Biofuels play a central role in decarbonising transport, industry, and energy systems where direct electrification remains limited. From road fuels to aviation and maritime use, biofuels offer deployable pathways to reduce emissions using existing infrastructure while supporting energy security and waste valorisation.
Investment trends in biofuels provide a clear view into how these pathways are being prioritised. This final article in our Biofuels series builds on earlier coverage on innovation pathways, startups, and commercial agreements. It examines how investment in biofuels is evolving, where capital is concentrating, and how funding patterns are shaping the next phase of biofuel deployment.
Debt-led growth pushes biofuels investment to a new peak
Funding for biofuels has expanded more than threefold over the past six years, rising from $924 million in 2020 to a historic peak of $3.1 billion in 2025.
The sharp increase in 2025 is driven primarily by debt financing, which rose from $421 million in 2024 to $1.4 billion in 2025. This shift indicates that capital is being directed towards developing assets and commercial deployment, reflecting the sector’s progression from technology validation to industrial-scale operations.
Debt activity in 2025 was concentrated in a small number of large transactions. U.S.-based Montana Renewables secured $700 million, while France’s Technique Solaire Group raised $339 million.
Equity funding has also grown steadily, increasing from $490 million in 2020 to $1.5 billion in 2025. In 2025, the largest equity rounds were raised by India-based Nexgen Energia with $1 billion and Netherlands-based SkyNRG with $282 million in late-stage funding.
Grant activity followed a different trajectory. Between 2020 and 2024, biofuels consistently attracted around 70 grants annually. In 2025, grant volume fell sharply to 34 awards totaling $177 million, marking the lowest level of non-dilutive support over the period.
Late-stage rounds capture the majority of biofuels capital
Capital in biofuels is concentrated in late stage rounds. Seed and Series A stages continue to record deal activity, but cheque sizes remain comparatively small.
This reflects the sector’s capital structure. Commercial biofuel deployment requires large-scale assets, which directs investment toward mature companies positioned for execution.
Late-stage funding dominates the market. Between 2020 and 2025, just 62 late-stage deals accounted for $3.7 billion in cumulative funding. This exceeds early stage investment at $3.2 billion and far surpasses pre-seed and seed funding of $221 million.
Biofuels capital concentrates around syngas and biogas pathways
Investment across biofuel sub-solutions is highly concentrated, with capital flowing decisively toward a small number of industrial-scale pathways. From 2020 to 2025, Syngas, Biogas upgrading, and Biodiesel together absorbed nearly 58% of total biofuels funding, highlighting investor preference for technologies capable of supporting large, capital-intensive deployment.
Syngas leads all sub-solutions with $8.56 billion in cumulative funding, reflecting its role as a versatile intermediate across transport, chemicals, and industry. Biogas upgrading follows closely at $7.03 billion, driven by demand for high-purity biomethane that can integrate directly into existing gas grids and transport infrastructure. Biodiesel ranks third with $3.86 billion, supported by established markets and regulatory incentives in road transport and aviation.
Beyond the top tier, funding drops to a second group of mature but lower-priority segments, including Bioethanol, Biogas production, Biomethane production, and Anaerobic digestion, each attracting between $2.1–$2.8 billion. These segments benefit from existing supply chains but lack the same scale acceleration seen in leading pathways.
A sharp decline is evident among emerging and niche solutions. Bio-oil, wood fuels, and biogas feedstock efficiency together received less than $500 million, representing under 2% of total investment. This disparity indicates limited investor appetite for optimisation-focused or early-stage pathways relative to infrastructure-ready systems.
Europe leads biofuels capital deployment as Asia gains momentum
Europe leads global biofuel investment, attracting $5.1 billion in cumulative funding between 2020 and 2025, followed by North America. At the country level, however, the United States remains the single largest recipient of biofuel capital at $3.2 billion, ahead of the Netherlands at $1.3 billion and India at $1.2 billion.
Within Europe, France and the Netherlands have emerged as the primary contributors to the region’s late-stage funding growth.
Overall, North America and Europe continue to dominate global biofuels funding, jointly capturing the majority of deployed capital. Europe overtook North America in 2025 despite similar deal counts, indicating a shift toward larger, more strategic financings.
Asia is the fastest-scaling region, with annual investment rising from sub-$50 million levels in 2020–2021 to over $1 billion in 2025. India ranks among the top three biofuel markets following Nexgen Energia’s $1 billion growth equity round in 2025, the largest biofuels transaction of the year. Asia shows the strongest emerging momentum overall, with funding accelerating sharply since 2022 despite relatively stable deal volumes.
India, Singapore ($363.85 million), and Brazil ($287.45 million) stand out as key growth markets. India has rapidly advanced its national biofuel roadmap, while Brazil is repositioning its mature bioethanol sector toward second-generation ethanol and SAF, leveraging its agricultural scale.
Meanwhile, Africa, Oceania, and South America remain smaller and more volatile, shaped largely by pilot-scale activity and uneven investment depth.
Government-led capital drive biofuels commercialisation
Venture capital continues to participate at the early stage, while private equity and government-backed investors play the dominant role in late-stage funding and commercial deployment. This reflects the capital-intensive nature of biofuels projects and the long timeframes required to reach operating scale.
Venture capital deal activity increased from 16 deals in 2020 to a peak of 32 deals in 2024. This momentum did not extend into 2025, with VC deal count falling to 14. Private equity participation peaked at 12 deals in 2021 and declined steadily, with no private equity investments recorded in 2025.
Government-backed investors remain the most consistent source of capital across the period. Public institutions averaged 25 deals per year between 2020 and 2025, providing continuity of funding as private capital fluctuated.
Strategic investors have made a small number of investments each year, typically in the single digits, but their participation has remained steady. Energy majors, chemical companies, airlines, and agribusiness are increasingly engaging to secure low-carbon fuel supply and advance decarbonisation objectives.
Biofuels investment moves from innovation to deployment
Investment in biofuels is directed toward improving performance, lowering production costs, and expanding commercial capacity. Decarbonisation with the help of biofuels depends on technological innovation and funding to sustain long development cycles and capital-intensive assets.
Progress will hinge on how effectively strategic, financial, and public capital align around deployment. The pace of biofuels scale-up will depend on overcoming barriers in biofuel production and continued cooperation between industry players, investors, and public institutions.
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