Fueling the Future of Flight
Fueling the Future of Flight
Gevo (NASDAQ: GEVO)
In an era where environmental concerns are at the forefront of global discussions, the aviation industry is actively seeking ways to reduce its carbon footprint. Sustainable aviation fuel (SAF) has emerged as a promising solution to address the environmental impact of aviation while ensuring the continued growth of air travel. SAF represents a significant departure from conventional fossil-derived jet fuels, offering a more eco-friendly alternative that aligns with the aviation sector's commitment to sustainability.
That brings us to today’s cash cow - Gevo.
Gevo is pushing the envelope on the next generation of renewable fuels like gasoline, jet fuel, and diesel with the potential for zero carbon emissions, catering to the need for sustainable alternatives in greenhouse gas reduction. Although the company offers multiple products including sustainable aviation fuel (SAF), renewable gas, and sustainable agriculture, the company's bread and butter is sustainable aviation fuel (SAF) due to growing demand and increasing customer interest. The SAF is sourced from inedible corn (from farmers), which is a sustainable and environmentally friendly method. The demand is being propelled by the big airlines aka the American airline industry (A4A) announcing the goal to achieve net carbon emissions by 2050.
So if the demand is evident, and will continue to be strong, then who are the suppliers? (good question young Buffet).
Gevo is currently the largest supplier of sustainable aviation fuel as of February 2023.
Because fuel is the largest expense for airlines (like Uber on the weekend), it is paramount that SAF be in line with traditional fossil fuel costs. As new infrastructures are established and costs begin to decline/become more feasible, we will likely see SAF adoption in larger amounts.
Gevo is well-positioned to survive the “transition period” until airlines further adopt SAF. Gevo has $453 million in cash, cash equivalents, restricted cash, and marketable securities as of 3/31/2023. “On August 7, 2023, Gevo announced that its Net-Zero 1 ethanol-to-jet project had been invited by the U.S. Department of Energy (‘DOE’) to the formal due diligence and term sheet negotiation phase for a $950 million loan guarantee under the Title 17 Clean Energy Financing Program.” - Gevo Corporate Highlight
Furthermore, Gevo also has a stellar management team, with experience at large, Blue-Chip companies that bring specialties in renewable energy, plant operations, chemical processing, and fermentation.
(source: Investor Presentation)
Recap on why we like Gevo:
- Unique environmental friendly sourcing from Corn
- First mover advantage in the SAF space
- Strong management team
Thanks for reading.
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