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Gevo, Aemetis and Pacific Ethanol stand out in a busy week for biofuels

As the US seeks more environmentally friendly fuel sources, the opportunity for the biofuels industry is growing
Clean energy
The EPA and the White House are still hashing out the details of a biofuel quota redistribution plan

It was an action-packed week for biofuel makers with the spotlight on Gevo Inc. (NASDAQ:GEVO), Aemetis Inc. (NASDAQ: AMTX), Pacific Ethanol Inc. (NASDAQ:PEIX) and Green Plains Inc. (NASDAQ:GPRE).

In a week of big gains for Gevo, it shot up again Friday as investors cheered the Englewood, Colorado-based biofuel maker’s long-term pact to supply renewable alcohol-to-jet fuel (ATJ) to Avfuel Corp starting in July.   

Gevo shares had rocketed earlier in the week after the Environmental Protection Agency’s approval of the ethanol-free gasoline additive isobutanol at a 16% blend level in gas for on-road use in cars. Gevo can produce isobutanol, ethanol and high-value animal feed at its production facility in Luverne, in Minnesota. Investors took note and sent the shares of the compnay up as the EPA's decision to give the go-ahead for the higher level of isobutanol marks a turning point in the fortunes of the biofuel maker.

READ: Gevo shares still accelerating after EPA green lights increased mix of gasoline additive isobutanol

Days after the EPA approval, Gevo made more news as it entered into an agreement to supply AJT fuel to Avfuel from the smaller-scale hydrocarbon processing facility it operates in Texas with South Hampton Resources. It will also construct a larger hydrocarbon facility at its existing ethanol and isobutanol production facility in Luverne, Minnesota.

“Avfuel has tremendous reach with more than 650 Avfuel-branded locations and 3,000-plus fueling locations worldwide,” said Gevo CEO Patrick Gruber.

“Not only can we reduce greenhouse gas emissions, but we also can produce a higher quality product than petroleum-based jet fuel from a technical standpoint.”

Next-generation biofuels

The opportunity for the nation's advanced biofuels industry is clearly extraordinary. The “Biofuels Digest” hailed Aemetis’ cellulosic ethanol facility under development at a site in Riverbank in California as the #1 Waste-to-Value Project in the world.

The trade magazine noted that the Aemetis Riverbank project combines the best technology from tech providers LanzaTech and InEnTec with the local availability of waste orchard wood and other feedstock that can be used to produce Aemetis’ high-value cellulosic ethanol and valuable byproducts.

“Though the Aemetis Riverbank cellulosic ethanol plant is designed to use any biomass material, the conversion of agricultural waste biomass into high value, below zero carbon biofuel utilizes the unique availability of over 1.6 million tons of annual waste wood feedstock in the Central Valley from almond and walnut orchards,” said Eric McAfee, the chairman and CEO of Aemetis.

Meanwhile, Pacific Ethanol, a leading producer and marketer of low-carbon renewable fuels and high-quality alcohol products in the US was showcased at the ROTH London Conference this week. Pacific Ethanol CFO Bryon McGregor held one-on-one meetings with investors after a company presentation. 

Pacific Ethanol views the overall, long-term fundamentals in the markets getting stronger on higher demand for low carbon ethanol and high protein feed products in the US and internationally.

Biofuel quota plan

Bloomberg reported Thursday that “oil industry opposition” prompted Trump administration officials to temporarily shelve a proposal that would force larger refineries to use more biofuel to make up for exemptions granted to smaller facilities.

The Renewable Fuel Standard (RFS), created in 2005, requires fuel companies to use increasing volumes of renewable fuels like ethanol as an oxygenator, with their petroleum products each year.

But the EPA has used its authority to provide waivers to an unusually large number of refineries releasing them of their obligation. According to Reuters, EPA chief Scott Pruitt has been slammed for his handling of the situation by biofuels supporters who accuse him of trying to undermine the program to help the refining industry.

According to several media reports, the EPA and the Trump adminstration are still hashing out the details of a biofuel quota redistribution plan as two key Trump constituencies, big oil and farmers, clash over the US renewable fuel mandate.

Shares of Omaha, Nebraska-based Green Plains, one of America’s largest ethanol fuel producers, seesawed with the news cycle. It was down in midday trade on Friday as Midwestern farmers pressed Pruitt to make up for the waived biofuel gallons.

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