Gevo Reveals Sale of Nearly $20 Million In Investment Tax Credits

Gevo, Inc. has revealed the sale of around $20 million in Investment Tax Credits to an undisclosed corporate purchaser. This transaction allows Gevo to monetize Investment Tax Credits generated under the Inflation Reduction Act (IRA) from its renewable natural gas (RNG) production facility, operated by Gevo NW Iowa RNG, LLC. After transaction fees, Gevo will receive around $17 million in net cash proceeds.

The Gevo RNG facility is designed to produce roughly 400,000 MMBtus of RNG annually, with plans for increased output in the future. There is potential for further value through Section 45Z Clean Fuel Production Credits under the IRA, once regulations are established. The facility generates RNG by collecting manure from dairy farms and processing it in anaerobic digesters, capturing biogas that is refined to serve as a sustainable transportation fuel. Gevo's commercial partner markets the RNG in California, where its production is expected to reduce greenhouse gas emissions by about 175,000 metric tons of carbon dioxide equivalent each year, according to carbon intensity scores aligned with the California Air Resources Board’s Low Carbon Fuel Standard.

Gevo is actively exploring ways to scale its RNG operations and enhance profit margins, while also looking for synergies with other business lines. CEO Dr. Pat Gruber emphasized the company's commitment to unlocking shareholder value through operational optimization. He noted, “This is just one example of how our mission to optimize renewable energy creates opportunities.”

The net proceeds from the sale of these tax credits enhance Gevo's liquidity and cash flow, positioning the company to fund strategic projects in sustainable aviation fuels (SAF) and other growth initiatives. The IRA has transformed the monetization of federal clean energy tax credits, allowing for the buying and selling of these credits, which presents companies with new opportunities for tax savings without long-term investment commitments.

This developing market for tax credit transferability offers the advantage of acquiring credits at a discount, thereby shortening investment timelines and simplifying legal procedures compared to traditional tax equity arrangements. Gruber remarked on the evolution of Gevo RNG, stating, “Initially a low-carbon heat energy source for our facilities, it has grown in value by reducing fossil fuel use in transportation while generating cash flow and attracting further investment in clean energy.” He believes this efficiency reflects Gevo's commitment to a circular economy and will continue to deliver shareholder returns as the company expands its operations.

Gevo's mission focuses on transforming renewable energy and biogenic carbon into sustainable fuels and chemicals with a net-zero or lower carbon footprint. Utilizing innovative technology, Gevo produces a range of products, including sustainable aviation fuel (SAF), motor fuels, chemicals, and other materials. The company’s business model involves developing, financing, and operating production facilities for these renewable products. Gevo operates one of the largest renewable RNG facilities in the U.S. that utilizes dairy products, and it is home to the world's first facility dedicated to producing specialty alcohol-to-jet (ATJ) fuels and chemicals. Gevo highlights the significance of sustainability by monitoring and verifying the carbon footprint of its operations through its subsidiary, Verity.