(Reuters) - The U.S. Department of Energy said on Wednesday it has approved conditional loan guarantee commitments totaling nearly $3 billion for two sustainable aviation fuel projects.
The agency's Loan Programs Office said the funding of up to $1.44 billion to Calumet's unit would support the expansion of its facility in Montana.
The facility will utilize vegetable oils, fats, and greases to produce SAF, renewable diesel, and renewable naphtha.
If finalized, the loan guarantee would fund facility expansion to produce about 315 million gallons per year of biofuels, most of which will be SAF, the agency said.
The White House aims to meet all of the U.S.'s aviation fuel demand with SAF by 2050 and to supply at least 3 billion gallons of SAF annually by 2030.
Once the Montana facility reaches full capacity, its output would represent 10% of the SAF Grand Challenge goal of 3 billion gallons annually by 2030, DOE said.
The government body also approved an up to $1.46 billion loan guarantee to renewable fuels company Gevo (NASDAQ:GEVO) to help finance a corn starch-to-jet fuel facility in Lake Preston, South Dakota.
Gevo would be the first integrated, commercial-scale facility in the United States to convert corn starch to SAF with carbon capture and renewable power, DOE said.
The U.S. Energy Information Administration expects domestic production of biofuels to increase by about 50% in 2024, led by rising SAF production.