Gevo has signed binding, definitive agreements with bp for the sale of RNG.
Gevo’s wholly-owned dairy manure-based RNG project company located in northwest Iowa, Gevo NW Iowa RNG, signed the binding, definitive agreements with bp Canada Energy Marketing Corp and bp Products North America.
The NW Iowa RNG project is currently being constructed and is expected to commence production in early 2022. On completion, NW Iowa RNG is estimated to produce around 355,000 MMBtu of RNG annually. The RNG is expected to be sold into the California market under dispensing agreements bp has in place with Clean Energy Fuels Corp.
RNG-fuelled vehicles are estimated to result in up to 96% lower emissions than those fuelled by gasoline or diesel on a lifecycle basis, according to a study by the US Department of Energy.
It is expected that NW Iowa RNG will benefit from environmental product revenues under California’s Low Carbon Fuel Standard programme and the US Environmental Protection Agency’s Renewable Identification Number programme.
Starting in late 2022 upon stabilised operations and pathway certifications of its environmental products, NW Iowa RNG is expected to generate cash distributions to Gevo of approximately $9-16 million per year. Starting in 2024, Gevo will have the right to use a portion of NW Iowa RNG’s production as process energy at its Net-Zero 1 Project or other production facilities, including future Net-Zero projects.
“RNG is proving to be a key fuel in the energy transition,” said Dr Patrick Gruber, CEO of Gevo. “bp has a value chain that allows RNG to reach the transportation market, and it’s a pleasure to work with a company that shares our vision of a low-carbon future.
“This is an excellent opportunity to meet the growing demand for RNG and to expand our RNG business. We are glad to be working with bp.”