What's Next for Sustainable Aviation Fuel - with Dr. Patrick Gruber from Gevo

Sponsored by: KPMG

It's time to talk about sustainable fuels; specifically sustainable aviation fuel (SAF). Dr. Patrick Gruber is the Chief Executive Officer of Gevo, where he and the team are at forefront of sustainable fuel development. Patrick is here to outline the basics of those fuels, how they fit into a wider energy ecosystem, what it will take for those fuels to see wider adoption, and the hurdles that might be standing in the way. He also explains how some fuels can be carbon negative.

Patrick is a no-nonsense executive who is passionate about growing the sustainable fuel sector in an effort to fight climate change, so enjoy the energy he brings to this episode.

More resources from KPMG
The Hydrogen Horizon
Energy & Chemicals
Energy Institute 2023 Statistical Review of World Energy

Highlights from Patrick Gruber
The basics of what Gevo does - (2:14)
Gevo's supply chain and feedstocks - (3:23)
Overview of various markets for sustainable fuels - (8:53)
Guidelines for SAF and CORSIA eligible fuels - (11:32)
How SAF fits into existing aviation fuel infrastructure - (15:32)
A2J: Alcohol to Jet fuel - (17:16)
Current SAF production capacity - (18:00)
Uncertainty surrounding the Inflation Reduction Act - (20:52)
Growing bi-partisan support for sustainable fuels - (21:43)
Paying farmers more for using better agriculture practices - (24:29)
The impact of climate change on feedstocks - (29:01)
The concept of carbon negative fuels - (30:11)
The share of the global aviation fuel market SAFs can capture - (33:35)

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Transcript

(Note: This transcript was created using artificial intelligence. It has not been edited verbatim.)

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Sean McMahon 

What's up everyone, and welcome to the Renewable Energy SmartPod. I'm your host Sean McMahon, and today we're going to be talking about sustainable fuels, specifically sustainable aviation fuel. In a minute, I'll be joined by Patrick Gruber, the Chief Executive Officer of Gevo. Patrick and the team at Gevo are at the forefront of the Sustainable fuel sector. So we're going to discuss the basics of those fuels, how they fit into a wider energy ecosystem, what it will take for those fuels to see wider adoption, and the hurdles that might be standing in the way. Patrick is a no nonsense type of guy who is passionate about growing the sustainable fuel sector. In an effort to fight climate change, I think you'll appreciate the energy he brings to this episode. 

Looking ahead, on our next episode, we will hear from Nick Wayth, the chief executive of the Energy Institute. Each year, the Energy Institute publishes the Statistical Review of World Energy, which offers a comprehensive look at energy production and consumption around the world. Nick will pop by to share with the most recent review found, both from abroad look at the energy sector, and in areas specific to renewables and precious minerals. 

That should be a great conversation. But right now, let's get things started with Patrick Gruber from Gevo. 

Hello, everyone, and thank you for joining me today. My guest is Patrick Groover, the CEO of Gevo Patrick, how you doing today?

Patrick Gruber  02:12

I'm doing well. Thanks. Thanks for having me.

Sean McMahon  02:14

I'm excited to bring you on. You know, we're gonna be talking a lot about renewable fuels, specifically sustainable aviation fuel, and your company is you know, up to your eyeballs in that. So why don't you tell our listeners a little bit about Gevo and what your the team do?

Patrick Gruber  02:26

Sure. So Gevo is a company where we're very focused on using carbohydrates as raw material, we make them into alcohols, alcohol, that's by brewing, actually. And then you take that alcohol, and you convert it into these basic building block chemicals that you would normally get out of a cracker, if you're doing a petroleum game, we're getting them from the alcohols, that would be like ethylene. And then you take that ethylene and do it just like the petrochemical industry would connect those things together to get the jet fuel. So it's combination of algae plus chemistry, roping in agriculture, and then doing all of that processing with renewable energy. So this means that we're wind farms supporting to us renewable natural gas supporting us hygiene is important to us, too, because we do a little bit of hydrogen, and all of that you get to net zero and carbon negative footprints, which is pretty darn fascinating about what we're doing here, right? carbon negative, think about that after it's burned as a fuel, it's still carbon negative. That's because we also play the game of sequestration.

Sean McMahon  03:23

Okay, so as most folks in the renewables industry have learned in the last few years supply chain, is something you really gotta kind of be concerned about. And obviously, for you, that probably kind of lends itself more to feedstocks. So what does this feedstock look like for your company in all the products you're producing?

Patrick Gruber  03:37

Yeah, well, you know, it's fascinating whenever when someone starts talking about the scale and scope of fossil based fuels there, they get overwhelmed so big, you know, we how can we solve these problems and blah, blah, blah, what we have noticed is that there's not really a whole lot of robust analysis done around what's possible to do in the future, because people assume that, for instance, that agriculture is stagnant and hasn't changed. And that word maxed out and it's fully optimized was not even close to being the truth, not even at all. And so we have a basic premise that photosynthesis is a much better way of capturing renewable energy, because you get both the electrons in the carbon and the hydrogen, all three things, I guess. And you can make that into a fuel versus doing all these other things like direct air capture, and all these other things. So if I want liquid fuel in the end, and Insaf jet fuel we do, because that stuff, so energy dense, and all the infrastructure is there, man, that stuff works great. And I can see that in gasoline, we're going to replace the one gasoline that's hydrocarbon based, because not everyone lends itself to being hydrogen or electric. And the same is true with on the road diesel fuel so we can make all those things right. But people go, Oh, can't be done. There's not enough land and LINPACK food. That's BS. I'm telling you right now, that's BS. That's not actually real. That's based on ancient data, not paying attention to the facts on the ground of what's really happening. So what's interesting about this is that when you think about What has to be done? How do you solve this problem, you got to do a couple of things. One, you want really, really low carbon footprint or carbon negative fuels. Why? It's Think of it like a detergent concentrate, if I just did grid electricity, for example, you know, I wasn't paying attention, I might have a CI score of 50. A CI score is the measurement from the emissions of carbon index, it's called it's really to the greenhouse gases. Ideally, you want to be a zero or below. And everyone says we're gonna be net zero by 2030. Well, here's the gain here, then is how do I get that done? If you drive that CI score down further and further, you need less renewable gallons than I would if it was a CI score of 50. It's like a detergent concentrate. And so that matters. And we have the ability to do those things. Well, how, how do you do it? Well, you leverage existing systems. So you think of the scale well guess what I'm leveraging agricultural systems that already exist. I'm interested in using corn starch, you take the corn, grind it up, separate the starch from the protein and oil, the protein and oil go to animal feed, or food markets, and the carbohydrates, which normally go to high fructose corn syrup, and corn sweeteners. Here's one for you that people don't normally know, sweet corn, popcorn, corn on the cob Karna, canned corn in a bag, represent what percent of all the corn grown, that's it. And those are grown for food, we're not using that kind of corn at all. It's one of the kind that is done for making protein for animals and for the get the oil out of it, too. And so it's just a different thing. And people aren't aware of that. So anyway, the point of this is leveraging large scale infrastructure already, it already exists. And it's leveraging it. And we're using the alcohol, we use ethanol. Everybody knows about ethanol, the ethanol industry has done a good job of learning how to run their plants. But if we take ethanol, we can convert that we have technologies nailed to convert that into petrochemical products like jet fuel. Well, you think about that. And if we took just suppose I could snap my fingers, and say, let's take all the ethanol. Today that's produced of the for the fuel market for gasoline, blend stock. And everyone did people don't like that very much. But okay, we're gonna get into jet fuel, I could take that 17 billion gallons and turn that into roughly 10 billion gallons of jet fuel 10 billion gallons of jet fuel and a 50% blend, which is allowed under the blending roles, guess what that would meet the full demand of jet fuel in the US, just like that. And so we talk about scale and supply chain, they already exist in this. So we don't see that as a problem. Plus, when you consider then that we see us yields of corn at 160 bushels per acre, whatever, 170 bushels per acre, we see the maximum at 400, or 500. I think there's room for improvement. And when you look at internationally, corn yields are in the below 100. So this, this is all without expanding land use. That gets me to another fallacy. People say, Well, you're gonna use more land no BS. That's not true. That's ridic, you think you could get away doing that pond down some virgin prairie these days, and someone's not going to be there with a cell phone watching, you really think that's reality? Or they're going to watch with a satellite? Because that's actually what we do we watch with satellites. So it is not the world of old, we can also use cellulosic feedstocks Gevo could in terms of, you know, stuff that comes from would you think we're going to have somebody clear cut a forest? Really? No, I don't think so. I think we're gonna be done pretty careful harvesting of the woods to make sure we don't hurt the environment. This is part and parcel to the turf that we live in, we get held to a much, much, much higher standard than say, those petrochemical guys who could just go ahead and pollute all they want. So we have to prove everything, absolutely across the board with this whole supply chain. And so another part of our businesses to do exactly that. We call it Verity tracking Verdi, carbon solutions. And this is about tracking every bit of sustainability data at carbon data, reporting it openly transparently and documenting the hell out of it. So we can withstand all scrutiny. That's also part of it, and then give that gives everyone in the supply chain, the ammo and competence to go. Yep, bring it. We got the data you don't.

Sean McMahon  08:53

All right. Well, I gotta say, Pat, I appreciate the energy you're bringing into this conversation about energy. So talk a little bit more about the markets and the industries you're serving. Obviously, we've talked about, you know, airlines and things like that. But what else?

Patrick Gruber  09:04

Yeah, here's the here's the thing that's changed a bit and I still need to see how it unfolds is that I think from in the marketplace, people can generally agree that yeah, those airplanes unlikely to jump to hydrogen anytime soon, because, you know, heck, hydrogen has what a quarter of the density and Okay, with the energy efficiency, maybe you need, you need big, big, big, big tanks of liquid hydrogen onboard an airplane, way bigger than a gas tank full of jet fuel. And so that means you got some kind of a new plane that can do this. And it's really no one quite knows the answer to that. So maybe someday in the future, and then you need all infrastructure. Oh, and did I mention that liquid hydrogen? Yeah, okay, someday, someday, and are there gonna be electric anytime soon? Well, we can't figure out how to do batteries for long haul, let alone airplane. So will there be opportunity? Sure, there will be. It's not this panacea, the key here, so things like jet fuel, we can all agree probably hydrocarbons are going to be here for a long, long, long time. And the airline industry believes that as well. So That looks like a good market. The question is, at what price is that carbon? This is the critical issue for us, all of us in the space. And this is true gasoline or diesel fuel or hydrogen even, is what's that value of the carbon abatement? Who's gonna pay for it? How's it gonna get paid for? Because a product like ours, and this is super important now, the cash cost, the cash costs, meaning full variable, raw material, plus variable cost plus fixed cost full cash out the door to make my gallon of fuel, actually is competitive with petrochemical stuff in the ad 200. Buck range. Amazing, I think I think that should be people can watch in this is that and you have a zero carbon footprint besides? Well, yeah, that's what we're doing here. That's what's possible. And that's not even fully optimized yet. But that's what it pencils out to be today. Ah, the killer for us the killer. The challenge, I got to build new plants. So I have several dollars a gallon of new capital to pay for where I'm competing with underappreciated industry. Okay, so I'm like, where's that guy gonna come from? Someone's got to step up. And that really translates to them the carbon value, who will pay for this? Well, with the IRA bill, there's supposed to be some money in there. I'm waiting to see the results of that analysis and what models they use the corsia thing was jacked, I'm just telling you right now. But where did they did it? How they did it? Did you know US agriculture was even consulted about this, and they just made up this rules? Are you freaking kidding me? It's like, it was such done in a black box. And people it's like, you gotta be kidding me.

Sean McMahon  11:32

So real quick, explain listeners to the corsia. What are we talking about here?

Patrick Gruber  11:35

That corsia is this thing where it's a framework? So it's not so what? Okay, there's a couple of things. One, there's IATA, the International Airline Transportation Association, along with the United Nations all got together and said, Well, we really should do this, right? We're not gonna do it like road fuels, we're going to come up with all the rules of sustainability, blah, blah, blah, let's make up our own rules. And so they said at the start a separate group, it's done sponsored by Ada. It's called corsia. Remember, kharsia stands for? And then it is a brown, the framework of sustainability, what it looks like in the future, and principles and stuff like that. And is it as part of it, they said, well, there's you gotta count carbon along the way. So the reason it's important is that in the IRA bill, there's a section called 45. And there's 45, B, and 45, z. And 45. deals with transportation fuels on road transportation fuels, and specifies that argon green model would be used to measure carbon. And then on the SAF thing, it just got really weird. This is where it said, we're going to use corsia, or another method, similar method. The problem is cracy is not actually a method of counting carbon. So we're like, what does that mean? And we'd like to know that answer, because we can't figure out economics without knowing what that answer is, right? So what's happening then is, we're told that greet model is going to be the method for counting for staff as well. There's been a rather big wrestling match amongst all the agencies and stakeholders, and the White House. So the green model is a model that was been developed for years and years and years by Argonne National Laboratory. It is the gold standard for how you count carbon and the methodologies by which you do so it also has with it, these various modules that get added and updated on a regular basis, as the information publications become more clear, and the stuff gets updated. Everybody who's serious about carbon accounting uses the green model in some way, fashion or form. What happens though, is that people will say, well use the green model, and they'll take a portion of the green model, not the whole green model. And I'll say, why is the green? Well, then they'll stuff their own data into it rather than using, like real data. And so that's the part where it's really troublesome and where the arguments fight because people, especially around soil, carbon, or sequestration, or some of these other, like, there's some other things too, but that's where they fight over it. But reality is the data is the damn data. This is how about we measure it? So we're huge fans of Route measuring stuff on the field. I had one of the administration people say, well, it's not possible to measure carbon in the field, I don't even know tell you, because we do it takes work money, we do it. Sure we could. But our stand, you know, so we got all these paradigms to blow up, the world's changed. And you gotta acknowledge that and then step up to it too, because I'm talking about one heck of a lot of data collection across the whole, and reporting, because in the end, you know, who's gonna pay for this fuel, and this is the back to the issue at hand. It's gonna be you and me as consumers, and sitting in that plane, paying for it one way or another directly, because I believe that there's a value associated with this that I can be convinced of, or it's going to be because we're taxed, right, or combinations thereof, which is probably the likely thing. But that gets back to the issue. What's carbon worth? where, why? Who's going to pay for it for how long? Because in the end, we got to know that answer to in order to build these plants, every company in my space, everybody has this very same issue. What's it worth?

Sean McMahon  14:50

And now, a quick message from the exclusive sponsor of today's episode KPMG. 

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Sean McMahon

And so now getting back to that conversation about you know, sitting on the plane, it sounds like other you're kind of trying to get to the point where the infrastructure for these fuels doesn't have to be completely shifted in, you said the paradigm shifted to account for like a hydrogen fuel and a bigger tank. So a lot of times when we're talking about sustainable aviation fuel, people don't quite understand what we're talking about. Are we talking about a blend? Are we talking about 100% replacement, a 10% blend? Like, I've talked to different experts who have different solutions who have a different percentage of blend? So what does Gevo offer? 

Patrick Gruber  16:02

Alright, so here's how to think about it is jet fuel is kerosene jet as kerosene Okay, so and kerosene is a mixture of molecules, so spread made from petroleum, we can make 100% 50%, temperate, whatever someone wants, we can do. So technically not even a challenge. So that technology exists is copied straight from the petrochemical industry, make whatever and these are exact rabbits. These are droplets. This is incredibly important. In fact, there's such a drop in that once you take something that we make in blender with veterans who cannot tell the difference, unless you're measured, see 14 Secret team ratios. You can't tell the difference. Physically, many measurement, it's the same legally, it's the same. So once it's blended it is Jet A and a discussion and a story. It took us six years to get that approved, we're the ones who did it for alcohol, the jet of all types. And it was brutal. We flew on every frickin plane and platform and engine, and you know, supply chain and tank and pump everywhere. Got her done. And so it's the same. And this is incredibly important. If we want something to change in our lifetimes, we got to leverage all the existing stuff and make it better. Because it takes decades and billions and trillions of dollars to change infrastructure. That's not realistic.

Sean McMahon  17:16

Okay, real quick, you mentioned A2J, what is that?

Patrick Gruber  17:20

That's an acronym for alcohol to jet. It's a generic term for taking an alcohol and doing the chemistry to convert it into jet fuel. And so you take like an ethanol or we can do butanol to but convert you do chemistry and those alcohols, and then make them into jet fuel. And but you know, what's cool about that is you can take the technique to actually do that conversion and stuff that's copied directly out of the petrochemical industry that's already well proven and well optimize. So we can just do that. We're doing our own flavor of it to try and make it so it's reduced carbon footprint by certain integrations and how we manage energy. But you know, so it's got our own spin on it, because we're trying to lower the carbon footprint overall, even more than they would care about. But it works already, these techniques are known.

Sean McMahon  18:00

So what does the current landscape look like, though? I know you've got some existing partnerships in place, you signed a recent agreement with the USDA, when it comes to these sustainable aviation fuels. How close are we to making that more immediate change? Like you said, it takes years and billions and trillions of dollars to change infrastructure. This seems like more of a no not flipping a light switch. But something that's a lot faster.

Patrick Gruber  18:20

It's you got to build new capacity. So it takes two years to build a plant. Once you have the design done. Once the site locate it takes two years and takes like a plant like ours is, you know, the hard cost, meaning the equipment itself and installation for our net 01 plants either 50 million bucks. It'll creep up a bit, I'm sure. And then we're working on beating it back. Because all the inflation stuff installed, it's like 1.3, or something billion on a fully financed fully installed cost. So you're talking big money here. All right, for 65 million gallons of hydrocarbons. Yeah, that sounds gonna say how much can one plant produce 65 million gallons at that scale. So that takes 100 billion gallons of ethanol equivalents in. So now it can work. It can work, but it's who's gonna finance it? And the question around financing is around, what's that carbon value? People get the cash cost and go, Yep, we believe you on cash costs, they look in the future and go, Hey, well, people value carbon in the future. And a lot of people on Wall Street say, yep, carbon value is going to increase. We believe that we have the lowest cost of carbon abatement for fuels that there is. And we have a lot of data that shows that because of how efficient the system is, and, and all the rest, and that's huge. But when it comes to real practical sense is, hey, 10 years from now, what's that value of carbon anyway? No. And I don't think they do because we didn't know fully what the carbon values today because you know what, we don't have clarity about that IRA bill. So you know what that means for us pencils down on Wall Street, other than keep us informed of what's changing, but until I know, what are all the values of carbon, I can't add them up or even finish having the discussions with airlines and their customers. So you know, because we got the federal stuff. We got state stuff that can add up into it. Maybe there's other incentives along the way. Like I like RFS RMS seem stable, you know, comparatively to these people. And so that's what has to happen. I need to know what the numbers are. I can't even finance something. And this is the status of where we're at. We're all in limbo land until we see some clarity here, and then we start solving the problems again. So I think we'll get clarity in December, then we'll start solving the problems. But it's a it's all about financing, bottom line, dropping products, dropping infrastructure. This is 100%, about financings? That's what this is about. financings then have to be pegged to the price in the marketplace, people understand there should be a premium for low carbon or zero carbon, get it, they get it, but how much and they don't want to be an outlier. So we need to get on with this and build stuff. Well, how are we going to build it? Well, I got to have financing, I got to know what carbon value is, or at least have predictions that people believe it. And I'll tell you what's happened in the last year around feds? Were no believes anything is not helpful. It is not is not helpful.

Sean McMahon  20:52

You're talking about just the uncertainty either with what's coming from the IRA or, you know, political infighting.

Patrick Gruber  20:58

So yeah, so three years ago, everyone's like, Oh, the green New Deal, the green New Deal, it's gonna be great, you know, and everyone's all rosy and robust. And let's go, let's go, let's go crazy. Now people are going they can get their act together and how to count carbon, which isn't that hard to do, actually, it's actually the government's been doing it with Argonne National Laboratory for years. It is the gold standard at the world experts that Oh, no, no, no, we're not gonna use them, we're going to create something new, really crazy. So now they're all getting their act together. So they did a good job. So the administration's done a good job, I think pulling people together. So that's the truth. i And I've talked to all those people that really have their, their work in it. And they know, this is like, the gaps that we're all always have the same interest. We want a policy that can last three administrations, because we're gonna be changes. Everyone believes there's gonna be changes in the future.

Sean McMahon  21:43

Yeah, of course. Speaking of those changes, though, what do you see as the political landscape or something like this? Because you got to play in Iowa, if I'm not mistaken. Right. But RG plant Iowa? Yeah. Yeah. So I mean, looking at the generalizations of, you know, political parties here in the US, how does that change?

Patrick Gruber  21:58

Well, you know, what's interesting, I think, I think there's a shift going on. Years ago, I also had to do see the word greenhouse gas, I get thrown out of a red office, you know, years ago.

Sean McMahon  22:07

Yeah, that's what I'm getting at. It seems like there's a lot more will go red and blue for however we want to name it. But red districts and red representatives in government who are starting to see either a the the money part of it or be the jobs part of it, or all the above. So how have those conversations changed? It sounds like you're saying you used to get kicked out of the offices, and now you're taking those meetings?

Patrick Gruber  22:25

Not anymore. And I think now that people have been understanding that it is a fact that when you burn fossil carbon, absolute certainty, it would have been burned, but for us as human beings, and in fact, it goes the atmosphere, if you believe any kind of fundamental theory about anything returning ecology, you know, that we, as human beings interact with our environment. So hell yeah, there's climate change, shut up. It's just a question of how much the climate change, what's the consequence, who's responsible, and all the rest. So it's not so simple as I don't you know, I'm not one of these guys who believes we're going to die in 12 years or anything like that, or the world's gonna end. But the fact is, I don't really know, you know, I don't know, is the truth and now think anyone truly knows. But that's part of the issue is that we definitely are going to places in carbon emissions in the atmosphere, the definitely the theory of greenhouse gas, causing heat. That's real. I mean, that's something you can prove it's real. So what does it mean? When does it mean it? What do we do about it? And how do you get the rest of the world to behave? And all the rest? It's all those are all legit questions. And I think what happens is that too often people get so polarized, they just speak about it as like religious doctrine versus just like, can we solve the problems really, we can make a difference, and we can make money at it, for God's sakes. This is my point about talking about cash cost, we can be competitive with petroleum, if I had the same benefit that those guys did, where they got sponsored by the government. years ago, if I had that same deal, I could already be competitive and except for I could offer to the consumers a product that's low carb, do you think if we could document you think they choose mine or theirs? Well, I think that's the point. And so we're at this inflection point where I think we're at it with the technologies of advanced enough, this point about counting the carbon accurately reporting it transparently and standing by it and let it be audited by others or anyone else who wants to throw rocks, hugely, hugely important. That's not the world's not been that way before. I'm talking about laying it all open all my production energy in the open for people. You think petrochemical companies want to do that? I don't think so. You know, so it's just a different paradigm about what we're trying to sell. Because in the end, it's got to be getting consumers, taxpayers to believe that they're getting some for the money. Now, interestingly enough, when I'm talking about here's what has to be done, we should measure at the field level field level. Don't give an average number for coroner's say all corn is good. Not all corn is good. Some of the guys, I'm sorry, but I don't think they should be farming. You know, it's like, Oh, my God, look at their emissions. And I'm like, Please stop, go do something else. You need a new job. Let's help you. And then you got other guys who are like so superb and you guys should be teachers to other people. Let's go and how do we get other people doing and let's spread it around the world because by doing these modern agriculture techniques, Like strip tillage, no till, or cover crops, some of these things are met, you solve other problems like nitrogen, you reduce the nature and you reduce the water runoff, you reduce, you create other crop, there's all kinds of things that come with it. And we're at the very beginning. So all of this is going to be driven economically. So we believe that if farmers do a good job, grinder stuff was a stable agriculture, climate smart ag practice, we should pay him more. So we're out committed already to do that, we're gonna pay more and get your data, I'm gonna pay you more, because I want that corn from that field. And the corn that sucks. I want that corn.

Sean McMahon  25:31

What’s the premium you're paying farmers who are doing it right? 

Patrick Gruber  25:35

It'd be like, I think about 40 cents a bushel in that range that we can identify today be willing to do that's like real money for someone who's not 1000 bushels per acre or whatever.

Sean McMahon  25:43

So what is the marketplace look like? In terms of other participants? You're working with partnerships with airlines, you mentioned IATA? What are the players are in this helping companies like Gevo advanced this whole thing, whether it's testing it in their products, doing their own research and r&d, and on finding new uses for fuels like this? Who are some of the major players?

Patrick Gruber  26:03

Well, the testing phase are done, we're done. All that kind of stuffs all done is all about commercialization. That's all done already. So this is not an r&d Phase project. So people will try to tell you, you meet people who say it is they're trying to make their own special technology, special sauce, but I'm telling you, these techniques that we're using our tried and true proven stuff from the petrochemical industry. There's been done already, right? Because look, ethylene, the two carbon building block ethylene, it's the same ethylene chemically, whether it's made of petroleum or renewables, with the only difference would be the source of the carbon, and hydrogen. So electrons but it's a the same, it's so everything's the same. So this is a one of these things that we face all the time, if confusing people about where the status is, we can make any damn thing we want to someone got to pay me. I had someone, for example, say to me as soon as a panel recently in Texas, and the person said, oh, you know, but there's these technologies can be a shortage of raw materials, we have to alkies onroad fuels will get shorted for diesel fuel, people divert what can be done for diesel fuel on the SAF? Like we're talking about? I'll make it I'll make a diesel fuel, I can make a diesel fuel. All you got to do is give me a contract that lasts long term that's financeable I'll make it, I'll make a diesel fuel. You want to sign up for that? Well, then I'd have to lock in a long term price. Yeah, no kidding. That's the point. You got to lock in long term price. And that's the issue that is comes down to the issue. So airlines, our partners, Delta has been terrific. One World group has been terrific. So sky, sky team, Delta, Delta has had a whole bunch of their customers up to our plant in Minnesota. And then we take them out to farms and show them our modern farms actually worked. Every one of them was blown away and shocked, because it's different than what all these sustainability experts are talking about. A lot of people who come there are sustainability experts, but they've never been to a farm before. They've only read about books. And so then they're shocked by what reality is. And of course, this is the problem we face is people don't know what the hell they're talking about. They're willing to learn though, and we got to educate them. But it all comes down to the end to let's get the real data, let's measure things, let's report things, we can do that we have the tools to do that. Let's do it. That is that's why we're getting traction on stuff is because we're willing to share all that with people and teach them. And in the end, it's we got to teach the people downstream the customers downstream. Consumers downstream, we got to education and work all the time with policy people around the world. I got a team in Europe this week. We're making progress there too. Because what they did is this paradigms that agriculture always pollutes and cows are bad. No, they're not. That's not true. Can we sort out the truth from the fiction and stop with the narratives? And just get the facts because this is a technical problem. The solutions exist already. This is our constant crusade. And yeah, we're passionate because we know it can be done we know can be economical, right? So we can see it and tasted financing it. Okay, in this hyperinflation world, and uncertainty with worse, this is not helpful whatsoever. I gotta tell you, but we'll work through it.

Sean McMahon  29:01

Okay, and you talked earlier about climate change. And we've also been talking extensively about feedstocks. concerns about the impact climate change will have on crop yields, which is something you'd obviously be counting on. So is it's hard to pencil that out for, you know, decades and decades out. But where does that you know what,

Patrick Gruber  29:21

When I was a kid, I don't recall corn grown very well in North Dakota. Not does. So

Sean McMahon  29:31

So where am I? Where am I suffer? There's other places that might have opportunity. Yeah,

Patrick Gruber  29:35

yeah. So I'm like, we can grow more stuff, you know, plants like more co2, maybe we should grow more plants. And maybe we should do it systematically. So we make sure we don't do the pollution that comes with unrestricted agriculture, not unrestricted the wrong word, but disciplined, says let's do sustainable agriculture. And let's grow more stuff and capture more of the co2 in the atmosphere of plant matter. So there's all kinds of things we can do so we can sequester carbon in the soil, we can take co2 emissions Put them in ground and make rock out of them. That's also possible. So all these are the tools.

Sean McMahon  30:05

Okay. And then you talked about, you know, we're trying to educate consumers, even folks within the commercial industries. And one thing you said earlier, I think it's gonna be an attention getter, you said that through your processes, your fuel can end up actually being carbon, negative carbon, negative carbon. So just real quick, you make a claim like that. And then renewables industry, hey, you're gonna, you're gonna get some attention and maybe get some skeptics. So let's take a few minutes right now, and just walk me through what you mean by that, and how that process works where you get to that outcome.

Patrick Gruber  30:33

Sure. So there's two things you have to consider when you're designing a fuel, you're taking about the carbon from which it's made, and then the energy to by which you make it, right. We're using photosynthetic energy to connect carbons together and add hydrogen to the carbon, taking co2, adding water to it, you release, photosynthesis gives off oxygen. And so that's what happens chemically, it's actually reductive, what's called in chemistry of reduction. And then we're taking that carbohydrate and then rearranging it through fermentation, again, using the energy biological energy to drive even more reduction. And then we're finishing it off by doing chemistry to make into a jet fuel. And we had one molecule hydrogen to it. So to the finished fuel, okay, that's technical order. Now I need process energy, electricity and heat in order to drive my process. So if I take that footprint out, if I eliminate that footprint with renewable energy, then I don't have a footprint from using energy in my process. Okay. That's how it's eliminated. Now, to get to negative what's the take by sustainable agricultural practices. By growing corn we have, we've measured the fields, we got somewhere like minus 30, minus 30. Footprint coming in to our plant from that corn because of how good they do the low till cover crop, precision agriculture, which is the probably the biggest thing of all precision agriculture, meaning you do the ad only those chemicals which are needed exactly on that spot that needs it kind of a thing. And that's where the technology is changing, it actually builds up soil carbon, we can measure it, and so that's negative. So that's cool. I like it, we've seen data lead to minus 100 jet fuel, by doing what's called if you change the microbiome, in the soil. So you're I don't know, if you were people sometimes are aware of like the microbiome in your gut, you got to pay attention to it make all healthy, happy soils, kind of the same thing. And so there's, there's people developing these techniques where it's soil, bacteria, change them, and you can bring them back, make him enriched, but you can actually capture more carbon and so and reduces nature and emissions and all the rest. So that's part of what can happen. But today, we can just take those techniques of what's been done with precision ag, strip tilling, good management, it's minus 30. In some cases, right? That's part of it, then you have during the fermentation, you make co2, you know, everyone has been, I don't know, a lot of us has tried beer at home, you know, makes bubbles, those bubbles are full of co2. So if you take those, that co2 that comes off the fermentation, you take it and put it in the ground. That's where 30 ci points right there. So that's how you get to carbon negative. So by eliminating your energy footprint by using renewable energy, and renewable hydrogen, plus, then paying attention to sequestration of soil sequestration of the co2 that comes off the fermentation, you can get to carbon negative, that's how you do it. And it's quite impressive as to what can be done. This has been published by Argonne National Laboratory. So I didn't even that's their data, our data we give to them. And they said you tell us what you think. And they just published it. So we're solid on this claim.

Sean McMahon  33:27

I appreciate that explaining, not only for me, quite frankly, I'm not the you know, the scientist here, but I know there's a lot of listeners will appreciate kind of that succinct explanation. You talked about your work with OneWorld and Delta earlier. Do you have any bold predictions in terms of the market for sustainable aviation fuel and say 10 years? What percentage of fuels and all these jets criss crossing the globe? What do you think is going to be sustainable aviation fuel? Or if you wanna take it longer? 20? Just give me a give me a percentage of fuel and how many years out? 

Patrick Gruber  33:55

All right, so here's, I'd say how I think of it because I think if a little bit differently is I'm doing my company's doing renewable hydrocarbons. Broadly, I know how to make diesel fuel, jet fuel, we have other technologies, gasoline, and I'm looking at the problems and I'm looking at all of them, right. And we can make a dent on all of them. It's possible. I think, what we're gonna see the midst of this initial phase of yours is going to be around setting up the infrastructure proving it all works, and there's money to be made. And it's a worthy investment so we can get carbon copies done. And we're setting up by the way our plant designs we can we can do carbon copies, or do modularization for that. How much could be done in 10 year period, that depends upon the financing and availability in the marketplace, as it depends upon future value of carbon and how people perceive it. So what's going to happen in 10 years you're going to see is that we're going to see photosynthetic routes, by far dominate, it's going to be made of Hefa. The technology comes from vegetable oil, and from stuff like us, which comes from carbohydrates through alcohols. That's going to be the dominant SAF and the question of how big it is, should we be a billion gallons in 10 years? Boy, I sure as heck would hope so many billions of gallons and 10 years by 2030, we should be approaching that already have people in our network around us or our licensees, all predicated on, we've got to crack the financial not have a long term view of what is carbon value worth and get kind of consensus built in the financial community.

Sean McMahon  35:18

How many billion gallons of jet fuel is used right now, though, like when you say a billion or multiple billions in 10 years,

Patrick Gruber  35:24

Worldwide, about 110 billion, and it's going to grow to 130 billion in the next 10 or 15 years. And in the US, about 20 billion gallons are used. And the thing is, that's a nut we can crack. Those are those are totally in the realm of fair game. Here's what here's one of the things that I didn't mention, but I should have is that I think he's gonna be successful in certain places, and they're going to take a bite out of the gasoline pool, gasoline pool is going to get smaller. Now what that means means ethanol becomes more available for other uses, because you don't need it for gasoline. Well, fine, we can now I can turn that into jet fuel, and everybody's happy. It makes money. So it all works. So it's a I think that's over time. If you play that out to a 10 year period, then it's even more severe that people are talking about 30 or 40%. Gasoline, cool, shrink. Cool. That makes more feedstock available for me to turn it into jet fuel. So it'll be a shift. So it's we aren't going to be feedstock limited like that. It's all about financings carbon value and clarity, and stability. That's what's needed. Okay,

Sean McMahon  36:29

Well, on that note, I appreciate you kind of helping us sort through it, Pat. So thank you very much for your time. This has been very educational for me, and I think for our listeners as well.

Patrick Gruber  36:37

Thanks for having me.

Sean McMahon  36:44

Well, that's our show for today. But before we get out here, I want to say one final thank you to the sponsor of today's episode KPMG. 

Thank you all for listening. And if you haven't already, please subscribe or follow this show on Apple, Spotify, Google, or wherever you listen to your podcasts. And as always, please be sure to share it with your friends and colleagues. Have a great day.