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Gevo shares explode after EPA gives go-ahead for higher isobutanol level in blended gasoline

The EPA is now allowing the ethanol-free gas additive isobutanol at a 16% blend level in gas
Diesel gas tank
The biofuel company's stock has risen about fourfold since the announcement

Shares of the biofuel group Gevo Inc (NASDAQ:GEVO) are soaring today after the Environmental Protection Agency (EPA) approved the ethanol-free gasoline additive isobutanol at a 16% blend level in gas for on-road use in automobiles.

Previous to this change, the EPA signed off on isobutanol for on-road use up to just a 12.5% blend.

Optimistic about the announcement, investors drove up Gevo shares nearly fourfold to US$12.70 Monday and the rally continues, adding another 18% to US$15 in extended trade.

“At Gevo, we have been developing the markets for isobutanol containing gasoline, in particular to meet the demand for the ethanol-free segment of the gasoline market. A 16% blend option will give our customers and partners an even better product for on-road use,” said Gevo CEO, Patrick Gruber.

The EPA gave the go-ahead for the higher level of isobutanol in response to a request from Butamax Advanced Biofuels LLC, another biofuels group, based in Delaware, which is a joint venture between DuPont and BP Plc.

The market size for ethanol-free gasoline is estimated to be as much as 7bln gallons per year, according to the Colorado-based Gevo.

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