Circularity Fuels Raises $7 Million as California Puts End Dates on Dairy Gas Credits

A California dairy digester's economics depend heavily on credits. The gas itself sells as renewable natural gas, largely as truck fuel. The large payments come from the state Low Carbon Fuel Standard, where dairy pathways score around minus 232 because they count methane the manure lagoon would otherwise have vented. A federal notice in September also gave manure its own rates under the 45Z clean fuel credit. For digesters that break ground after 2029, the federal credit is gone under current law and California's credits carry published end dates.

On November 5, Circularity Fuels closed a $7 million seed round led by Trucks and DCVC to turn that same digester gas into jet fuel. Trade coverage ran the release line: cow manure becomes jet fuel, and farmers get a new revenue stream.

Read against those dates, Circularity's plan offers the next wave of digesters a different kind of buyer. Airline blending mandates in Europe and the UK rise through 2040 and, in the EU, to 2050, well past the date California stops crediting new vehicle gas. If dairy-gas jet fuel can win airline contracts at prices that hold as credits roll off, the gas owner who signs first holds revenue that runs past 2040. The project under the most pressure is the post-2029 digester financed on vehicle-gas credits alone: about a decade of credits, then a market California says it expects to shrink.

The confirmed fact is the round. Sum Ventures and Automotive Ventures joined the lead investors.

The rest is Circularity's plan. The company says it has raised about $17 million in total, including nearly $7 million in grants. It says the 18 months of funding cover a demonstration plant making jet fuel daily, engineering for a 75-barrel-a-day commercial plant, and the airline contracts it needs before breaking ground. At 75 barrels a day year-round, that plant would make up to about 1.15 million gallons of liquid fuel, close to the 1 million gallons its website lists, and not all of it would be jet fuel.

We covered the June pilot at a dairy near Madera, where Circularity said fuel made from raw digester gas met the jet blending specification. That test result is company-reported. The projected cost of under $100,000 per barrel-a-day of capacity and the carbon score of minus 350.7 come from company modeling, and independent verification was not found. Circularity says a USDA loan guarantee application has reached second-phase review, which is not an award.

The public schedule is tight. In June the company expected to break ground in 2027. Its website now lists a first commercial plant in early 2029, and the new plan puts airline contracts ahead of construction. If groundbreaking slips past December 31, 2029, Circularity's own first plant would fall under the post-2029 rules it is pitching against.

California has put dates on dairy gas by end use. Under the 2024 fuel standard amendments, pathways certified before July 2025 keep up to three 10-year crediting periods, and pathways certified from July 2025 through 2029 get two. For projects that break ground after 2029, gas sold as vehicle fuel stops earning credits after 2040, and gas routed into hydrogen gets until 2045. If a California manure methane mandate takes effect, crediting for those projects ends at the close of the current period. Regulators wrote that they expect vehicle gas demand to fall as trucks electrify and want biomethane moved into other sectors.

The rule's end-use dates name vehicle gas and hydrogen. They do not name jet fuel, which enters the standard as an opt-in fuel. We found no certified dairy-to-jet pathway and no ruling on whether one would keep its avoided-methane value past 2040.

Without that ruling, a post-2029 dairy-to-jet plant has no California credit horizon to bank. The federal side is plainer. Under current law 45Z expires after 2029, and the extra credit jet fuel once received ended for fuel made after 2025. The federal Renewable Fuel Standard has no end date, but EPA resets its volumes every few years. A post-2029 project therefore underwrites mostly on credits that are dated or reset by regulators, which is the gap an airline contract would fill.

Two kinds of gas owner could license the reactor, and only one is under pressure. On many California dairies the digester belongs to a developer that leases the site, holds the gas, and pays the dairy a royalty often cited at 10 to 20% of gross revenue. Aemetis describes 25-year agreements with its dairies. Those operating projects sit outside the post-2029 rules, and their crediting periods run into the 2040s. Today's developers can wait.

The next wave of California projects cannot. Nationally, EPA counts about 400 operating livestock digesters against more than 8,000 farms where one is technically feasible. A California project in that gap that breaks ground after 2029 starts life with dated credits. Our read is that its developer will need revenue past 2040 to finance it, and an airline contract is the version of that revenue Circularity is selling.

A jet licensor adds a third seat to digester control. Our September 28 CalBio dive showed the first two: CalBio took the operating seat and UGI kept the fuel and the marketing. The release does not say how much new value would reach the dairy. Royalties are commonly set on gross gas revenue, and whether that language covers a jet fuel sale depends on contracts we have not seen.

Agra Energy said on October 21 that it produced jet fuel and naphtha from dairy biogas at New Franken, Wisconsin, and that it is targeting 150 to 250 barrel-a-day plants through licensing and owned sites. Syzygy Plasmonics is developing a dairy-gas jet fuel plant in Uruguay. It says Trafigura has signed as offtaker, with a final investment decision expected this year and operations targeted for 2028.

Both rivals sit outside California, though Syzygy lists the California standard among the certifications it is targeting. With three companies chasing dairy-gas jet fuel, the gas owner has choices, and the scarce asset is a signed airline or fuel-supplier contract. Syzygy says it has one. Circularity and Agra have not announced one.

If the bet is right, digester contracts change before fuel volumes do. Developers planning post-2029 California projects will start writing leases that say who chooses the end use and who holds the airline contract, and dairies will have a new term to negotiate. The proof inside 18 months would be an airline or fuel-supplier contract for Circularity's fuel that runs past 2029 at a price not tied to California credits, or a buyer using the fuel to meet the European or UK mandate.

The European and UK demand is the weak link for a California plant. Whether Circularity's fuel will be certified for those mandates and shipped, or sold to US airlines buying voluntarily, has not been announced.

The bet fails in two ways. If California certifies a long-lived dairy-to-jet pathway and the first contracts lean on it, dairy jet fuel is another credit play with a later date. If airlines will not sign at prices that survive the 45Z expiry and a California manure mandate, the technology has no buyer, and on its own plan Circularity has no groundbreaking.