Gevo, Future Energy Global sign carbon-credit offtake agreement to accelerate SAF book-and-claim market

Gevo Inc. announced April 9 that it has signed an offtake agreement with Future Energy Global for carbon-abatement attributes to enable airlines and other companies to reduce their CO2 emissions through sustainable aviation fuel (SAF).

Under the multiyear agreement, Future Energy Global will acquire from Gevo the scope 1 and scope 3 emissions credits from 10 million gallons per year of fuel to be produced at Gevo’s alcohol-to-jet (ATJ) SAF production facility, Gevo ATJ-60, to meet demand from Future Energy Global’s airline and corporate customers seeking to decarbonize their operations.

The agreement also includes an option for Future Energy Global to increase the offtake at a later date.

According to Gevo, this agreement is expected to enable the company to finance construction of its ATJ-60 facility.

Gevo has secured a loan guarantee conditional commitment of $1.63 billion (including capitalized interest during construction) from the U.S. DOE Loan Programs Office and is originating equity from project-level capital providers.

Under development in Lake Preston, South Dakota, ATJ-60 is designed to address the market need for cost-effective jet fuel while abating carbon and to respond to growing worldwide demand for SAF.

Gevo’s proprietary plant design is expected to be able to produce 60 million gallons of SAF per year at similar production costs to conventional jet fuel, according to the company, but with far lower carbon emissions.

The aviation industry has targeted net-zero CO2 emissions by 2050, and SAF is expected to contribute around two thirds of the necessary emissions reduction.

But to achieve this, SAF production quantities need to scale more than 400-fold.

SAF is not yet available at all major airports worldwide so Future Energy Global provides SAF-derived scope 1 credits to airlines that wish to buy additional SAF but cannot easily source the physical fuel at their own airports.

Similarly, when companies purchase and retire SAF-derived scope 3 credits to compensate for their business-travel emissions, they mitigate the added cost of SAF to airlines and thus enable the faster scale-up of SAF production.

The Greenhouse Gas Protocol defines different “scopes” of responsibility for emissions.

The emissions from a flight fall under an airline’s direct responsibility (scope 1), but a company with staff flying for business on that flight is responsible for its staff’s share of the flight’s emissions (scope 3, or indirect, emissions).

Separating the scope 1 and scope 3 attributes from the physical fuel, an approach known as book and claim, reduces fuel transportation and storage costs and carbon emissions, and unlocks a global SAF market both for airlines and for indirect aviation-fuel customers around the world who are seeking to mitigate their emissions.

“Gevo has always planned to leverage SAF market economics to scale our business, and a book-and-claim market that enables the trading of SAF environmental attributes can accelerate SAF production even faster,” said Gevo CEO Patrick Gruber. “Future Energy Global is building just such a market, spanning corporate customers, airlines and aircraft lessors. Aircraft lessors own about half of all commercial aircraft worldwide, and book and claim is a critical enabler to allow them and their airline customers to adopt SAF faster.”

Natasha Mann, the CEO and co-founder of Future Energy Global, added, “FEG’s collaboration with Gevo strongly enhances the portfolio of book-and-claim solutions we can offer our airlines, our lessors and our corporate customers. It’s crucial to scale SAF production, and our business model lets us unlock the capital to do so. We’re impressed with Gevo’s pipeline, which combines technology ready for today’s market and additional technologies far along in development that could increase production efficiency and accelerate the trajectory of SAF scaling.”

Future Energy Global’s business model brings together investors, suppliers and buyers to help accelerate and scale SAF production globally.

The company generates additional revenue streams by commercializing the carbon credits that SAF provides, enhancing the business case for faster production scale-up.

Its new offtake agreement with Gevo is expected to fulfill a market need by giving buyers access to SAF credits at predictable prices, while providing financial commitments and revenue certainty that are expected to allow suppliers like Gevo to expand.

Future Energy Global’s initial focus has been on aviation, though its sustainable-fuel credit solutions span the transport spectrum, including marine and land transport.