Sustainable jet fuel company buying Red Trail ethanol in North Dakota

(North Dakota Monitor) A company that is developing sustainable aviation fuel is purchasing a North Dakota ethanol plant that was the first in the nation to implement carbon capture and sequestration.

Gevo, based in Englewood, Colorado, announced Thursday that it has a deal to buy Red Trail Energy at Richardton in southwest North Dakota for $210 million. Gevo officials said in a conference call that it hopes to close on the deal in the first quarter of 2025.

Red Trail, a partnership with numerous farmer-investors, produces about 65 million gallons of ethanol per year, according to a Gevo news release announcing the deal. It has pore space lease agreements for 5,800 acres in the underground geologic formation known as Broom Creek, capable of storing 1 million metric tons of carbon annually.

Red Trail started underground storage of carbon in 2022 and currently sequesters approximately 160,000 metric tons of carbon annually. Sequestration qualifies Red Trail for the 45Q federal tax credit that pays $85 per ton of carbon that is permanently stored.

Jodi Johnson, CEO of Red Trail, told the North Dakota Monitor in April that the carbon capture project was a $35 million investment.

Johnson said in a news release Thursday  that “Gevo’s vision for a sustainable future aligns with our philosophy of ‘our farms, our fuel, our future.’ We are confident this acquisition will drive positive change in the renewable energy sector.”

Gevo officials said the acquisition puts the company on a path to profitability while it continues to develop a sustainable jet fuel project at Lake Preston, South Dakota, known as Net-Zero 1.

“We expect our ownership of these assets to generate significant near-term and long-term value for our shareholders, while adding new jobs and economic growth to rural communities in the region,” Gevo CEO Patrick Gruber said in a news release.

Gevo has signed on to the Summit Carbon Solutions pipeline that could potentially take carbon emissions from the Lake Preston plant and other ethanol plants to an underground storage area northwest of Bismarck.

The Summit project has faced regulatory delays and setbacks from legal action by landowners.

Gruber said by acquiring Red Trail “we also mitigate risk around carbon sequestration regarding our Net-Zero 1 plant site in South Dakota.”

Gevo said it plans to retain the workers at Red Trail and that the company can draw from their experience with carbon sequestration.

In addition to being first in carbon sequestration, Red Trail has been working with Indigo Ag, which provides software and monitoring tools to help farmers calculate their carbon intensity score and grow lower-carbon corn. Low-carbon corn can then help the ethanol plant further lower its carbon score.

During a discussion of carbon capture and the Summit project in April, Andrew Mauch, president of the North Dakota Corn Growers Association, said low-carbon ethanol that can be turned into jet fuel is what gives him hope for the next generation of farmers.

“I think this sustainable aviation fuel and just the growing demand for ethanol is that next big thing,” Mauch said.

Red Trail was able to take advantage of being in an area with the right geology for carbon sequestration.

If built, the Summit project would need about 2,500 miles of pipeline to connect 57 ethanol plants in five states to underground storage.

A permit decision on the Summit pipeline in North Dakota is pending with the Public Service Commission.

Gevo’s South Dakota project would include using renewable energy to make it a carbon neutral source of jet fuel.

The Red Trail plant does not currently use renewable energy but Gevo officials said on the conference call that it would be considered at the plant.

Gevo also has a development facility in Luverne, Minnesota, and a renewable natural gas operation in northwest Iowa.

This story has been updated with additional reporting.