DOE announces $3bn for Gevo, Montana Renewables
There are lots of sustainable aviation fuel (SAF) companies that only came to life because of friends and family investors. But these rounds can only take you so far. There is only one relative that can get you to production. Uncle Sam. This week the US Department of Energy’s (DOE) Loan Programs Office announced nearly $3bn in loan guarantees for two SAF projects. This substantial federal backing not only accelerates the growth of the SAF industry but also signals to private investors that the sector is primed for expansion, potentially unlocking further capital.
The LPO’ s conditional commitments include a $1.46bn loan guarantee to Gevo’s Net-Zero 1 facility in Lake Preston, South Dakota. This project aims to convert corn into 60m gallons of SAF annually while implementing carbon capture technology to avoid more than 600,000t of CO2e each year.
“The world is going our way at the moment. We have a system that will work. This is a fundamentally important point. And it’s going to work economically at scale,” said Patrick Gruber, Gevo’s CEO, while talking to journalists on a call following the announcement. “We can deliver a product that for airlines is in the realm of affordable. That’s pretty fundamental for driving this business system.”
But it’s not just about the money. “This is an important milestone for Gevo. We have significant confidence in the DOE conducting comprehensive due diligence as noted by the company” Peter Gastreich of Water Tower Research tells SAF Investor.
“Inherently this guarantee should suggest a derisking of the project based on the DOE’s due diligence which is likely to give project level equity investors more confidence.”
Simultaneously, Montana Renewables has secured a $1.44bn guarantee to transform their existing facility in Great Falls, Montana, into a SAF production centre. The project aims to increase biofuel production from 140m to 315m gallons per year, demonstrating the potential for repurposing existing infrastructure for sustainable fuel production.
“We would like to thank the DOE LPO team for its dedication and partnership during this process,” said Bruce Fleming, CEO of Montana Renewables. The company plans to install a second renewable fuels reactor, aiming to achieve 50% of its 300m gallon SAF capacity by 2026 – nearly 10% of the SAF Grand Challenge by 2030.
Additional projects include upgrading existing renewable fuels and feedstock pre-treatment units, adding SAF blending and logistics infrastructure, and boosting renewable hydrogen production. “Our MaxSAF planned expansion is fully aligned with strategic national interest in low-emission sustainable alternatives,” said Fleming.
The LPO’s loans also send a strong signal to private investors about the viability and potential of the SAF industry. This public-private partnership model could prove crucial in scaling up SAF production to meet ambitious climate goals.
As this support materialises, it could lead to an increased private sector investment, technological advancements and ultimately, a significant reduction in aviation’s carbon footprint.
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