Ecoceres, a spinoff from Hong Kong billionaire Lee Shau Kee’s gas supplier Towngas, makes environmentally-friendly jet fuel out of animal fat and used cooking oil. It has set its sights on becoming a leading producer of such fuel by the end of this year.
As airlines around the world aim to mitigate their climate impact, some have pledged to ramp up the use of sustainable aviation fuel (SAF). Meeting the demand for the green jet fuel is Ecoceres, a Hong Kong-based unicorn startup spun off from billionaire Lee Shau Kee’s utility giant Hong Kong & China Gas and backed by U.S. private equity firm Bain Capital.
Ecoceres turns animal fat and used cooking oil into renewable fuel. Its SAF, for example, can cut greenhouse gas emissions from air travel by up to 90% compared to conventional kerosene-based fuel. The company is also working to convert other feedstocks into SAF to meet the growing needs from the aviation industry, which has set a target of net zero carbon emissions by 2050.
While Ecoceres is relatively small compared to industry giants such as Neste in Finland, the startup’s Chief Executive Director, Matti Lievonen, says in a video interview that it aims to differentiate itself by having the highest yield in the field. Lievonen, who was previously the president and CEO of Neste, claims Ecoceres is on track to have the highest yield in the industry by the end of this year, when its new plant in Malaysia equipped with more advanced technology starts operating. Malaysia is the world’s second-largest producer of palm oil after Indonesia; palm oil waste is used to make SAF.
Ecoceres will be able to achieve a yield of 85% upon completing the plant in Malaysia’s Johor state by the end of 2025, adding to its existing one in China’s Jiangsu province, says Lievonen. The industry’s average yield ranges from 40% to 55%, he adds. With the second plant, the company projects it will be able to increase its annual SAF production to about 700,000 tonnes from 100,000 tonnes in 2023. That will boost Ecoceres’ SAF global market share to more than 30%, from 20% in 2024, as the International Air Transport Association expects the clean jet fuel production to reach 2.1 million tonnes in 2025.
“We are really the leading company in providing the airline industry the possibilities to reduce their greenhouse gas emissions, and in providing people the possibilities to fly with good intentions,” says Lievonen.
Ecoceres was started in 2008 as a biorefining research and development project at Hong Kong & China Gas, Hong Kong’s sole gas supplier known locally as Towngas. Ecoceres spun off from Towngas in 2021 and raised $108 million in a Series A round from Kerogen Capital, a private equity firm cofounded by members from JPMorgan’s Asia energy and natural resources group. In 2023, Towngas sold a 21% stake in Ecoceres to Bain Capital in a deal that valued the startup at nearly $1.5 billion. Towngas retains a 44% stake in Ecoceres as of June 2024.
Ecoceres is said to be weighing an initial public offering next year in Europe that could value it at about $5 billion, according to a report by Bloomberg in January, citing unnamed sources. The report added that the company could raise $500 million to $1 billion. Ecoceres declined to comment.
Ecoceres is among the growing number of companies manufacturing SAF, which the U.S. Department of Energy said is so far the “only viable solution to meaningfully decarbonize” the aviation industry. Aviation contributes to about 2.5% of global carbon dioxide emissions, according to the International Energy Agency, and that figure is expected to rise as air travel continues to increase. It is one of the most challenging industries to decarbonize because energy-dense fuels are needed to power long-haul air trips.
Ecoceres’ increasing production capacity is well-timed with a European Union mandate that requires at least 2% of total jet fuel supply to be SAF starting this year, and a minimum of 70% by 2050. Ecoceres’ biggest revenue stream comes from its SAF output to Europe, with customers such as Germany’s Lufthansa, says Lievonen.
It will also help satisfy the rising demand from the U.S. and Asia, Ecoceres’ second and third biggest sales contributor, respectively. The U.S. doesn’t have a SAF mandate but offers lucrative incentives for the green jet fuel. Meanwhile, Singapore has planned to require all departing flights to raise their SAF usage from 1% in 2026 to up to 5% by 2030. Hong Kong has also said it will set a target, with HSBC in November signing a deal to purchase SAF from Ecoceres for Cathy Pacific flights departing from the city.
For now, SAF only accounts for less than 0.1% of all jet fuel consumption, according to the International Energy Agency. Among the challenges that are hindering its adoption is that it costs two to ten times more than traditional aviation fuel, depending on the feedstocks and technology used, the U.S. Department of Energy has found. Meanwhile, waste oil and animal fat used to make SAF are relatively limited in supply.
To overcome the hurdles, Ecoceres is now trying to convert other feedstocks into SAF. Among the promising alternatives is carinata, a green leafy plant with bright yellow flowers that can grow in less fertile lands and is used to protect soil rather than to be harvested for food. Ecoceres is working on the technology to produce SAF out of oil extracted from carinata, says Lievonen.
The company is also working on a technology known as alcohol-to-jet, which uses chemical reactions to upgrade ethanol into fuel strong enough to power flights. Ecoceres is already capable of turning agricultural waste into ethanol, a gasoline blend-substitute that can reduce greenhouse gas emissions by 80%.
“We have over 100 people in our R&D team looking at the alcohol-to-jet technology, novelty feedstocks and other things,” says Lievonen. “You cannot be successful if you only do one thing and think it will save you. We want to stay ahead.”
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