GEVO Is Sitting On A Potential Gold Mine Of Renewable Energy Catalysts
By: Andrew Martin
Tags: Investment, Stock Market, Stocks, Investing, Green Energy

Image via Unsplash.com- Karsten Wurth

GEVO Is Sitting On A Potential Gold Mine Of Renewable Energy Catalysts

The low-carbon fuel manufacturer is setting itself up to be a major player in the clean energy market Andrew Martin Follow Sep 12 · 6 min read

Renewable and greener energy has rapidly spread around the globe as important environmental and business movements. With an increasing world-wide goal to drastically cut emissions and other forms of pollution in the near future, those operating in these markets have the potential to find unprecedented success in the coming years. One such company seeking to make its bones in the veritable gold rush is GEVO, which is in the midst of accumulating bullish catalysts for its future.

Headquartered in Colorado, according to Robinhood, “Gevo, Inc. Common Stock, also called Gevo, is a renewable chemicals and next generation biofuels company, which focuses on the development and commercialization of renewable alternatives to petroleum-based products.”

The company’s website explains that:

“Gevo is commercializing the next generation of renewable gasoline, jet fuel and diesel fuel with the potential to achieve zero carbon emissions, addressing the market need of reducing greenhouse gas emissions with sustainable alternatives. Gevo uses low-carbon renewable resource-based carbohydrates as raw materials, and is in an advanced state of developing renewable electricity and renewable natural gas for use in production processes, resulting in low-carbon fuels with substantially reduced carbon intensity (the level of greenhouse gas emissions compared to standard petroleum fossil-based fuels across their lifecycle). “In addition to addressing the problems of fuels, Gevo’s technology also enables certain plastics, such as polyester, to be made with more sustainable ingredients. Gevo’s ability to penetrate the growing low-carbon fuels market depends on the price of oil and the value of abating carbon emissions that would otherwise increase greenhouse gas emissions. Gevo believes that its proven, patented technology enabling the use of a variety of low-carbon sustainable feedstocks to produce price-competitive low carbon products such as gasoline components, jet fuel, and diesel fuel yields the potential to generate project and corporate returns that justify the build-out of a multi-billion dollar business.”

GEVO offers an impressive diverse array of products, which include renewable gasoline and biodiesel, sustainable aviation fuel, ethanol and high-protein animal feed. Their line focuses on decarbonization to give their creations the lowest carbon life-cycle assessment (LCA) possible. LCA is seen as the most effective method of measuring true carbon intensity in biofuels and chemicals with the lower levels benefiting the environment.

With increasing emphasis being placed on the types of products Gevo offers, they have been accumulating a number of positive catalysts in recent weeks that speak well to the long-term potential of the company. These include:

The Production Facilities Are Ramping Up: Gevo has three different production facilities. There is a biorefinery in Silsbee, Texas that manufacturers renewable jet fuel and ingredients for plastics, such as polyester. In Luverne, Minnesota, they have a plant that produces ethanol and isobutanol from corn. This facility just recently re-started their renewable fuel production, which in turn will be used to deliver on existing contracts. Additionally, the company has a partnership with wind turbine company Juhl Energy to help offset the high-use energy of their Luverne plant with renewable wind-powered electricity.

Gevo is also in the midst of testing and preparing for the development of a Net-Zero 1 production facility in Lake Prestone, South Dakota. This state-of-the-art project is expected to begin production sometime in 2024. The company is putting their money where their mouth is and building a formidable base of operation for what they hope is a strong sales and production future. According to Yahoo! Finance, “It is anticipated that NW Iowa RNG will benefit from environmental product revenues under California’s Low Carbon Fuel Standard program and the U.S. Environmental Protection Agency’s Renewable Identification Number program.”

They Are Snagging Contracts: While Gevo has landed nice contracts before, they just locked in another promising deal by signing an agreement for its wholly-owned dairy manure renewable natural gas company in northwest Iowa to produce renewable natural gas BP Canada Energy Marketing Corp. and BP Products North America, Inc (BP is a large oil and gas company based out of Calgary and originated out of BP plc, formerly British Petroleum). The RNG project in Iowa is still being built but is expected to be up and running in early 2022, with an estimated ability to produce around 355,000 MMBtu of renewable natural gas annually.

Their most substantial deal to date was an announced collaboration with Chevron U.S.A, a subsidiary of the powerhouse oil company Chevron earlier this week. They will be jointly investing in facilities that will be turning inedible corn into aviation fuel. As part of the agreement, Chevron has the right to buy 150 million gallons on this fuel annually.

Looming Infrastructure Bill: The senate recently passed President Joe Biden’s $1 trillion infrastructure bill. While the historic legislation would dramatically impact the country in the coming years if passed by the Congress, that body still expects to have some significant challenges in voting it into law, talks will be ongoing and the prospect of its finalization is enough to move markets. The roughly $73 billion the bill has allocated for renewable energy would present possible generational opportunities for companies like Gevo and others to expand their businesses.

There is bullish sentiment coming from analysts on Gevo as well. The stock price is currently trading at $6.93 per share but some believe there is a possible big bump coming. Tipranks cite three analysts who have the stock as a “Buy” and have offered 12-month predictions that comes out to an average of $14.67, or more than 110% increase in where we are today.

Gevo is in a booming market and has started accumulating positive catalysts as they work to establish themselves. They are a long-range stock for sure, but the foundation they are building seems to match their ambition and investors should be eager to see if they can fulfill their lofty goals.

DISCLAIMER: The author is not a financial advisor or expert. The opinions expressed in this article are intended for general educational purposes and entertainment only. They are not intended in any way to provide specific advice or recommendations for any individual or on any specific security or investment product. Individual investors are responsible for their own money and investment decisions. Remember there is no guarantee that stocks will fulfill the analysts’ projections or increase in value. Please always do your own due diligence and if you invest, do so with proper caution. The author does not hold a position in the primary holding(s) discussed in the article at the time of publishing.

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