Jet fuel company’s leader calls South Dakota ‘a difficult place to do business’

From left, Steve Westra of the Governor’s Office of Economic Development, Lt. Gov. Larry Rhoden, Gevo CEO Patrick Gruber, Lake Preston Mayor Andy Wienk and First Gentleman Bryon Noem participate in a ceremonial groundbreaking for Gevo’s Net-Zero 1 project near Lake Preston on Sept. 15, 2022. The company has since shifted its focus to a site in North Dakota. (Courtesy Lt. Gov. Larry Rhoden/Twitter)

The leader of the company that abandoned its immediate plans to build a $2.6 billion ethanol-based jet fuel plant in Lake Preston said Friday that South Dakota is no longer a friendly place to do business.

In 2022, Gevo CEO Patrick Gruber stood alongside South Dakota Republican Gov. Larry Rhoden, then the lieutenant governor, at the ceremonial groundbreaking for the project, billed as the largest economic development project in state history.

This week, Gruber and his Colorado-based company announced plans for a smaller jet fuel facility at an ethanol plant in Richardton, North Dakota.

Gevo bought the plant a year ago in the wake of South Dakota pushback on a carbon sequestration pipeline that was critical to the company’s Lake Preston business plan. 

“South Dakota is a very difficult place to do business,” Gruber told South Dakota Searchlight on Friday. “Everything is oppositional. North Dakota is a breath of fresh air.”

Gruber said his company still hopes to build something on the 200-odd acres it owns in Kingsbury County at some point in the future. It wouldn’t be a standalone ethanol plant, he said, but it could be a jet fuel plant that uses corn oil or ethanol, or be used as a chemical production plant.

Gruber sees a future where 70 of the nation’s approximately 180 ethanol plants use designs like Gevo’s to convert to jet fuel production. Demand is growing, he said, and the U.S. can’t keep up with the petroleum-based refineries it has.

That’s long-term, though. Whether the Lake Preston site is a part of that conversation or is used for another offshoot of Gevo’s operations is also a ways off. 

At this point, after watching opposition to the Summit Carbon Solutions pipeline drive policy changes over the past three years, Gruber said he’s wary of engaging South Dakota leaders.

In 2022, he said, there was strong support in state leadership for both the pipeline and Gevo’s Net Zero-1 complex in Kingsbury County.

Then the political winds shifted.

“Having lived through the change, I’m not doing that again,” Gruber said.

Carbon sequestration drives business

Summit Carbon Solutions had hoped to gather carbon dioxide from ethanol plants across multiple states and deliver it via underground pipe to a site in North Dakota for sequestration. In doing so, the company would cash in on federal carbon capture tax credits.

Gevo, were it to build its operations in Lake Preston and connect to that line, would be able to lower the carbon emissions of its jet fuel, boosting its value in certain markets.

Sustainable jet fuel developer moves priority from SD to ND amid Summit pipeline delays 

Gevo’s North Dakota plant sits atop the same formation that would be used to sequester carbon by Summit. This year, Gevo’s been pumping the carbon from that plant underground and selling carbon credits to other companies that want to offset their carbon footprint. Sequestering carbon also lowers an ethanol plant’s carbon score, so Gevo can sell it for more in some areas.

Gruber said the company can also sell carbon to fossil fuel companies in North Dakota’s oilfields for use in enhanced oil recovery — pumping gas underground to force more crude oil toward a well.

“We did good by buying that plant,” Gruber told Searchlight.

Summit, meanwhile, is in limbo. Gov. Rhoden signed a bill banning the use of eminent domain by carbon pipeline companies this year. Eminent domain is the legal process by which land access can be obtained for use in projects that benefit the public, with compensation for landowners determined by a court. The specter of eminent domain sparked landowner opposition, litigation and political activism in South Dakota, leading to the ban.

The Public Utilities Commission denied Summit’s permit application twice, but the company vowed to reapply.

Issue splits governor candidates

On Thursday, Rhoden said he’s glad to hear that Gevo may still build in South Dakota. He also said signing the eminent domain ban for carbon pipelines was the right thing to do in response to citizen concerns, and that Summit has a chance to “reset” its plans and work with landowners.

Rhoden has not announced if he’ll be a candidate to keep his job in 2026, but he’s spent much of his first year in office on an “Open for Opportunity” tour to meet business leaders across the state.

South Dakota Speaker of the House Jon Hansen, R-Dell Rapids, was the first Republican to announce his intention to run for governor. He’s been among the loudest opponents of the carbon pipeline. 

Hansen said he’s not saddened to hear about Gevo’s shift to North Dakota. He pointed to a $12.2 million tax rebate authorized for Gevo by the Governor’s Office of Economic Development in 2023 and said companies ought to be able to thrive in South Dakota without incentives.

“This is yet another example of what I’ve been fighting against: politicians and bureaucrats in the Governor’s Office of Economic Development getting duped by green-energy and other scams — abusing so-called ‘economic development’ programs to hand out our tax dollars to out-of-state corporations.”

Hansen said South Dakotans “want our money back,” and that “corporate welfare waste” would end if he were elected governor. 

Gruber said Friday, however, that Gevo never used its tax rebate, because it was predicated on building the Net Zero-1. Since that hasn’t happened, “we have not taken any money from South Dakota.” Josie Harms, Rhoden’s spokeswoman, confirmed that Gevo hasn’t collected any state money, and that it has paid sales taxes on anything it purchased in South Dakota to prepare the site.

Nothing has been done to the land for about two years. 

Governor race exposes divergent paths on economic development among South Dakota Republicans

Another Republican candidate for governor, Aberdeen businessman Toby Doeden, also leaned in on opposition to publicly funded economic development incentives in his statement on Gevo. He said companies that want to locate in South Dakota should “share our values” and be able to “succeed without politicians putting their fingers on the scale.”

“As governor, I will attract businesses, large and small, who will come here on fair terms,” Doeden said in a statement. “Businesses that move here should do so on their own two feet without demanding hundreds of millions in state subsidies or abusing residents in the process.”

Republican U.S. Rep. Dusty Johnson, who’s also declared his candidacy for governor in 2026, has talked recently about wanting to make South Dakota’s business climate more friendly again. This week, he sent out a press release on a “Data Centers Done Right” initiative, which he said would incentivize their placement in South Dakota and make the state “be a national leader in the AI revolution.”

Hansen and Doeden each responded to that announcement by saying they’re opposed to tax breaks. 

Johnson, in a statement on the Gevo situation, said anti-development attitudes are the reason the state lost ground in the latest iteration of CNBC’s “America’s Top States for Business” rankings.

“Unfortunately, this isn’t the only project looking to leave South Dakota,” Johnson wrote. “Our state has slid down the rankings to the 35th best state for business. South Dakota has many strengths, but if we are going to meet our potential, we’ll need vision and a plan.”

Robert Arnold, the only declared Democratic candidate for governor, said South Dakotans have made their feelings on the carbon pipeline clear. But he also said he’d like to see Gevo follow through and build in South Dakota.

“I hope that we haven’t turned this industry completely away from us and we can negotiate a deal down the road,” Arnold said in a statement.

Lake Preston anticipated loss

Lake Preston Mayor Donna Bumann said pipeline opposition wasn’t an issue in her community. 

“For the farmers in our area that Summit has connected with, it’s been quite positive,” Bumann said. “I realize that’s not the same in other areas.”

Gevo trumpets cash on hand, growth potential for sustainable jet fuel in earnings call

Bumann said her community had embraced Gevo and the benefits its proposed jet fuel plant promised. In a presentation offered to investors last year, the company included a slide that said Net Zero-1 would return $170 million annually to the South Dakota economy, create 1,300 short-term and 100 long-term jobs, partner with universities to promote science education and draw graduates to its operations, and pay area farmers a premium for corn.

“We are hopeful that, in due time, circumstances will make it possible for Gevo to move forward,” Bumann said.

Kingsbury County Commission Chairman Kyle Lee wasn’t surprised by the news, either.

“Once the state said that they weren’t going to allow for Summit to do any eminent domain, I think we knew that was going to end up being the straw that broke the camel’s back,” Lee said.

Net Zero-1’s footprint would’ve included an ethanol plant, a plant to turn that ethanol into jet fuel, and a wind farm proposed by a company called Zero6. It also spurred East River Electric Cooperative to invest in a switching station near the Gevo site, meant to help service the company’s power needs. 

This month, however, Zero6 pulled its application for interconnection from the Southwest Power Pool’s queue. The Southwest Power Pool manages the wholesale power market for the central U.S. 

Chris Studer of East River Electric said the cooperative will still build its switching station and use it to serve existing customers.

“We weren’t just building lines to serve Gevo,” Studer said, but he added that the upgrades will ready the area for any large-scale industrial project that might come along.