January 16, 2024

Can ‘greener’ e-fuels save the planet? This startup just raised $129m to try and make it happen

E-fuels are considered one of the most promising alternatives to fossil fuels, but few companies can produce them at scale

Getting people to fly less, or switch to e-vehicles, might not be a fast or reliable enough solution to decarbonise the transportation industry — but e-fuels, which are supposedly more environmentally friendly than traditional ones, could help us get there quicker.

That’s according to Karlsruhe-based e-fuels company Ineratec. Today, it is announcing a $129m Series B, led by Piva Capital, a US VC firm investing in energy and industrial startups, with participation from existing investors such as Planet A Ventures and High-Tech Gründerfonds.

Ineratec produces sustainable e-fuels and synthetic chemicals to replace fossil crude oil for the aviation, shipping, road transport and chemical industries. These sectors are referred to in the industry as ‘hard-to-abate’, meaning that reducing emissions is difficult due to a lack of technological innovation or because the cost of becoming ‘green’ remains prohibitive. 


“We focus on hard-to-abate sectors where it doesn’t make sense to deploy electromobility in the short to medium term. In the end, we have over 1.4bn cars driving around in the world which need to be climate neutral by 2050. Only betting on electromobility is a bet you’re going to lose,” says Tim Boeltken, founder and managing director of Ineratec. 

The demand for e-fuels is expected to triple by 2030, reaching $13.5bn by 2050. But whether e-fuel companies can scale up the production of the fuels fast enough to reach that demand remains to be seen. 

The e-fuel industry

E-fuels are considered by policymakers and academics as one of the most promising alternatives to fossil fuels. However, e-fuels are still far away from production, with few companies producing at a significant industrial scale — yet.

E-fuels are produced by combining captured CO2 with hydrogen. 

Some companies use CO2 captured directly from the atmosphere — the fuel still produces CO2 when burnt, but because it’s produced from captured CO2, the process is more cyclical and less carbon-intensive.

Someone holding a bottle of Ineratec's synthetic fuel
Label reads: INERATEC, synethic fuels

But this method — which is still in its early days as an industry — has its critics, due to the large financial and environmental costs of building carbon capture technology.

The alternative is to use point-of-source emissions, essentially carbon captured during fossil fuel production. Using this method reduces the environmental impact of the fuel compared with regular kerosene, but it still relies on the continuation of the use of fossil fuels. 

Boeltken says Ineratec is “agnostic” over which methods it uses to capture CO2, but that the cost of CO2 is ultimately cheaper when you use point-of-source emissions.

Building infrastructure 

Producing e-fuels on a large scale requires companies to build their own infrastructure, which is naturally cost-intensive and Ineratec has already started building modular facilities to get production up and running. 

Now, it wants to use the fresh capital to start building bigger, industrial-scale plants worldwide.

An example of Ineratec’s modular facilities that can be “stacked” on each other to scale up capacity
An example of Ineratec’s modular facilities that can be “stacked” on each other to scale up capacity

The company is building a large-scale plant in Frankfurt, which will have the capacity to produce 2,500 tons of e-fuels per year.

“It sounds like a lot, but it’s actually nothing compared to what is required,” says Boeltken.

Ineratec has already signed agreements to build production facilities in Chile, where there is big interest for e-fuel from the mining industry to run its heavy duty trucks, as well as buses that transport employees from the city to the mines. It also plans to develop similar projects in the Netherlands.


Mixing up the cap table

Many e-fuel companies fail at the point where they need to build physical infrastructure due to difficulties with raising enough capital — a moment in a climate tech startups’ journey known as the “first-of-a-kind valley of death.”

Many startups that have managed to build a first physical facility have had a mix of financing options on their cap tables — something that Ineratec has been conscious to replicate.

The company started out raising grants from the European Innovation Council and Germany’s Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection, as well as VC equity to finance its growth. 

With the new Series B round, it has also brought on board corporates such as Japanese carmaker Honda, that is also a customer of Ineratec, and French energy group ENGIE. It also raised some debt from banks in Germany, but declined to specify which ones. 

Boeltken says the goal is to prepare the company for a public listing over the next few years and raise one or two financing rounds in between, but only when favourable market conditions return. 

Due to information Sifted received post-publication, this article has been updated to clarify that Malaysian global energy group Petronas is not an investor in Ineratec.

Miriam Partington

Miriam Partington is a reporter at Sifted. She covers the DACH region and the future of work, and coauthors Startup Life , a weekly newsletter on what it takes to build a startup. Follow her on X and LinkedIn