Gevo’s wholly owned dairy-based RNG project company, Gevo NW Iowa RNG, has signed an agreement with BP Canada Energy Marketing Corp. and BP Products North America for the sale of NW Iowa RNG’s production. The project is currently under construction, with completion expected in early 2022. It is expected to produce 355,000 MMBtu of RNG per year. The gas is expected to be sold to the California market.
RNG-fueled vehicles are estimated to result in up to 95 percent lower emissions than those fueled by gasoline or diesel on a lifecycle basis, according to a U.S. Department of Energy study. It is anticipated that NW Iowa RNG will benefit from environmental product revenues under California’s Low Carbon Fuel Standard program and the U.S. Environmental Protection Agency’s Renewable Identification Number program.
Beginning in late 2022 upon stabilized operations and pathway certifications of its environmental products, NW Iowa RNG is expected to generate cash distributions to Gevo of approximately $9 to $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. 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,” said Patrick R. Gruber, CEO of Gevo. “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.”