Gevo Inc (NASDAQ:GEVO) said it has entered into a financeable fuel supply agreement with Kolmar Americas Inc for 45 million gallons per year (on a neat basis) of renewable, energy-dense liquid hydrocarbons that are expected to be produced from Gevo’s second net-zero production facility, Net-Zero 2.
The company said the agreement with Kolmar demonstrates that it is continuing to diversify its partner base geographically as it grows its presence on the global stage. The fuel supply agreement provides for Gevo to supply Kolmar with renewable hydrocarbons, including sustainable aviation fuel (SAF) and isooctane that is a key component of renewable premium gasoline.
Kolmar America is a wholly-owned subsidiary of Kolmar Group AG, a privately held service provider, manufacturer, and marketer of renewable fuels headquartered in Zug, Switzerland.
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“With this agreement, Kolmar is investing in the future, and this kind of foresight makes for another excellent partner and should make clear to our investors that we have traction in the market,” Gevo CEO Dr Patrick Gruber said in a statement.
“We have great potential in our business system to reinvent what is possible. Our system translates well because we actively address food security with the high-value nutritional products that our process generates simultaneously as we produce our advanced renewable fuels. Both products come from the same acre of farmland and add to our environmental benefit.”
Gevo noted that deliveries to Kolmar would represent the entire plant output based on Net-Zero 2’s current design. Under the fuel supply agreement, Net-Zero 2 is expected to generate approximately US$300 million per year of gross revenue, including revenue from environmental benefits.
With protein and corn oil co-product sales, Net-Zero 2 is estimated to generate gross revenues of approximately US$350 million per year. Over the eight years of the agreement, Gevo said Net-Zero 2’s all-in, gross revenue is estimated to be up to approximately US$2.8 billion, inclusive of renewable fuels and related products for the food chain.
Raf Aviner, president of Kolmar Americas, commented: “In addition to our traditional businesses, Kolmar is dedicated to commercial development and optimization of leading-edge low carbon products and technologies.
“We are excited to align Kolmar’s global supply reach, logistics, and regulatory capabilities with Gevo’s Net-Zero 2 production of cutting-edge low carbon aviation and gasoline fuels to get these advanced, sustainable products to the varied global markets that need and want them the most.”
Gevo’s mission is to transform renewable energy and carbon into energy-dense liquid hydrocarbons. These liquid hydrocarbons can be used for drop-in transportation fuels—such as gasoline, jet fuel and diesel fuel—that when burned have the potential to yield net-zero greenhouse gas emissions when measured across the full life cycle of the products.
The company uses low-carbon renewable resource-based carbohydrates as raw materials and is in an advanced state of developing renewable electricity and renewable natural gas for use in production processes, resulting in low-carbon fuels with substantially reduced carbon intensity (the level of greenhouse gas emissions compared to standard petroleum fossil-based fuels across their life cycle).
Contact the author at stephen.gunnion@proactiveinvestors.com