US DOE Plans to Invest $1.5 Billion in Gevo SAF Project

Gevo Inc. has received a conditional commitment from the United States Department of Energy (DOE) for a loan guarantee of $1.46 billion for a sustainable aviation fuel (SAF) production project in South Dakota.

“This valuable commitment to help finance NZ1, if finalized, should also attract other capital investments to unlock SAF commercialization given the robust due diligence conducted by the agency”, Gevo chief executive Patrick Gruber said in a company statement.

Planned to start operation next year after breaking ground in September 2022, the corn starch-to-SAF Net-Zero 1 (NZ1) project is designed to produce about 60 million gallons of SAF, about 30 million pounds of corn oil and about 1.3 billion pounds of protein and animal feed products per year. NZ1, being built in Lake Preston, will use United States-produced feedstocks. According to the company, it is the biggest economic development project in South Dakota’s history.

“NZ1 is the first-ever large-scale alcohol-to-jet project to receive a DOE LPO [Loan Programs Office] conditional commitment and is expected to provide critical new opportunities for South Dakota workers, farmers and residents”, the Englewood, Colorado-based company said.

“We believe Gevo’s proprietary ATJ plant design represents the lowest cost-per-ton of carbon abatement among all of the current SAF production technologies”.

“The project design and engineering, and the operating and financing model, should serve as a template for future Gevo net-zero projects—potentially accelerating the timeline of SAF commercialization”, Gevo added.

Gevo hopes the provisional award from the DOE will make the project more attractive to investors. The project needs to satisfy legal, technical, environmental and other conditions before the DOE funding can be finalized.

The DOE said, “This conditional commitment supports the Biden-Harris administration’s goal of increasing U.S. production of SAF to 3 billion gallons per year by 2030 and 35 billion gallons per year by 2050”.

“Current U.S. SAF production is around 2,000 barrels per day, or about 30 million gallons per year”, it added. “Once the facility reaches full capacity, Gevo’s output alone will represent more than double the 2023 U.S. SAF capacity”.

“SAF is the only viable near-term option to decarbonize the airline industry, which is responsible for 11 percent of U.S. transportation emissions or 3.3 percent of total U.S. emissions”, the DOE said. “… Other low-carbon alternatives to traditional jet fuel such as hydrogen- and battery-powered aircraft technologies are still early in their development, leaving the aviation industry reliant on sustainable ‘drop-in’ fuels from renewable feedstocks”.

The potential guarantee for Gevo’s project comes from the LPO’s Clean Energy Financing Program, with Gevo’s corn starch-to-SAF model eligible under the program’s Renewable Energy Systems theme.

To contact the author, email jov.onsat@rigzone.com