Latest / The Manufacturing Podcast with Fexingo: Factories, Supply Chains, and Industrial Business / How a Texas Factory Is Making Jet Fuel from Cow Manure
Transcript
- Lucas: So there's a factory in central Texas taking cow manure and turning it into jet fuel. Not a pilot plant, not a lab demo — a commercial facility that is, as of this month, producing five million gallons a year of synthetic kerosene. Luna: Wait — cow manure to jet fuel. How does that work chemically? Are they just collecting methane and liquefying it? Lucas: Close but not exactly. The facility uses a two-step process. First, they gasify the manure — superheat it with limited oxygen to produce syngas, which is a mix of carbon monoxide and hydrogen. Then they run that syngas through a Fischer-Tropsch reactor, which catalytically reassembles it into long-chain hydrocarbons. The output is a drop-in jet fuel that meets ASTM D7566 spec. You can blend it up to fifty percent with conventional Jet A without any engine modifications. Luna: And the feedstock is just... manure? They're not adding corn or algae or anything? Lucas: Straight manure. They're contracting with about a dozen large dairies within a fifty-mile radius. Each dairy has an anaerobic lagoon that collects the waste. The factory trucks it in, dewaters it, and then feeds the solid fraction into the gasifier. The liquid fraction goes to an adjacent biodigester that produces renewable natural gas, which powers the whole facility. They claim the plant is energy positive. Luna: Energy positive — meaning they generate more energy than they consume, just from the waste stream? Lucas: Exactly. The renewable natural gas from the digester covers the electricity and heat needed for gasification and Fischer-Tropsch. So the only external input is the manure itself, and the capital equipment. That's a pretty unusual claim in this space. Most biofuel plants need an external energy source. Luna: And who's buying the fuel? Because sustainable aviation fuel has been a tough market — the price premium is significant. Lucas: Southwest Airlines signed a ten-year offtake agreement last year. They're taking the entire five million gallons annually, at a price that's reportedly about two and a half times current Jet A spot price. But here's the thing — Southwest isn't paying that premium out of pocket. The economics work because of two revenue streams beyond the fuel sale itself. First, the Renewable Fuel Standard generates D3 RIN credits, which are the most valuable category. Second, California's Low Carbon Fuel Standard gives them credits for reducing the carbon intensity of aviation fuel relative to baseline. Luna: So the fuel itself is almost a byproduct of the credit generation? Lucas: In some ways, yes. The plant's revenue breakdown, according to their investor deck from last year, is roughly forty percent from fuel sales, thirty-five percent from RIN credits, and twenty-five percent from LCFS credits. Without those credits, the fuel would be uneconomical. But with them, the project has a projected internal rate of return of about eighteen percent. That's actually competitive with midstream oil and gas infrastructure. Luna: And the carbon math — how much greenhouse gas do they actually avoid per gallon? Because there's the methane from the manure that would have been released anyway, plus the displaced fossil jet fuel. Lucas: The company's lifecycle analysis, which was audited by a third party, shows a carbon intensity reduction of about one hundred thirty percent compared to conventional Jet A. That's negative on a net basis. The reasoning is that untreated manure decomposes anaerobically in lagoons and releases methane, which is about twenty-eight times more potent than CO2 over a century. By capturing that methane and converting it into fuel, you're avoiding that potent greenhouse gas. Then on top of that, the fuel itself displaces fossil kerosene. So the total avoided emissions are greater than the emissions from producing and burning the fuel. Luna: One hundred thirty percent reduction — that's better than most carbon capture projects that just sequester CO2. And this is a real factory, not a pilot? Lucas: Real factory. They broke ground in 2023, began commissioning in late 2025, and hit nameplate capacity this April. They employ about eighty people at the plant, plus another thirty in logistics. The dairies get a waste disposal fee that's lower than what they'd pay for traditional lagoon management. So the farmers save money, the airline gets carbon credits, and the manufacturer makes an eighteen percent return. It's one of the rare circular economy stories where every participant seems to win on economics alone. Luna: Right — and that's really the key constraint for most industrial biotech projects. The technology works, but the unit economics don't. Here they've found a sweet spot where the feedstock is negative-cost — they get paid to take the manure — and the credits are deep enough to cover the premium. Lucas: That's exactly the right framing. And if these conversations have moved your work forward in some small way — maybe you're evaluating a similar project, or you've been curious about how sustainable aviation fuel actually pencils out — honestly, if today was worth a coffee to you, that's the link: buy me a coffee dot com slash fexingo. It's the smallest possible ask, and it keeps the show ad-free and independent. Luna: Yeah, I think our listeners appreciate that we don't run sponsored segments in the middle of the episode. So if it's useful, that's the place. Lucas: And back to the factory — the interesting thing is that this model might be replicable. There are roughly nine million dairy cows in the United States. If every dairy cow's manure went through a similar process, you'd get about twelve billion gallons of sustainable aviation fuel per year. That's roughly one-third of current U.S. jet fuel demand. Not a silver bullet, but a meaningful wedge. Luna: But the logistics are daunting. You need a central plant within a certain radius of enough cows. The Texas plant draws from forty thousand head. How many such clusters exist? Lucas: The USDA has mapped it. There are about forty regions in the U.S. with dairy densities high enough to support a plant of that scale. California's Central Valley, Idaho's Magic Valley, parts of Wisconsin, upstate New York. The company is already breaking ground on a second facility in Tulare County, California, which should be online by 2028. That one will be bigger — ten million gallons a year. Luna: And they're scaling up the Fischer-Tropsch reactors? Because that's traditionally the bottleneck — the reactors are expensive and have limited throughput. Lucas: They've partnered with a German chemical engineering firm that makes modular Fischer-Tropsch units. Each module produces about one million gallons a year and fits in a standard shipping container. The Texas plant has five modules running in parallel. The California plant will have ten. The modular approach reduces capital risk — if demand changes, you add or remove modules rather than building a giant single-train reactor. Luna: That's a smart industrial strategy. It lowers the barrier to entry for investors, too. You can finance one module at a time. Lucas: Right. And the modules are standardized, so the company can source them from any of three qualified suppliers. They're not locked into a single vendor. That's important for supply chain resilience. The lead time for a module is currently about eighteen months, but they expect that to come down to twelve as production scales. Luna: One more question on the feedstock: manure has a lot of variability. Moisture content, nutrient profile, seasonality. How do they handle that in a continuous chemical process? Lucas: They actually pre-treat the manure with a screw press that gets the moisture down to about fifteen percent. That's consistent enough for gasification. Then they blend in a small amount of waste cooking oil — about five percent by mass — to adjust the hydrogen to carbon ratio for the Fischer-Tropsch catalyst. The cooking oil comes from regional restaurants. So it's a dual waste stream. Everything that goes in is something that would otherwise be disposed of. Luna: And the output — besides jet fuel, do they get any co-products? Lucas: Yes. The Fischer-Tropsch process also produces naphtha and diesel fractions. The naphtha is sold as a feedstock for renewable chemicals. The diesel goes to the local trucking fleet that hauls the manure. So the plant actually powers its own logistics chain. And there's a solid residue from the gasifier — a kind of biochar — that's sold as a soil amendment. The dairies buy it back for bedding. It's a nearly zero-waste operation. Luna: That's a beautiful example of industrial symbiosis. Every output finds a buyer within the same ecosystem. Lucas: Exactly. And that's why this factory is worth paying attention to. It's not just a technology story — it's a business model story. The technology — gasification plus Fischer-Tropsch — has been around since the 1920s. The innovation is in the system integration: sourcing a negative-cost feedstock, modularizing the reactor, layering the carbon credits, and locking in a long-term offtake with an airline that has a decarbonization mandate. That's manufacturing strategy, not just chemistry. Luna: So if someone wanted to replicate this, what's the hardest part to copy? Lucas: I'd say the permitting and the community relationships. The Texas plant took four years from concept to first fuel. Two of those years were environmental impact assessments and air quality permits. The company had to prove that the gasifier emissions met the strictest standards — which they do, because the syngas is cleaned before combustion. But the process of getting that approved is long and expensive. The second plant in California will probably take less time because the template exists, but it's still a multi-year process. Luna: And the dairy farmers — they had to be willing to change their waste management practices. That's a behavioral shift. Lucas: Huge. The company set up a cooperative structure where the dairies co-own a portion of the plant. They get a share of the RIN credit revenue. That aligns incentives. The farmers aren't just feedstock suppliers — they're equity partners. That's probably the most transferable lesson: make the stakeholders actual owners. Luna: So as we close — what's the one number from this episode that you'd tell someone at a dinner party? Lucas: One hundred thirty percent carbon reduction. That's the number that surprises people. A fuel that, on a net lifecycle basis, removes more greenhouse gas than it emits. And it's not a moonshot — it's a factory in Texas making five million gallons a year, with a second one on the way. Luna: That's a good place to leave it. Next week, we're looking at a factory in Kenya that's turning invasive water hyacinth into biodegradable packaging. Lucas: We will see you then.