But then you think about the carbon tracking needs. So while we’re focused on the biofuels vertical now, we’re rapidly expanding into adjacencies where we need this help and this carbon tracking and transparency through the value chain, things think food, feed and other industrial products, like what we’re talking about with LG Chem.
Sameer Joshi: Understood. Yes. Actually —
Patrick Gruber: Yes. I was going to say. So in terms of the kind of numbers we think about is I asked this question, Paul, like on a weekly basis, actually. And I probably get on his nerves. And it always is coming, and it is coming and it’s going to be in the — it’ll be a few million, it’s in that kind of a number this gets it going good and it’ll grow from there. And so it’s not this year in 2024. I don’t expect it to be a giant number. It won’t be. But you know what? It’s initial sales with real customers, initial partnerships being paid for services and fee, fees for service and that type of thing. And it has huge potential. And what’s interesting is it cuts across supply chains too. So we’re stay focused on the basics of how do you measure the stuff around the agriculture and the farms and then how transform the products through ethanol plants.
But you know what? You also then have a potential in tracking animal feed for people who want low carbon beef. And so that just comes hand in hand with it. So it’s getting to be quite an interesting game to play. And I like the direction from 40-B and what they said out loud about where they’re headed with 45-Z is that you’re going to be specific. They’re talking about field level, audible, traceable, straight through that plays to what we designed Verity for. I like this a lot.
Sameer Joshi: Yes. No, completely agree on that. The potential for Verity enhanced by the 40-B and 45-Z the further opening of that market. On the ATO, what should we expect the next steps to be with LG? I know you will be getting some revenues $0.8 million, I think. But then what are the next steps and how should we see that growing?
Patrick Gruber: Yes. So, I’m going to let Paul to answer that, okay? And Lindsay, if I miss something, you jump in. But it’s that next step is to build a bigger pilot plant or a small demo plant. And right now it’s about going ahead, getting the bids. That’s on LG’s dime, not ours. And we get to use the data. We own the electrical property. This is a good deal for us. And we’re aligned strategically in what we want. Remember our process, carbohydrates to alcohols, alcohols to olefins. We have an improved technology for those olefins we can selectively make propylene; we can also make it into fuels. So we get to leverage all that knowledge into our fuels business. So it’s a win-win straight away. And what’s fascinating about this is the savings here are big.
There’s not some incremental improvement. A lot of companies are focused on little improvements. This is a big improvement. And I think in our deep dive deck, it talks about this. It shows some — it shows what it could mean. So it’s pretty exciting. I wish it was ready for primetime now. It’s not — it’s going to take a couple of years to get it to be fully vetted, scaled up and commercialized. But you know what? It’s pretty cool and it’s ours. So that’s a lot of fun.
Sameer Joshi: Yes. Yes. No, no, that’s true. On the DOE loan, can you just give us a little bit more insight on the level of engagement and maybe the timeline for next milestones just so that we can keep track of it?
Patrick Gruber: Yes. So I can tell you this, the engagement level is high. They’re working hard to get this done. The DOE is the government. The government’s bureaucratic. They got all kinds of rules to comply with, and they’re working their butts off from here I can tell. I think it helped a lot. The question earlier was about do they all talk to each other at the DOE? And I think the answer is yes. I think it helps because they all know that we have the low cost route to make alcohol-to-jet and lowest carbon score, most carbon abatement. And so I think they all know that and can see it and see why, they’re rated and transparent with it. Again, you can — this transparent with you guys, too. You can go look at it. It’s on our website as to why and how it compares to other people’s technologies.
So they’re working it. How long does it take? Well, Chris talked about that. We’re getting the engineering details figured out, mapped to what can be done on the DOE side, map to what could be done on the customer side adjusting it. And so that stuff should become more clear relatively soon. Chris, I’m going to call upon you in just a minute, and you can comment on that more specifically on that timeline. So give it a thought. And then when we hope, I hate to project, when we’re going to say we’re going to get to FI, the loan closed because stuff happens and everyone, well, you said it was going to happen at this time and it didn’t. Well, it’s not in my control exactly. All we can do is go through the work to go get her done. Chris, you want to comment on the DOE project here?
Chris Ryan: Sure. I just have to be aware of the fact that DOE has explicitly told us that we can’t say too much publicly about it. But I will tell you that we’ve really felt the support from the DOE loan office in terms of them wanting to work with us to get this to work. There’s a real sense that this is of strategic importance and that really helps the team between Gevo and all of our counterparties and DOE, as we work through all the details. I think we will be able to say something more definitively over the next few months a milestone — a key milestone. But we are, as Pat said, high level of engagement, frequent discussions, very detailed due diligence they’re doing on us, and everything’s moving forward. So that’s about all I can say.
Sameer Joshi: Got it. And then just a last one and maybe for Lynn. I know the reduction costs are related to mainly CapEx, that you would do at a later stage. Does it mean that any of the project development costs budgeted for this year are lower? The $5.3 million that was incurred in 1Q? Should we expect a reduction in that, or were you capitalizing those CapEx in a different accounting manner?
Lynn Smull: Are you referring to project development cost in the statement of operations, the income statement?
Sameer Joshi: Yes.
Lynn Smull: Yes.
Sameer Joshi: Recently, the reductions announced —
Lynn Smull: Yes, the reduction — I think the reductions will probably not hit that line item as much. Those are ongoing costs for a range of things in combination with the G&A. Those two items really cover the operations of the company, inclusive of — some of that goes to Verity, some of it goes to other project sites to have a slate of opportunities to exploit once we close Net-Zero 1. So I don’t see that number coming down substantially, but the capitalized portion will come down to the $90 million to $125 million.
Patrick Gruber: And Sameer, I’m going to add something. So some of you might wonder about what the heck you’re working on multiple sites for. I’ll tell you why. Customers want multiple sites. They don’t just want one off plant. And so part of the deal with them is you got to have a path forward that you can show them that something’s real, that you can go ahead and develop multiple sites. And so we do have to spend some effort on that and show people we’re managing the cash to keep it low. And we definitely have multiple sites available to us that we could point to and say, no, here’s where we would go. Here, there, and over there. We could point to those things. And you got to have that credible story because no one’s interested in the one-off, nobody. So that’s all part of what we have to do to build market.
