By Chris Rozzell
With headlines dominated by promises of artificial intelligence (AI), quantum computing and the relentless rise in data center energy needs, it can be easy to fall prey to salience bias, or the tendency to overvalue what is most visible and novel. But if we examine the patterns of history, especially the business side of innovation, another lesson emerges. Those innovations that piggyback on existing infrastructure, policies and regulations have historically had a shot at becoming quickly investable (e.g., search engines, social media, new apps). In contrast, those that need to be built from the ground up (e.g., solar power, rural electrification), can take decades to get there.
Seemingly exciting industries can spend years looking slow, messy or uneconomic, until all at once the fundamentals line up and the capital flows in. For that reason, in infrastructure-heavy sectors, it is more often the slow but stubborn developments that, having labored in obscurity for decades, suddenly become poised for breakout returns.
Cresta believes that both the carbon capture and biofuel sectors are at this tipping point. Both of these sectors have spent the last decade undershooting the early returns they once promised. However, they have hung on for strong fundamental reasons, and, if the following trends continue, 2025 could mark the beginning of a transition from gradual to accelerated growth.
Resilience in a Fragmented World
We are entering an era of deglobalization and strategic fragmentation. Global trade is less predictable. Energy security is no longer just about price. Instead, it’s about resilience, reliability and control. In this environment, legacy systems dependent on imported fuels have begun to become liabilities.
Biofuels, by contrast, can often be inherently local. For most developed nations, ethanol, renewable diesel, and sustainable aviation fuel (SAF) can be produced closer to home, often from agricultural or waste inputs already embedded in domestic supply chains. As countries look to insulate themselves from energy shocks, this “homegrown” attribute becomes a competitive advantage. What once seemed like a secondary climate solution now has geopolitical gravity. Just look at the SAF facility announcements made in Japan, South Korea, Brazil and numerous other countries over the past few months, and you can see this taking hold.
Carbon capture, similarly, benefits from national interest. No country, including the U.S., wants to cede its industrial base in the name of decarbonization. Capture technology allows for continuity. Heavy industry can survive, even thrive, if emissions can be managed. This makes it a politically palatable solution, and one increasingly backed by bipartisan support in the U.S. and abroad.
They’ve Done the Hard Part
Carbon capture and biofuels have already walked through the valley of early-stage resistance. They’ve spent 20-plus years tangled in regulatory complexity, refining their tech stacks, and proving viability. Many of the financial and physical infrastructure hurdles like plants, storage sites, offtake contracts and supply chain optimization have already been addressed. Carbon capture has gone from lab experiment to commercial deployment. Biofuels have cleared blending mandates and supply chain logistics. These aren’t speculative moonshots anymore. They are battle-tested.
Investing at this stage could be a lot like catching solar in 2011, at a time when it was not yet ubiquitous but following decades of cost improvements and policy alignment.
Contrast this with the massive amounts of new power infrastructure that will be demanded by AI, which will inevitably face a years-long set of permitting delays, utility pushbacks and grid upgrade bottlenecks.
When the Narrative Shifts, Capital Follows
A common trope is that perception is reality—until it isn’t. For years, carbon capture and biofuels have lived under the shadow of skepticism. They’ve been seen as too slow, too costly or too messy. But narratives, like markets, have inflection points. And when sentiment changes, it often does so with sudden, viral momentum.
The steady resilience of policies like the 20-year-old U.S. Renewable Fuel Standard and the 17-year-old 45Q carbon sequestration tax credit has, over time, shifted the risk and reward calculus. When combined with continued improvements in technology and costs, the internal rate of return for these projects has become quite attractive. Add to that the range of low carbon incentives spreading internationally (such as Britain’s Sustainable Aviation Fuel Mandate, Canada’s Clean Fuel Regulations, and the EU’s Renewable Energy Directive and RefuelEU Aviation legislation), and you have a structural setup for capital rotation into these sectors.
Meanwhile, the AI energy theme, while both game changing and inevitable, is not immune to infrastructure inertia. You can’t rewire the grid in a year. And power plant development, even when driven by exciting AI demand, is still subject to permitting friction, interconnection wait times, and community resistance.
Invest in the Overlooked, Prepare for the Tipping Point
A shared belief at Cresta is that the world is nonlinear. What seems inevitable today often stumbles. What seems stalled can catch fire.
Carbon capture and biofuels are not speculative plays anymore. They are legacy trends with pent-up momentum. Like renewable power, they have done the hard, boring work of building standards, aligning incentives and winning policy support. That positions them not just for modest growth, but for sudden, rapid expansion.
In short: The best medium-term energy investments may not be in what’s newest, but in what’s finally ready.
Author:
Chris Rozzell
Managing Partner, Cresta