The red-hot market for renewable diesel has inspired another deal in the ag tech space. An ag investor publication reports that Bayer has increased its stake in CoverCress, an ag start-up that developed and promotes a genetically modified oilseed cover crop, to 65%. Ag Funder News reported Aug. 2 that the remainder of the shares will be split between Bunge and Chevron.
The company’s valuation is not known, but the company said the buyout of the former investors, a group of venture capitalists, was a “meaningful exit.”
The deal will enable CoverCress to “further commercialize its namesake winter oilseed product into a cover crop that can provide lower carbon fuel feedstock to the renewable fuel industry while also bringing farmers another source of revenue during the growing season.”
The CoverCress team genetically modified the common weed pennycress into a cover crop that provides high-quality oil and can also be used as animal feed. CoverCress, originally called Arvegenix, has been working on the crop since 2013. The Bayer deal is a homecoming since several of its founding members had been employed by Bayer before starting CoverCress.
In April, CoverCress announced a partnership with Bunge establishing a long-term commercial relationship between the two companies.
Renewable diesel fuel can be made by several different chemical pathways, including gasification, pyrolosis and other chemical processes. Its feedstocks are vegetable oils or fats including soybean oil, safflower oil, canola oil and even used cooking oil. It differs from biodiesel in that there is no blendwall limit; renewable diesel can be substituted for petroleum-derived diesel 100%, with no modifications necessary to the engines.
Earlier this year (HPJ, April 29) CoverCress chief commercial officer Dale Sorenson told High Plains Journal, “We’re currently not pursuing the food market, but concentrating on bio-fuels.” The oil content of CoverCress is higher by weight than that of soybeans.
CoverCress has been working closely with the University of Illinois. This year it has recruited selected growers in the Midwest in a phased rollout. The U.S. Department of Agriculture has said it wants to double cover-crop acreage to 30 million acres by 2030.
USDA has joined with the Department of Energy and Department of Transportation to launched a Sustainable Aviation Fuel Grand Challenge to reduce the carbon-intensity of aviation fuel, providing a promising market for renewable diesel.
David Murray can be reached at [email protected].
