| Key Points: – Gevo to acquire Red Trail Energy’s ethanol production and carbon sequestration assets for $210 million. – The acquisition accelerates Gevo’s sustainable aviation fuel (SAF) initiatives and carbon abatement strategies. – The deal is expected to generate positive EBITDA for Gevo by 2025. |
Gevo, Inc. has announced a major $210 million acquisition of Red Trail Energy’s ethanol production and carbon sequestration (CCS) assets, positioning the company as a key player in the energy sector’s shift towards sustainability. This move is aligned with Gevo’s mission to produce sustainable aviation fuel (SAF), motor fuels, and chemicals with a net-zero carbon footprint.
The acquisition includes a 65-million-gallon-per-year ethanol production facility and a CCS site that sequesters 160,000 metric tons of carbon annually, with the potential to increase that capacity to 1 million metric tons. The integration of Red Trail’s assets will support Gevo’s existing projects, including its Net-Zero 1 SAF plant in South Dakota, which aims to produce low-carbon fuel while reducing overall greenhouse gas emissions.
This acquisition enhances Gevo’s ability to produce low-carbon ethanol and expand its SAF platform, catering to both the U.S. and Canadian markets. The ethanol produced at the Red Trail site is already distributed across North America, including low-carbon demand markets such as Oregon, Washington, British Columbia, and Alberta. The deal further strengthens Gevo’s ability to contribute to energy decarbonization while adding significant economic value to rural communities.
The energy sector is seeing a shift towards renewable energy sources, and carbon sequestration has become a critical part of the conversation. The Red Trail CCS site, which captures and stores carbon underground, is one of the few operating CCS sites in the U.S. With this acquisition, Gevo aims to scale its carbon capture capabilities, addressing the urgent need for technologies that reduce atmospheric carbon levels while driving energy production.
Gevo’s CEO, Dr. Patrick Gruber, expressed the strategic importance of the acquisition, stating that it accelerates Gevo’s goal of becoming self-sustaining and profitable ahead of its Net-Zero 1 project. The acquisition also helps mitigate risks associated with carbon sequestration for the company’s projects, providing a blueprint for future SAF and carbon abatement initiatives.
From an operational standpoint, Gevo plans to retain the approximately 50 employees currently managing the Red Trail facilities, ensuring continuity and leveraging their expertise. The company also intends to optimize the facility through combined heat and power, further reducing carbon intensity and increasing annual carbon sequestration capabilities. This approach not only improves the efficiency of ethanol production but also enables future expansion into net-zero fuel and chemical production.
The energy sector, particularly in the realm of renewable fuels, is rapidly evolving. Gevo’s acquisition of Red Trail’s assets is a key step in positioning itself at the forefront of the industry’s low-carbon future. The deal is expected to generate positive EBITDA by 2025, a significant milestone for the company, and demonstrates its commitment to driving innovation in the renewable energy space.
As the transaction is expected to close by the first quarter of 2025, pending regulatory approval, it underscores the growing importance of sustainable energy solutions in addressing global climate change, U.S. energy security, and economic growth in rural areas.
