Gevo is racking up the agreements to produce sustainable fuels, announcing deals with Chevron, Axens, and now ADM since September. Our view on the need for sustainable aviation fuel is that everyone building will likely be capital constrained relative to the potential demand – this is also true for sustainable diesel and gasoline, which is relevant given that the EIA sees the conventional light vehicle stock peaking globally as late as 2038 (this is not inconsistent with other estimates we have seen) see chart below.
Source: EIA – Today In Energy, October 2021
Renewable-based fuels can be very low in carbon intensity depending on the feedstock and how it is grown and transported and all are essentially plug-in fuels – no need to change anything about the vehicle targeted – car, truck, or plane. Gevo’s largest challenge will likely be its scale and its ability to manage multiple capital projects at once. Partnerships with companies like Chevron and ADM should bring large project management expertise, and we feel good about the outlook for Gevo, assuming the help is offered and they take it. For more see today's daily report.