The process line links DAC, electrolysis, and Fischer–Tropsch synthesis into a closed-loop system, positioning China as a potential global leader in commercial e-fuel aviation.
On January 23, Shanghai Carbonology Technology officially inaugurated its R&D and innovation center in Lingang, Shanghai, unveiling its first integrated process line, a step toward the industrialization of direct air capture (DAC)-based sustainable aviation fuel (SAF).
The Lingang center represents a total investment of CNY 300 million and is intended to accelerate the transition of Carbonology’s core technologies from laboratory research to industrial-scale validation. At the launch ceremony, the company revealed what it describes as the world’s largest hundred-ton-class air-source SAF process line, capable of extracting carbon dioxide directly from atmospheric air and converting it into clear, drop-in aviation fuel.
The announcement comes as aviation regulators and airlines worldwide intensify their search for scalable SAF pathways that do not rely on biomass feedstocks, amid tightening emissions targets and growing scrutiny of life-cycle sustainability.
Carbonology’s approach, capturing CO₂ directly from the air and converting it into liquid fuel, targets one of the most technically ambitious and capital-intensive segments of the e-fuel value chain.
A first industrial step for DAC-based SAF
The Shanghai R&D centre will host Carbonology’s inaugural process line, a fully integrated system that links three core modules: direct air carbon capture, CO₂ electrolysis, and microchannel Fischer–Tropsch (FT) synthesis. The company positions the line not as a laboratory pilot, but as a pre-industrial platform designed to validate continuous operation, system integration efficiency, and product quality at a meaningful scale.
According to Carbonology, the facility marks a critical transition point for DAC-based fuel technologies, which have historically remained confined to small-scale demonstrations. The startup indicates that the completion of this process line represents a key industrial validation step for DAC coupled with downstream fuel synthesis.
The line underpins Carbonology’s medium-term expansion roadmap. In 2026, the company plans to construct a kiloton-scale demonstration facility in Ningxia, a region in northern China offering access to ultra-low-cost renewable electricity and suitable industrial infrastructure. By 2027, Carbonology aims to commission China’s first commercial-scale SAF project with an annual capacity of 50,000 tons, an output that would place it among the larger synthetic aviation fuel initiatives globally.
Key technologies and specifications
At the front end of the system are arrays of DAC adsorption units that capture high-purity CO₂ directly from ambient air. Unlike conventional carbon capture, which focuses on flue gases from power plants or chemical facilities, DAC is not constrained by the location of point emission sources and enables true carbon-source substitution rather than incremental emissions reduction.
Captured CO₂ is transported via piping into a dedicated CO₂ electrolyzer, where it is converted into carbon monoxide or syngas intermediates using electricity, ideally sourced from renewable power. These intermediates then feed into a microchannel FT reactor, a compact, high-surface-area configuration that allows precise thermal control and higher conversion efficiency compared with traditional large-scale FT reactors.
Carbonology disclosed a headline conversion metric: for every 400 tons of CO₂ captured from the air, the system produces approximately 10 tons of SAF. While this ratio implies significant energy input, the company states that process integration, modular reactor design, and scale-up learning effects are expected to improve overall system efficiency over time.
The closed-loop architecture, integrating DAC, electrolysis, and synthesis, reflects a broader shift toward power-to-liquids systems but remains technically challenging, requiring tight synchronization of mass and energy flows across subsystems operating under very different physical and chemical conditions.
Scale, capital, and policy alignment
From a commercial perspective, Carbonology remains at an early stage, having completed a tens-of-millions-CNY angel round, with investors including Sequoia Capital China and Tencent, signalling growing interest from technology-focused capital in long-duration decarbonization solutions.
Historically, industrial carbon capture has focused on high-concentration exhaust streams from coal-fired power plants and chemical facilities. While technically mature, these approaches remain tied to fossil fuel infrastructure, whereas large-scale capture from air offers a more fundamental solution by replacing fossil carbon sources altogether.
Globally, SAF demand is being driven by mandates and voluntary commitments, particularly in Europe and North America. Although China has yet to introduce binding SAF blending mandates, its long-term carbon neutrality targets and strategic emphasis on advanced manufacturing provide a policy backdrop supporting domestic SAF and e-fuel supply chains.
Cost remains the central challenge. DAC is widely recognized as one of the most expensive carbon capture pathways, with costs still significantly higher than point-source capture. Carbonology acknowledges this constraint, framing its Shanghai process line as a cost-reduction platform aimed at engineering optimization, economies of scale, and integration with low-cost renewable electricity.
Strategic and market implications
Strategically, Carbonology’s approach bypasses the biomass constraints that limit many first-generation SAF pathways. If successful, DAC-based SAF could offer a theoretically unconstrained carbon feedstock, limited primarily by clean power availability and capital efficiency. This places the startup in a different competitive category from bio-SAF producers and aligns it more closely with global e-fuel developers targeting synthetic hydrocarbons for aviation and shipping.
The planned 50,000-ton commercial facility, while small relative to global jet fuel demand, would represent a meaningful step along the industrial learning curve. For airlines, such projects are less about immediate volumes and more about securing certified, bankable supply, and building long-term offtake frameworks.
From a value-chain perspective, Carbonology is pursuing vertical integration across capture, conversion, and synthesis. While this increases technical and execution risk, it may also enable tighter system optimization and long-term cost advantages if successfully standardized. The use of microchannel FT technology further suggests a modular scaling strategy rather than reliance on large, bespoke reactors.
More broadly, the project highlights China’s growing interest in carbon source substitution—replacing fossil-derived carbon with atmospheric carbon in hard-to-abate sectors. If supported by targeted policy incentives or green fuel procurement mechanisms, such systems could become a cornerstone of the country’s future clean aviation strategy.
For now, Carbonology’s Shanghai process line remains a proof point rather than a commercial breakthrough. But in a sector where industrial integration experience is limited, the ability to demonstrate a functioning, closed-loop DAC-to-SAF system may be as strategically valuable as near-term volumes.
Capital markets and industrial ecosystem context
Carbonology’s trajectory also reflects broader trends in China’s capital markets and industrial priorities, where advanced manufacturing and climate-aligned technologies are increasingly favored. The availability of patient capital and policy-backed financing mechanisms has become a critical enabler for capital-intensive platforms such as DAC-based e-fuels.
In 2025, China had 116 companies newly listed on its A-share market. Among the investment institutions behind these IPOs, Sequoia Capital China ranked first with 17 portfolio companies going public, followed by Shenzhen Capital with 16 and CICC Capital with 15.
Regionally, Jiangsu province led the country with 29 new A-share listings – around one quarter of the national total. Manufacturing dominated these IPOs, with 27 of Jiangsu’s newly listed companies classified as strategic emerging industries aligned with national industrial policy priorities.
This reflects a broader “chain effect” driven by manufacturing clusters in Jiangsu’s core cities, such as Suzhou, Wuxi, and Changzhou, supported by a deep innovation base. Jiangsu hosts more than 57,000 high-tech enterprises, 22,000 provincial-level “specialized and innovative” SMEs, and over 3,000 national-level “Little Giant” technology firms.
This industrial ecosystem is further reinforced by a financial support system in the Yangtze River Delta region that includes Shanghai, Jiangsu, and Zhejiang, spanning equity, credit, bonds, insurance, and guarantees across the innovation lifecycle. The emphasis on patient capital and policy alignment has created favourable conditions for capital-intensive, long-horizon technologies.
In this context, ventures such as Carbonology’s DAC-based SAF platform form part of a broader industrial–financial alignment strategy. The convergence of advanced manufacturing policy, capital market depth, and long-term climate objectives provides a foundation for scaling high-risk technologies such as e-fuels, positioning China as both a technology developer and a potential future anchor market for commercial synthetic aviation fuels.