Gevo is a “low-carbon” company developing and commercializing renewable diesel, jet fuel alternatives

2019-10-02 15:00:00
The group has developed a breakthrough process that converts a high-octane fuel called isobutanol into clean, renewable diesel
Gevo is developing gasoline and jet fuel using renewable feedstocks that have the potential to lower greenhouse gas emissions
Nasdaq-listed next generation “low-carbon” fuel company Developing and commercializing renewable alternative jet fuel and diesel Uses feedstocks that have the potential to lower greenhouse gas emissions

What Gevo does:

Gevo, Inc. (NASDAQ: GEVO) is a next generation “low-carbon” fuel company focused on the development and commercialization of renewable alternatives to petroleum-based products.

The Englewood, Colorado-based company is developing gasoline and jet fuel using renewable feedstocks that have the potential to lower greenhouse gas emissions at a meaningful scale and enhance agricultural production, including food and other related products.

The group has developed a breakthrough process that converts a high-octane fuel called isobutanol into clean, renewable diesel. The green diesel can also be made from fusel oils, a mixture of several alcohols produced as a by-product of fermentation.

Renewable diesel is expected to compete head-to-head on price with natural and petroleum-based equivalents, while reducing particulates and CO2 emissions, according to Gevo’s CEO Patrick R Gruber.

Low-carbon fuels reduce the carbon intensity, or the level of greenhouse gas emissions, compared to standard fossil-based fuels across their lifecycle.

Demand has increased since California’s Low Carbon Fuel Standard came into effect, which is designed to decrease the carbon intensity of California’s transportation fuel pool and provide an increasing range of low-carbon and renewable alternatives, which reduce petroleum dependency and achieve air quality benefits.

The marine sector is also looking to reduce sulphur emissions ahead of new international water regulations that come into effect from 1 January 2020.

In addition to serving the low-carbon fuel markets, Gevo’s technology can also serve markets for the production of chemical intermediate products for solvents, plastics, and building block chemicals.

The group's stated strategy is to commercialize bio-based alternatives to petroleum-based products to allow for the optimization of fermentation facilities’ assets, with the ultimate goal of maximizing cash flows from the operation of those assets.

How is it doing:

Gevo has had a busy year, expanding its footprint in jet fuel and diesel, and unveiling break deals to convert plant biomass into industrial sugars, and securing the supply of five megawatt of fully renewable electricity for its agri-energy production plant in Luverne, Minnesota.

In the air, Gevo announced in June that Virgin Australia had used the firm’s sustainable aviation fuel to power 1 million kilometers of flights for all aircraft operating in and out of Brisbane Airport, which marked another important step for the airline to build a supply-chain for the long-term commercial use of the product.

In early August, the company inked an agreement to supply its sustainable aviation fuel to Air TOTAL for use and distribution in France and other parts of Europe. Gevo said it will initially supply Air TOTAL from its South Hampton facility in Silsbee, Texas and eventually from the expansion of Gevo’s advanced biofuels production facility in Luverne, which is expected to be constructed over the next several years.

The firm also supplied its sustainable aviation fuel to support its North American partner Avfuel Corporation’s demonstration event at the beginning of September to raise awareness of the product’s viability and safety, and it is also supplying its sustainable aviation fuel for aircraft general aviation’s largest tradeshow to further support carbon neutrality goals in the aviation industry.

On October 7, Gevo said Avfuel had partnered with fixed-base operator, Avflight Salina at Salina Regional Airport and Henderson Executive Airport to provide its sustainable aviation fuel for aircraft headed to the Business Aviation Convention & Exhibition (BACE) in Las Vegas, Nevada beginning October 17.

On the ground, in August, Gevo revealed the successful completion of the City of Seattle's Phase I trial of fleet vehicles utilizing its low carbon, renewable drop-in isobutanol blended gasoline to reduce greenhouse gas emissions from its fleet of vehicles. 

The City of Seattle confirmed they saw 18 metric tons of carbon reduction during the trial and zero adverse effects to their fleet vehicles.

At the end of July, Gevo unveiled a partnership with Locus Agricultural Solutions to trial a new technology, developed by Locus, that is expected to improve capture of soil carbon, reduce applied nitrogen fertilizer needs and improve yield.

Locus AG’s Rhizolizer is a line of fresh, non-GMO soil “probiotic” treatments which are produced from proven microorganisms and tailored to meet the needs of local farmers. Gevo said the treatments were being tested on its 30-acre farm co-located at its Luverne facility.

On the R&D side, in a deal, on September 10, Gevo revealed that it had signed a joint development agreement with Leaf Resources, an Australian company specializing in converting plant biomass into industrial sugars.

The plan is to investigate the potential of sugars and glycerol derived from cellulose — plants — to be converted into hydrocarbon molecules for use in fuels or chemicals.

The agreement consists of three phases, the company said, the first of which includes exploring a potential facility and investigating the project’s commercialization. The companies will each bear their own costs during phase one, with funding for future phases to be laid out in a written agreement at a later date.

A week later, Gevo also announced that it had secured the supply of five megawatt of fully renewable electricity for its agri-energy production plant in Luverne, from an affiliate of Juhl Energy.

The company said electricity generated from wind turbines would be wired directly to Gevo's agri-energy, enabling the company to claim a lower carbon intensity score under the Low Carbon Fuel Standard (LCFS) program, enacted to reduce carbon intensity in transportation fuels.

As part of the project financing, Gevo picked up $1.5 million in stock in Juhl Clean Energy Assets (JCEA), out of a total funding round of $9 million. JCEA is the owner and operator of the wind project and the funding round will enable the acquisition and construction of the wind towers.

Gevo said the wind power should be available to Gevo's agri-energy plant by mid-2020. The wind energy will help to decarbonize Gevo's agri-energy plant in Luverne, allowing Gevo to produce biofuels with a lower carbon intensity score.

The wind project is the first of several steps that are expected to lead to improved profitability for Gevo by reducing the carbon footprint of its fuel products.

On October 8, Gevo responded to recent plans put forward by President Trump’s administration to boost US biofuel consumption to help US farmers with a Renewable Fuel Standard (RFS). Patrick Gruber, Gevo’s chief executive officer called the announcement by the EPA (Environmental Protection Agency) "a step in the right direction" which will "will hopefully put the RFS back on track after 31 oil refineries received exemptions back in August.”

At the start of August, Gevo achieved its International Sustainability and Carbon Certification (ISCC) certification under the ISCC PLUS scheme for Food, Feed, Industrial Applications, Energy, Biofuels outside Europe.

And at the end of September, Biofuels Digest named the company on its NEXT 50 list of “the Next 50 Companies to Disrupt the World.”

It said the honor was specifically given for Gevo’s partnership with Renmatix and their work to pioneer additional fuel pathways by introducing innovative cellulosic feedstock such as wood, agricultural residues, or other cellulosic raw materials to cellulosic-based sugars, the basic building blocks of sustainable fuels.

The NEXT 50 list includes companies focused on fuels, chemicals, foods, new crops and crop protection, animal feeds, and synthetic biology-based services.

On the financials front, Gevo’s revenues for the second quarter ended June 30, 2019 were $5.1 million compared with $9.4 million in the same period in 2018, primarily as a result of reduced ethanol and co-product revenues due to planned lower production volumes in response to a decline in sales prices.

The group’s loss from operations in the three month period was $6.5 million, compared with a $4.4 million loss in the same period in 2018, reflecting lower ethanol margins.

The company ended the second quarter cash at $29.2 million, and the total principal face value of its outstanding debt was $13.9 million

Inflexion points:

Further news on renewables jet fuel and diesel adopters More on plan to investigate the potential of sugars and glycerol derived from cellulose to be converted to hydrocarbon molecules Progress in expansion of agri-energy plant at Luverne

What the boss says:

Gevo’s CEO Patrick R Gruber said in a statment on October 8: "A robust renewable fuel standard is important for our farmers, the biofuel industry, and reducing greenhouse gases. Every drop of biofuel we get into the market is a win and helps to change the conversation about what is possible from low carbon, sustainable biofuels.”