require considerable production outputs for an “all SAF” solution.

SAF Interest And Investment Growing

Major airlines and SAF providers continue to move forward with partnerships and plans for wider integration of these fuels:

  • Last summer, American Airlines, the world’s biggest airline, established a $500 million agreement with Gevo, an SAF provider. Gevo uses feed waste to produce low-carbon SAF that’s compatible with modern aircraft requirements.

  • United Airlines Inc. in January entered a deal with two biofuel companies, Tallgrass and Green Plains Inc., to create a pilot program with a 2028 implementation goal. This move correlates with United’s stated purpose of achieving net-zero carbon emissions by 2050.

  • Southwest Airlines Co. partnered with SAFFiRE Renewables in a Department of Energy-backed project to produce SAF at scale.

  • JetBlue partnered with CHOOOSE to enable customers to indicate their desire for more SAF-flown flights by making a contribution to carbon offsets.

  • The Boeing Co. agreed to double its purchase of SAF from Neste, the world’s largest producer of SAF

The DOD investment in SAF and Air Company as well as corporate partnerships signals an accelerated interest in SAF innovation and investment in the years to come. By investing $65 million in an SAF startup, the department is pushing forward entrepreneurial interest in the space. This will build the industry’s growth in the coming years as high demand for SAF combines with improved production methods.

See Next: The DoD isn’t the only one able to invest in new and innovative startups. Thanks to changes in federal law, anyone can invest in startups on platforms like StartEngine and Wefunder.For example, RAD AI is a startup creating the worlds first AI marketing program built to understand emotion.

Read More in Startup News & Investing Opportunities: 

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This article Department of Defense Makes $65 million Bet On Sustainable Aviation Fuel With Latest Startup Investment originally appeared on Benzinga.com


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