Investing with Conviction: Advancing a Resilient Low-Carbon Future
Khasma Capital’s 2025 Energy Transition Strategy
In 2025, the energy transition is unfolding against a backdrop of political and economic uncertainty, marked by corporate ESG pullbacks and volatility in carbon markets. Recent elections in the US have signaled potential policy reversals, favoring increased fossil fuel production and loosening environmental regulations, which will most likely impact the trajectory of the transition.
While some environmental regulations are being rolled back, other doors are opening. A renewed focus on domestic manufacturing and energy production is creating momentum for infrastructure that’s cleaner and more resilient.
At Khasma Capital, our conviction in low-carbon infrastructure is grounded in this shift. We’re supporting hydrogen-powered ferries that replace imported diesel, biofuel production from U.S. forestry waste, and enabling carbon sequestration for North America’s abundant natural gas — all of which advance energy independence while reducing emissions.
We continue to prioritize both the circular economy and the emerging energy transition as core pillars of our investment strategy. Projects in the circular economy — such as waste valorization, materials innovation, and low carbon cement — remain a key focus. But in this piece, we’re taking a closer look at how our energy transition investments respond directly to today’s geopolitical, regulatory, and energy landscape.
The Rising Energy Demand Reality
Across North America, electricity demand is expected to grow nearly 16% over the next five years, driven by the rapid rise of AI data centers, industrial reshoring, and widespread electrification. In 2023, the U.S. Energy Information Administration reported that approximately 60% of utility-scale electricity came from coal, natural gas, petroleum, and other gases, with the remaining 40% provided by renewables and nuclear.
While a fossil-fuel-first policy that also relies on importing significant portions of our energy mix may offer short-term supply for energy demands, it cannot ensure long-term stability. The U.S. imported nearly 8.3 million barrels per day of petroleum in 2023, and relied on more than 50 TWh of electricity imports. In order to reduce our dependence on imports, we have to maximize the natural resources that we have, including those that are not based on fossil fuels. This is especially important given the increasing trade tensions in which supply is no longer guaranteed. Losing access to these energy sources, especially in regions like the Northeast and Midwest, would further strain existing generation capacity and increase reliance on higher-emission alternatives.
Recent global market shocks have shown that even as the U.S. becomes the world’s largest oil and gas producer, it remains vulnerable to international price volatility. The longstanding playbook for energy independence — drill more, rely less — no longer applies in a globally integrated energy market.
In fact, delaying low-carbon investment may expose countries to even greater economic and trade risks. A recent study in Nature Climate Change found that nations slow to adopt net-zero policies could suffer the steepest consequences. In other words, postponing the energy transition isn’t risk-averse — it’s risky.
Meeting Demand Through Domestic, Low-Carbon Innovation
As energy demand rises and global volatility continues, one thing is clear: the U.S. cannot afford to depend solely on imported or emissions-heavy fuels. While the current economic climate may lean toward oil and gas, we believe the more durable path forward lies in producing more energy domestically — and doing it cleanly.
Our energy transition investments are designed to catalyze homegrown, low-carbon alternatives that align with long-term demand.
Clean Energy Systems
We’re invested in Clean Energy Systems (CES), which delivers clean, firm power and heat through proprietary oxy-combustion technology capable of capturing nearly 100% of CO₂ emissions. By burning natural gas or renewable fuels in oxygen instead of air, CES produces a pure CO₂ stream ready for sequestration, eliminating the need for expensive post-combustion capture systems.
With the only TRL 8 commercial-scale oxy-burner on the market, CES is positioned to serve high-demand sectors like data centers, industrial facilities, and midstream oil and gas, targeting a combined $100 billion addressable market across North America.
SWITCH Maritime
SWITCH Maritime is developing North America’s first commercial fleet of zero-emission maritime vessels, powered by hydrogen fuel cells and batteries. With our backing, SWITCH launched its flagship vessel Sea Change, a 75-passenger hydrogen fuel cell ferry. It began commercial operations in San Francisco in 2024 under a six-month pilot following U.S. Coast Guard approval.
With more than 1,000 ferries in the U.S. averaging over 35 years in age, and more than 10,000 globally still running on diesel, this sector is due for modernization. Maritime transport accounts for roughly 3% of global emissions, putting it on par with the sixth-largest emitting nation.
As the International Maritime Organization moves forward with binding net-zero regulations, including a global fuel standard and emissions pricing set to take effect in 2027, SWITCH is positioned as a first mover in a rapidly shifting regulatory and market environment. The company’s strategy has the potential to catalyze over one gigaton of CO₂e reduction over the next 30 years.
Castlerock Biofuels
Three out of five households in Maine still rely on heating oil, and families are often forced to choose between warmth and affordability during the winter months. The state’s reliance on imported fossil fuels — largely trucked in from refineries in Texas, Louisiana, or Canada — exposes local economies to global price shocks and contributes to rising residential carbon emissions.
Our portfolio company Castlerock Biofuels is developing a solution. Their flagship project in Maine’s Katahdin region will be the world’s largest renewable fuel oil facility, powered by forestry waste and Ensyn’s rapid thermal pyrolysis technology — the only known system of its kind to scale successfully. The result: a drop-in renewable fuel that cuts lifecycle greenhouse gas emissions by 85–90% while integrating seamlessly with existing heating infrastructure.
In addition to the core heating oil market, Castlerock’s fuel has commercial potential in refinery co-processing, gasification, and sustainable aviation fuel. Khasma provided funding to de-risk financing future facilities with a potential impact of up to an estimated 243 million tons of CO₂e over 30 years, making it a transformative player in hard-to-abate thermal markets.
Partnering for Impact
The path to energy security runs through low-carbon innovation. At Khasma Capital, we’re investing in scalable, U.S.-based solutions that meet rising energy demand while reducing emissions.
Building a resilient, decarbonized future starts now. If you’re developing or investing in what comes next, let’s talk.
