Kvasir Technologies, a Danish biofuel startup, has closed a Series A round of €10 million ($11 million) to speed up the commercialisation of its climate-neutral marine fuel, biofuel technology, shipping decarbonisation, sustainable fuel and maritime emissions reduction solutions. European Energy joins the funding round as a new investor and strategic partner through KVEEN Biofuels together with existing investors EIFO, Mærsk Growth and Footprint Fund.

The investment will be used to develop and design Kvasir's first commercial production plant and assist in scaling up its drop-in fuel technology that is based on a suite of biofuels that can be used with existing vessels without the need for engine changes or significant changes to the infrastructure. The shift is part of a trend to lower emissions from ships amid a growing push to decarbonize the shipping sector, which has been under pressure to cut emissions.

Decarisation is a challenge for the shipping.

The maritime sector is a key sector in international trade, yet one of the most challenging sectors for decarbonisation because of the use of long-life vessels, current fuel usage, and their intricate supply chains. Companies are working on several fronts to achieve climate goals, such as alternative fuels, efficiency gains and new technologies.

Kvasir Technologies has set itself the goal of solving this problem by developing fuel from residues of agriculture and forestry that are non-edible lignin. The company's patented process transforms these materials into premium biofuels which may be an alternative to traditional marine fuels.

The investment will enable Kvasir Technologies to advance its technology development and scaling process and be in line with an ongoing interest in solutions that can help decarbonize the maritime sector,” said Joachim Bachmann Nielsen, the CEO of Kvasir Technologies.

European Energy joins with partners in a strategic partnership.European Energy enters into a strategic partnership with partners.

European Energy will be a strategic partner in Kvasir's expansion plans as part of the investment agreement. The two companies are forming a company called KVEEN Biofuels, dedicated to the development of a commercial-scale production plant based on Kvasir's technology.

The partnership can be expected to bring together Kvasir's fuel conversion technology with European Energy's experience in developing and financing large-scale energy infrastructure projects. The companies will be concentrating on getting the production cost competitive and on long-term customer commitments before expanding commercialization.

Knud Erik Andersen, the CEO of European Energy, stated that this would be critical to the success of the technology being scaled-up and pricing appropriate enough to draw long term customer demand.

The first commercial plant is being planned in Denmark.

The support will also go towards the scale up activities at Kvasir's test facility in Fredericia, Denmark where 2 tonnes of biofuel can be produced per day. The company will use the site to further test production processes before expanding.

In addition Kvasir is developing a first commercial scale plant in Aabenraa, southern Jutland. The project aims to prove the technology at industrial scale to evaluate important parameters, such as fuel quality, feedstock availability, production economics and customer demand.

The collaboration with the European Energy would help Kvasir Technologies in its path to a commercial deployment by lowering risks when building the first large-size facility, said Ulrik Falkenberg Lending, Chief Commercial Officer at Kvasir Technologies.

The focus of climate investments are the hard-to-abate sectors.

The funding arrives at a time when many climate tech firms are struggling to raise capital, as the funding market is tightening and interest rates are increasing, impacting startup fundraising. But investors are still interested in technologies that have defined commercial application pathways and have applications in sectors where there are few other options to reduce emissions.

Kvasir's technology is aligned with the increasing investments in solutions for sectors that are hard to abate, where it is not easy to replace the existing systems entirely. The company's drop-in fuel strategy is based on the concept of making emissions reductions possible without changing existing maritime infrastructure.

Biofuel as a part of broader Maritime Transition.

The shipping industry's transition is anticipated to utilize several technologies like methanol, ammonia, electrification, energy efficiency and advanced biofuels. It is not expected that any one solution will satisfy all the needs of all the types of vessels and all the routes.

Some of the prerequisites for Kvasir's technology are production costs, availability of sustainable feedstocks, and long-term customer agreements. The company's planned commercial plant in Denmark will be a significant milestone in determining the feasibility of its fuel's ability to be produced at a scale large enough to be used more widely in the maritime sector.

It’s also a sign of Denmark's ongoing commitment to maritime climate solutions, and a part of the broader work done to find climate-friendly solutions for global shipping.