Each year, substantial volumes of agricultural residues and residual biomass are left unutilized. These materials can be converted into low-carbon fuels at scale, offering a viable decarbonisation pathway for hard-to-abate sectors such as trucking, shipping, and aviation.
Demand for advanced, sustainably sourced feedstocks is expected to rise sharply over the next decade. Policy mandates, emissions targets, and airline commitments are accelerating global adoption of biofuels and sustainable aviation fuel. As deployment increases, the ability to secure reliable, low-carbon feedstock has become a defining constraint on sector growth.
A new group of startups in biofuels are addressing this challenge by developing technologies that convert diverse biomass streams into commercially viable fuels. This article examines these companies and their funding progress as investment scales to support net-zero transport objectives.
Castlerock Biofuels (USA)
Castlerock Biofuels develops renewable fuel oil and biocrude from woody biomass. The company focuses on building and operating rapid thermal processing facilities that produce zero-carbon heating oil and biocrude for co-processing in refineries and chemical plants.
Castlerock Biofuels uses logging residue from sustainable forestry operations as its primary feedstock. This material includes tops, limbs, and branches with limited commercial value that are often left to rot which increases wildfire risk. Moreover, by converting this waste into bio-crude, the company reduces emissions associated with decomposition. Basides, it supports healthier forest management and rural economies.
The renewable fuel oil produced serves as a lower-emissions alternative to fossil-based heating oil and as a refinery-compatible feedstock for renewable fuels. Castlerock Biofuels secured $7.8 million in Series A funding in June 2025
Terviva (USA)
Terviva is a food and agricultural innovation company working with farmers to grow pongamia, a drought-tolerant tree that produces oil- and protein-rich legumes. The company operates across food, feed, and fuel markets, using pongamia as a low-carbon alternative to conventional oilseed crops.
Over more than 15 years of field trials across nearly 2,000 acres in the U.S. and Australia, Terviva has developed elite pongamia cultivars that deliver three or more metric tons of seeds per acre with high oil content. The trees grow on underutilized agricultural land, avoiding competition with food crops and reducing pressure on deforestation linked to soy and palm oil.
Harvested pongamia beans are processed through Terviva’s patented systems to produce vegetable oil and protein ingredients. Also, crude pongamia oil can be used directly as a feedstock for biofuels while refined oil is suitable for food applications. High yields combined with low input requirements enable lower lifecycle emissions than first-generation biofuels. The company secured $17.7 million in Series E funding in June 2025.
Tagaddod (Egypt)
Tagaddod is a renewable energy and waste management company focused on converting waste oils into certified feedstocks for biofuels. The company collects used cooking oil and other waste inputs to supply biodiesel, hydrogenated vegetable oil, and sustainable aviation fuel.
Tagaddod operates a proprietary, technology-enabled platform that collects, aggregates, and traces renewable feedstocks from thousands of fragmented suppliers, including households, restaurants, food manufacturers, and independent collectors. The platform applies IoT sensors, machine learning, and compliance tools to improve collection efficiency, maintain feedstock quality, and ensure end-to-end traceability.
The company has built a distributed network of collection points and regional hubs across Egypt, Jordan, and the Netherlands, with expansion underway in Saudi Arabia and additional markets. This structure allows Tagaddod to link informal and highly fragmented waste supply chains with large-scale industrial demand from global refiners and fuel producers.
Tagaddod raised $26.3 million in Series A funding in October 2025.
Sistema.Bio (Mexico)
Sistema.bio designs, manufactures, and distributes prefabricated modular biodigesters that convert animal manure into biogas and organic fertilizer for farms. The systems treat daily livestock waste through anaerobic digestion, producing renewable biogas for cooking and heating alongside nutrient-rich fertilizer for crop application.
With just a few cows, a Sistema.bio biodigester can meet a rural household’s cooking and heating needs while generating organic fertilizer for the farmland. Consequently, Sistema.bio reduces deforestation, and lowers GHG emissions, and improves farm productivity thereby replacing wood fuel and fossil fuels with on-farm biogas. Additionally, the company raised an undisclosed Series C round in November 2025.
Terragia Biofuel (USA)
Terragia develops biological conversion systems that transform non-food cellulosic biomass into ethanol and other low-carbon liquid fuels. The company focuses on agricultural residues and perennial crops, targeting fuel pathways that remain difficult to electrify.
The company uses engineered bacteria Clostridium thermocellum to deconstruct lignocellulosic biomass and ferment the resulting sugars into fuel molecules. Terragia is able to convert biomass into fuels with little or no thermochemical pretreatment by genetically engineering the bacteria.
Besides, this process reduces capital intensity, shortens processing time, and lowers carbon intensity relative to conventional cellulosic biofuel systems. Terragia claims its approach enables smaller plant sizes and significantly shorter payback periods compared with traditional enzyme-based facilities.
Terragia received $100,000 in funding from the U.S. Department of Energy’s Bioenergy Technologies Office to advance biofuel development.
Innovative biofuel startups leveraging sustainable biomass
The startups highlighted in this article demonstrate how various biofuel production pathways are shaping the renewable fuels landscape. By converting non-food, cellulosic biomass and forestry residues into low-carbon fuels, they address production constraints in biofuel production.
In other words, as demand for low-carbon transport fuels accelerates, expanding access to sustainable feedstocks is needed to sustain growth. The pace at which these technologies scale and integrate into existing markets will determine how quickly biofuels can decarbonise transport.
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