Neela Biotech raises £2.1m for waste-to-aviation-fuel pilot

Cambridge-based Neela Biotech has secured £2.1m in pre-seed investment to develop technology that turns organic waste into ingredients for sustainable aviation fuel, as first reported by UKTN.

Climate technology investor Elbow Beach led the round with £1.5m. Ascension, Cambridge Enterprise, Ventures Together and strategic angel investors also backed the business.

What happened

Neela is developing an AI-guided microbial process that converts waste from food production, farming and forestry into fatty acids. These can then serve as inputs for sustainable aviation fuel, or SAF, production rather than being used directly as finished jet fuel.

The company calls its technology Controlled Microbial Upcycling. It combines synthetic biology with artificial intelligence to improve the conversion of organic material into the fatty acids required by established fuel-making processes.

Its intended operating model is to fit the technology into existing anaerobic digestion facilities. Those include European biogas plants, giving Neela a potential route to production without building an entirely separate network of facilities.

The investment is intended to take the technology beyond laboratory development. Neela’s immediate task is to demonstrate its process at pilot scale before progressing towards commercial deployment.

The background

About 95% of current SAF output uses hydroprocessed esters and fatty acids, known as HEFA. That production route processes materials such as used cooking oil and other fats into fuel.

The constraint is the supply of those inputs. Suitable waste oils and fats are available in limited quantities, restricting how much fuel can be produced through a route that already dominates the market.

Neela is targeting that feedstock shortage rather than proposing to replace HEFA production. Its process is designed to supply compatible ingredients made from more plentiful materials, including agricultural residues and forestry byproducts.

The distinction places the company upstream of finished fuel production: its technology would broaden the materials available to existing SAF processes. The commercial objective is to increase supply while bringing the resulting fuel closer in price to conventional aviation fuel.

Alongside the equity round, Neela has received grant support from Innovate UK and the Henry Royce Institute. It is also taking part in the innovation programme run by International Airlines Group, adding an aviation industry connection to its development work.

What people are saying

Jonathan Pollock, chief executive of Elbow Beach, said the prospect of using infrastructure already in place was central to the investor’s decision. He argued that SAF developers need to address commercial scale, availability and price, not only the environmental case for alternative fuel.

Pollock identified continued dependence on scarce used oils as a weakness in much of the sector. In his view, Neela’s approach could avoid some of the capital spending associated with competing technologies while offering a route towards commercial use.

Deepanshu Singh, Neela’s chief executive and co-founder, put the feedstock challenge against annual global jet fuel consumption of about 300 million tonnes. He said waste oils and fats could not provide enough material to meet demand on that scale.

Singh said advances in AI-led synthetic biology allowed the company to work with a wider range of organic waste. He also argued that installation at operating biogas plants could shorten deployment times and support more localised SAF production.

For plant operators, Neela sees an opportunity to earn additional revenue from their facilities. The company believes reusing that infrastructure could also lower the capital required to expand its own production process.

Neela further claims that its lower-energy microbial approach could eventually help bring SAF production costs into line with fossil-derived jet fuel. That remains a scale-up ambition, rather than a commercial outcome established by the funding announcement.

What happens next

Neela plans pilot-scale trials at an existing biogas plant over the next two years. The £2.1m round will fund the move from laboratory work into that operating environment.

The planned pilot is the next stated development milestone, rather than the launch of a commercial fuel supply operation. Singh said the funding would help the business work towards locally produced SAF that can compete with conventional fuel on cost.