Northwest Advanced Bio-Fuels accesses development capital through insurance-backed repayment guarantee

Northwest Advanced Bio-Fuels, developer of a U.S.-based sustainable aviation fuel (SAF) project using woody biomass as feedstock, announced in July what it is calling “a breakthrough financing structure” that removes a longstanding barrier in the renewables industry—access to engineering-services development capital (DevCap).

This pathway, according to Northwest Advanced Bio-Fuels, will allow for widescale use of nationally and internationally mandated SAF by airlines who fly across the globe.

“Historically, major infrastructure and institutional investment funds have been prohibited by their charters from funding DevCap, leaving dozens of renewable infrastructure projects whose purpose is to create SAF for airlines on hold,” the company stated.

To address this, Northwest Advanced Bio-Fuels has partnered with a global insurance underwriter to create an insurance-backed repayment guarantee that de-risks preconstruction working capital.

Under this structure, the investor or lender is named as the insured party and beneficiary and is insured against all defaults of principal and interest payments from the borrower, thereby, according to Northwest Advanced Bio-Fuels, removing 100 percent of the risk for financiers.

“This solution was born from our own roadblocks,” said Dave Smoot, managing partner and founder of Northwest Advanced Bio-Fuels. “Despite having one of the industry’s strongest offtake agreements, from one of the industry’s strongest airlines, top-tier engineering and technology partners, commitments for the project’s required feedstock and the best site available in the Pacific Northwest, securing DevCap funding has been a challenge due to legacy financing policies. Now, with this insurance-backed guarantee, similar in nature to corporate surety bonds currently and readily available in Europe and Asia, we’re opening the door for all developers across the SAF and renewable energy industry. Someone had to do it.”

According to Northwest Advanced Bio-Fuels, this financial breakthrough will lead to a variety of benefits—not just for companies in need of DevCap across the nation but also airline partners who will use Northwest Advanced Bio-Fuels’ SAF and the state of Washington, where jobs will be created.

“New regulations are requiring the airline industry to use 10 percent SAF by 2029 and 100 percent by 2050,” the company stated.

Once fully operational in 2029, Northwest Advanced Bio-Fuels said it will be producing 60-plus million gallons of SAF a year, allowing its airline partner to decrease CO2 emissions by up to 80 percent as they fly across the globe.

Purchase agreements with companies like Northwest Advanced Bio-Fuels will also allow equity access to fuel supply as opposed to reliance on a volatile oil market.

“There is currently woody biomass and waste at up to 4 feet tall across much of the forests in Washington,” Smoot said. “We will be providing the outlet for clearing this out by the tons to use for creation of our SAF.”

With wood leaking methane and CO2 into the atmosphere, “this alone will be of great benefit to the environment through Northwest Advanced Bio-Fuels’ production and manufacturing of SAF,” the company stated.

Smoot said Northwest Advanced Bio-Fuels will create approximately 2,000 jobs during construction, in addition to more than 200 full-time positions as well as ancillary jobs (agriculture, waste collection and transport, housing, hotels and restaurants) as a result of its facility on the Columbia River.

The company also plans to create feedstock-preparation sites that will employ dozens of other Washington State residents.

Northwest Advanced Bio-Fuels said it is currently raising funds for its front-end engineering and design (FEED) study while concurrently developing a state-of-the-art SAF production facility along the Columbia River in Washington state using waste wood as feedstock.

The site is currently being secured under a long-term lease agreement, according to the company, and the feedstock providers have agreed to execute long-term supply contracts.

The project boasts a long-term offtake agreement with a prominent U.S. airline and is scheduled to begin production in 2029, once construction is completed, and will produce over 60 million gallons of SAF per year.

“This structure provides a scalable financing solution for developers in SAF, biofuels and clean-infrastructure sectors,” Smoot said. “It’s a powerful tool that can unlock billions of dollars in delayed projects and benefits many of the airlines who currently can’t find this fuel, for use now and in the future. Our chief financial officer, Bernie Asher, and the insurance representative have done a wonderful job road mapping a solution to this outdated industry paradigm, creating a winning solution that will benefit many project developers, technology and engineering companies, feedstock suppliers, barge companies and local communities.”