Renewable fuels producer Gevo Inc. is pulling its application with the Department of Energy for a $1.46 billion loan guarantee and instead will pursue private financing options to fund its planned ethanol-to-jet plant in North Dakota by year’s end.

Gevo made the move on Wednesday after a conversation with DOE’s Office of Energy Dominance Financing (EDF), the Colorado-based company said in a statement.

“It was clear the business objectives EDF required -- that the project support enhanced oil recovery -- are not yet commercially viable at scale in the project area, and that there are opportunities for alternative financing better aligned with company strategy that can accelerate the timeline for project execution with improved returns,” Gevo said.

Gevo said the withdrawal allows it to potentially resubmit an application for a project later.

The biofuel company previously said it was targeting a final investment decision by midyear for its “ATJ-30” facility, which would produce sustainable aviation fuel (SAF) made with ethanol. The plan is for the plant to be part of Gevo’s recently acquired low-carbon ethanol operation in North Dakota. Gevo estimates it will take two to three years to build the SAF plant.

Gevo Chief Executive Officer Paul Bloom called the facility “one of the best sites in the U.S., in a pro-agriculture and pro-energy state that has local farmers who continue to increase productivity year after year." 

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Last year, Gevo received a conditional commitment from DOE to guarantee a loan for an SAF project in Lake Preston, South Dakota. The company said it had been working with the Trump administration to shift that approval to the North Dakota facility, which features low-carbon ethanol production, and carbon capture and sequestration capabilities.

Federal and state incentives for low-carbon fuels, including SAF, are considered a major opportunity for producers of ethanol and farmers who grow corn used to make the biofuel. The rise of electric cars is expected to slash demand for liquid fuel, leaving the ethanol industry working to find new markets. About 40% of the U.S. corn crop each year is used for making ethanol.

The buzz around SAF, which can be made from a wide array of raw materials, including ethanol, has died down from a few years ago as many investment and construction plans have stalled, and some airlines have scaled back sustainability initiatives. War is the Middle East, though, is putting a new spotlight on jet fuel as prices soar and fears of widespread supply shortages grow.

Shares of Gevo fell about 12% in after-hours trading on Nasdaq as of 7:35 p.m. ET.

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