We should focus on the Gevo headline today (Gevo and HCS Group Sign Strategic Agreement to Produce Renewable Low-Carbon Chemicals and Sustainable Aviation Fuel in Europe) as it indicates further acceptance of the technology as well as the opportunities in aviation and other fuels. It is also interesting to note that HCS Group, which has signed the JV with Gevo, mentions low-carbon chemicals in the headline.
We have written about this in the past, but many of the biofuel producers who start with fermentation, like Gevo, create an initial chemical building block. The choice to take this material through further reactions to fuels is based solely on economics today – there is simply more money to be made and more incentives/credits to be earned. But the pathways to chemicals and plastics still exist, and we are of the very firm view that as consumer products companies recognize that recycled polymers are not going to be available in sufficient quantities to meet their collective 2025 or 2030 recycling goals, they will turn to renewables as one of several alternatives. Gevo can help stimulate this potentially very significant demand by continuously working to lower costs, which is a stated goal, but potential customers will likely need to be willing to pay more for the renewable-based product.
