Gevo Enters Agreement to Acquire Red Trail Energy

On September 12, Gevo Inc. announced a definitive agreement to acquire Red Trail Energy LLC’s ethanol production plant and its carbon capture and sequestration (CCS) assets for $210 million. Gevo plans to enhance the Richardton, North Dakota facility by adding net-zero sustainable aviation fuel (SAF) production capabilities. Red Trail Energy operates a 65 million-gallon-per-year ethanol plant and launched its CCS project in June 2022. The CCS assets currently have a sequestration capacity of 1 million metric tons per year, with approximately 160,000 metric tons in use.

The transaction is anticipated to close by the first quarter of 2025, pending shareholder approval from Red Trail Energy, regulatory clearances, and other conditions. Gevo intends to retain the existing workforce of around 50 full-time employees at the facility.

While Gevo has not yet provided a timeline for adding SAF production at the site, the company discussed potential plans to reduce the carbon intensity (CI) of the ethanol produced during a September 12 conference call. Chris Ryan, Gevo’s President and COO, highlighted that the Red Trail Energy plant already produces ethanol with a CI 70% lower than the industry average. He emphasized the plant’s potential for expansion in both production and CCS capacity. Following the acquisition, Gevo plans to immediately work with partners to optimize the asset, aiming to further lower CI and prepare the site for SAF and chemicals production. One proposed improvement includes installing a combined-heat-and-power (CHP) system with carbon capture to provide near-zero carbon electricity and steam. Other renewable options, such as wind, solar, and biogas, are also being considered to enhance the site's decarbonization.

Gevo CEO Patrick Gruber noted that the future Net-Zero North site, which includes the Red Trail Energy facility, aligns with Gevo’s goals for its planned Net-Zero 1 SAF production facility in South Dakota and other initiatives. He pointed out that the excess CCS capacity at Red Trail Energy could potentially capture carbon from Net-Zero 1 if there are delays with the Summit Carbon Solutions pipeline project. The Red Trail Energy site is situated about 400 miles to the northwest of the proposed Net-Zero 1 site near Lake Preston, South Dakota.

Gevo's mission is to transform renewable energy and biogenic carbon into sustainable fuels and chemicals with a net-zero or better carbon footprint. Utilizing its cutting-edge technology, Gevo produces a range of products, including sustainable aviation fuel (SAF), motor fuels, chemicals, and other materials. The company's business model involves the development, financing, and operation of production facilities for these renewable products. Gevo currently operates one of the largest dairy-based renewable natural gas (RNG) facilities in the U.S. and owns the world's first production facility for specialty alcohol-to-jet (ATJ) fuels and chemicals. Gevo underscores its commitment to sustainability by monitoring and verifying its carbon footprint through its Verity subsidiary.