Gates-Founded Firm Bets on Cheaper Way to Produce Clean Jet Fuel
(Bloomberg) -- Bill Gates’ Breakthrough Energy Ventures made its first investment from a fund aimed at accelerating the commercialization of clean aviation fuel.
The firm led a $43 million Series A round for a startup developing lower-carbon jet fuel made from hydrogen and carbon dioxide, the companies said Thursday. Breakthrough invested out of its oneworld BEV Fund, which launched with $150 million last year and is backed by Alaska Air Group Inc., American Airlines Group Inc. and several other carriers.
Boston-based startup Lydian is one of a growing number of companies developing next-generation clean jet fuel technology. The funding is intended to scale a system Lydian says can reduce capital expenses by more than 50%, compared with competing technologies. Lowering those costs is seen as crucial to making sustainable aviation fuel, or SAF, commercially viable, as it remains far more expensive than conventional jet fuel.
SAF is considered critical to decarbonizing the highly carbon-intensive aviation industry. Clean fuels currently represent a tiny fraction of the overall market. Production totaled 1.9 million metric tons in 2025, equivalent to about 0.6% of global jet fuel demand, according to analysts at BloombergNEF.
Most SAF produced today is made from refining fats and oils, a more mature process known as HEFA SAF. Lydian is pursuing a different approach, using renewable electricity, hydrogen and carbon dioxide to produce e-SAF. The technology has struggled to scale commercially, in part because of the high cost of inputs such as green hydrogen and the lack of binding offtake agreements needed to finance first-of-a-kind plants.
“This is a space that I think people are skeptical of,” said Eric Toone, a managing partner at Breakthrough. “There’s so much money that has gone into things that haven’t panned out over the last period of time.”
Lydian’s technology has inherent cost and scaling advantages, Toone said. This will allow the company to compete with biofuels and eventually with fossil-based jet fuels over the long term, according to the company.
BloombergNEF’s survey put the average price of HEFA SAF for delivery in 2026 at about $1,817 per metric ton. By comparison, average e-SAF contract prices for delivery from 2026 through 2028 were about $5,015 per metric ton, almost three times the HEFA price and more than seven times the 2025 average price of conventional jet fuel, at $683 per metric ton.
What’s historically prevented e-SAF from scaling is the high cost, said Joe Rodden, Lydian’s chief executive officer and co-founder.
Rodden, who previously worked at energy-storage company Form Energy, said he saw a way to lower costs by producing clean jet fuel when wind and solar are cheapest. That would require a plant that can operate flexibly and remain economical even if it isn’t running all the time. Because a plant operating fewer hours has less time to earn back the money spent building it, keeping capital costs low is essential.
To make its SAF plants cheaper, Rodden said Lydian is focused on developing a smaller reactor with more productive catalysts and a standardized, modular design that can be replicated with less custom engineering.
Rodden said Lydian’s plant is about one-tenth the size of a conventional gas-to-liquids SAF plant and roughly one-hundredth the size of older gas-fired designs. He declined to name any customers that have signed agreements, but said Lydian is “in a number of discussions.”
The company is currently operating a tonne-scale pilot plant in Boston and expects to complete a commercial demonstration facility in East Texas in 2028 at a cost of $30 million. A full-scale commercial plant is planned for 2030. It will be about 10 times larger and cost roughly $200 million, Rodden said.
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