Gevo scraps clean jet fuel, carbon capture project in South Dakota

Gevo Inc. has canceled plans to build a multibillion-dollar clean jet fuel plant in Lake Preston, South Dakota, after struggling to line up CO2 transportation and storage infrastructure for the facility.

The alternative fuels company is formally scrapping the dormant project, called ATJ-60, along with other "noncore project activities," executives said during an Aug. 6 earnings call. Instead, the company aims to focus on expanding and upgrading its North Dakota ethanol and carbon capture operations.

As a result of the decision, Gevo recorded a $176 million noncash impairment charge during the second quarter.

The company also raised its adjusted EBITDA guidance for 2026 to more than $60 million, from $30 million. The improved outlook reflects higher anticipated revenue in the US from the Section 45Z tax credit for clean fuels, along with Gevo's recent qualification to sell into Canada's clean fuel compliance market, executives said.

"Net-net, we continue to believe Gevo is maturing from a story stock to a well-run renewable business with visible EBITDA growth," Texas Capital Securities analysts wrote in an Aug. 6 research note.

ATJ-60 was to be Gevo's first sustainable aviation fuel (SAF) plant, producing up to 60 million gallons/year. The company aimed to use corn ethanol as a feedstock and sequester the refinery's CO2 emissions, resulting in a negative carbon footprint. The plant was to link to Summit Carbon Solutions LLC's planned CO2 pipeline and storage network in the US Midwest.

The project was encouraged by federal tax credits for carbon capture and SAFs, emerging markets for low-emission jet fuel and corporate demand for carbon offsets. In 2024, the Biden administration conditionally awarded Gevo a $1.46 billion loan guarantee for ATJ-60.

The Lake Preston project ran into a series of setbacks, however. First, the South Dakota legislature banned eminent domain for CO2 pipelines in 2025 and denied Summit's second application for a siting permit. Summit has since postponed its development plans in that state.

The project was also affected by a change in federal energy priorities under the Trump administration, forcing Gevo to forfeit its conditional loan guarantee in April.

In the meantime, Gevo has been investing in its Richardton plant, acquired in 2024, which is one of the few industrial facilities in the US with on-site carbon capture and storage operations. The plant's capacity is currently being expanded to reach 75 million gallons of ethanol/year in 2027, from 67 million gallons. Gevo is also negotiating an equity financing deal with Houston-based Ara Partners Group LLC to support a second plant, which would bring the site's annual capacity to 150 million gallons.

Separately, Gevo is seeking financing to deploy its "alcohol-to-jet" technology at the Richardton site, which would enable the conversion of up to 30 million gallons/year of SAF.

Gevo CEO Paul Bloom explained the company's decision to exit the South Dakota project by noting the relative advantages of investing in North Dakota.

The Richardton site "combines one of the strongest active on-site carbon capture and sequestration capabilities in the world, with access to advantaged local feedstocks, established rail and truck logistics, an experienced operating workforce, available land and pore space capacity for future growth," Bloom said on the call. "And it's in a business-friendly state that supports agriculture, energy and carbon management."