Terragia Biofuel raised $6 million to make ethanol from plant biomass with heat-loving bacteria, targeting aviation, shipping and trucking

What are the most futuristic, innovative and cleanest fuels today, EVs aside? If you’re familiar with our content line-up, you’ll be thinking about hydrogen and ammonia by now, but those aren’t the ones we’re focusing on today. Today’s story is about Terragia Biofuel, a U.S. startup that wants to make ethanol from plant biomass using heat-loving bacteria. It is not an engine: it is a way of producing fuel. The company and the experts quoted in its announcement see it as a possible route to low-carbon fuels for aircraft, ships and trucks, but the technology is still at an early stage.

What Terragia Biofuel does: ethanol from plant biomass, not a new engine

Terragia Biofuel is a bright new star in the biofuel niche, which has recently attracted attention with its unique take on biomass processing. On March 28, 2024, the company announced a $6 million seed round to commercialize technology that, it says, could make low-carbon biofuel cheaper to produce (that $6 million is investor funding, not the price of an engine). Working as the backbone of Terragia’s innovation is a biology-based process of converting cellulose biomass to ethanol and other products. This approach is markedly different from classical cellulose biofuel production procedures and may possess aspects that can lead to cost reduction and increased efficiency.

• Engineered Thermophilic Bacteria: Terragia uses heat-loving bacteria to digest cellulose biomass and turn the content into ethanol and any other usable chemical products.
• One-Step Bioprocessing: The company’s technology follows what can be described as a ‘consolidated’ bioprocessing technique, which does not require more enzymes.
• Cotreatment Process: Instead of the thermochemical pretreatment used in conventional cellulosic biofuel production, the process uses mechanical disruption during fermentation.

What the company projects, and what is still unproven

Terragia has not published performance data that we could find. The figures below are projections by its co-founder and CTO, Lee Lynd, from the March 2024 funding announcement:

• CO2 Emission Reduction: Lynd projects that, with full penetration of the hard-to-electrify fuel market described below, the technology would displace 3 gigatons of CO2 emissions per year. That is a projection, not a measured result.
• CO2 Capture Potential: It could be used to capture an even a greater amount of CO2, but the numbers are not discussed in detail.
• Market Potential: Lynd says converting ethanol into fuels for planes, ships and trucks is a leading option for roughly half of future global transportation energy demand, the part where electrification is likely impractical, and he puts that at a trillion-dollar market.

The biofuel produced through Terragia’s process is primarily ethanol, which can be further converted into fuels suitable for various transportation modes:

• Aviation Fuel: The ethanol can be upgraded to sustainable aviation fuel (SAF), and Lynd calls cellulosic fuel a missing link for reaching the aviation sector’s goals.
• Maritime Fuel: The technology provides possible solutions to the shipping industry, which is currently on the lookout for cleaner fuels.
• Heavy-Duty Transport: The biofuel that Terragia had been developing could give trucks and other tough-to-electrify vehicles a feasible solution.

From the United States to Brazil: who is funding and backing Terragia’s technology

Terragia’s technology development has been supported by a combination of public and private funding sources:

• Government Support: The U.S. Department of Energy Center for Bioenergy Innovation and the São Paulo Research Foundation supported the ongoing development of the technology with funding.
• Research Grants: Other support has been obtained from the U.S. Department of Agriculture and the National Science Foundation.
• Private Capital: In March 2024, it announced a $6 million seed round led by Engine Ventures and Energy Impact Partners (EIP).

The ongoing technology development is carried out in collaboration with prestigious institutions:

• Dartmouth College.
• University of Campinas, Brazil.

Terragia is a young company, founded in 2022, and it describes itself as still developing and deploying its technology. One of its lead investors, Engine Ventures, said in March 2024 that a joint development agreement with a major U.S. biofuel producer was already underway, and the sources we reviewed mention no commercial-scale plant. The challenge now is to scale the process and prove that the costs fall as the company projects. That will depend on whether biofuel producers adopt the technology, so for now it remains a promising but unproven approach to cleaner fuels for aviation, shipping and trucking.

First published on August 31, 2024; corrected on October 28, 2026 to remove inaccurate statements: Terragia Biofuel is developing a fuel production process, not an engine, and the $6 million was seed funding.