Green Diesel and Sustainable Aviation Fuel

[Catalyst_59]

As promised, the beginnings of some slapped together due diligence into some companies that are in the renewable/bio fuels industry.

We have all heard of ethanol, and hopefully you have heard of biodiesel. Green Diesel looks to be a more “drop-in” product than biodiesel and will potentially avoid some of the mechanical issues associated with running biodiesel in engines. Along with that comes Sustainable Aviation Fuel, which airlines are starting to use as a carbon offset. Currently SAF accounts for 0.1% of all aviation fuel and is projected to increase to 10% by 2030. Source: https://www.iea.org/reports/aviation#:~:text=Increasing%20SAF%20use%20from%20less%20than%200.1%25%20of,fuel%20taxes%2C%20low-carbon%20fuel%20standards%20and%20mandatory%20blending.

What’s more, the EU has adopted their “Fit For 55” which calls for an increase to 63% by 2050. Excellent article outlining the issues surrounding adoption: Aviation industry‘s Sustainable Aviation Fuel (SAF) problem - AeroTime

Shotgun pattern of articles from Science Direct concerning bio-fuels but green diesel specifically, more looking at processes than anything: Green Diesel - an overview | ScienceDirect Topics.

Information on SAF: https://www.energy.gov/sites/prod/files/2020/09/f78/beto-sust-aviation-fuel-sep-2020.pdf

Article with some smaller companies working in the bio-fuels space: 6 US Biofuel Stocks (Updated 2023)
Mentioned companies:
$OPAL
$REX
$GEVO
$FF
$ALTO
$AMTX

Some larger companies in the space:
$DAR Darling Ingredients, partnered with Valero to produce Diamond Green Diesel. Investor page: Darling Ingredients | Investors - About

$GPRE Green Plains, owns and operates 11 ethanol plants in 6 states. In a joint-venture with UAL and Tallgrass develop and produce SAF. Investor page: Green Plains Inc., Investor Relations

$ADM Archer Daniels Midland: already in the bio-fuel business, only a small part of what they do. Investor page: ADM - Investor Relations

$BG Bungie: also well established and recently announced the purchase of 49% of BZ Group, located in France which owns a port in Caen. This could provide a future import point for the EU market. Has a partnership with BP Investor page: https://investors.bunge.com/

There are more but this post was meant to just be a start. Many of the companies listed are at a pretty decent price on a 52-week range. I think it would be worth our time to take a look at these companies and at least consider some of them for long-term investment. Good luck and play safe!

[Fllwoman]

As an aviation person, I figured I would chime in with the latest on sustainable aviation fuels (SAF) news.

United says it is making good on promises to invest in sustainable aviation fuel development by launching its “United Airlines Ventures Sustainable Flight Fund” as an investment vehicle designed to “support start-ups focused on the reduction of carbon emissions in aviation through sustainable aviation fuel research, technology and production”. In its February 22 announcement, the airline confirmed a USD100 million-dollar investment from itself and the inaugural corporate partners that include JP Morgan Chase Bank, General Electric Aerospace, Honeywell Aerospace, and Air Canada. The project also involves passengers who can choose to contribute to the fund with each flight and make informed decisions about their travel options.

The statement further mentions that investments have already been made in, or purchase agreements signed with, companies producing a variety of ingredients and technologies to produce SAF. The fund is open to corporations across industries and will “prioritize investment in new technology, advanced fuel sources and proven producers, all in an effort to scale the supply of SAF”.

United Airlines, Tallgrass, and Green Plains have announced a new joint venture called Blue Blade Energy, with the aim of developing and eventually commercializing a novel SAF technology that uses ethanol as a base. According to the airline, the JV could provide up to 135 million gallons of ethanol-based SAF annually and up to 2.7 billion gallons in total under an offtake agreement. The new technology uses feedstocks such as cooking oils to reduce emissions by up to 80% from conventional fuel. If the technology is successful, it is expected to proceed with the construction of a pilot facility in 2024, followed by a full-scale refinery that could begin commercial operations by 2028 and potentially supply fuel for 50,000 flights annually between United’s and Denver International hubs.

The agreement mentions that Tallgrass will manage research and development of the technology, including pilot plant development, and will oversee the construction of the production facility, whereas Green Plains will supply the low-carbon ethanol feedstock, and use its ethanol industry expertise to manage operations once the pilot facility is constructed. The airline will assist with the development, fuel certification and technical logistics.

United venture capital business, United Airlines Ventures (UAV), may invest up to USD37.5 million in an Oregon biofuel refinery being developed by Houston-based NEXT Renewable Fuels, provided the company meets certain milestones.

Announcing the strategic investment in a statement, UAV said the Port Westward refinery was expected to begin production in 2026 and could produce up to 50,000 barrels per day of sustainable aviation fuel (SAF), renewable diesel, and other renewable fuels.

[Catalyst_59]

I appreciate you weighing in on this. I’m wondering what the factor will be to bring this to “critical mass”. In agriculture we have had to deal with continuous RFS waivers issued to “smaller” refineries that allowed them to avoid adding ethanol to their gasoline mixes. This had originated from the “big oil” lobbyists but with big oil being on-board with green diesel the segment may avoid this pressure. I really think it will come down to cost of production vs price of traditional fuel supplies which adds complexity to evaluating these companies long term. It’s all well and good to have the intention to adopt SAFs but if they are running at a premium to regular fuels then we may hit a situation where airline just pay a fine to avoid paying higher prices.

Perusing the internet provided this: Alternative Fuels Data Center: Federal and State Laws and Incentives
This site may help monitor legislative developments that could impact the space.

[Catalyst_59]

Recently we had news in this space with the release of the EPA’s BioFuel Mandate, released 06/21/2023. Honestly I had stopped paying attention and there was some movement that we could have benefited from. I took some screenshot from news off of WeBull and am attaching them. It seems that initally the market was disappointed with the mandated levels of biofuels for 2023-2025 and subsequently the stocks working in the space sold off a bit. Then this news was released https://americanagnetwork.com/2023/06/vilsack-announces-funding-for-homegrown-biofuels/

[Catalyst_59]

The above article stated that more grants will be announced in the following weeks and I intend to monitor the news in the hopes of catching some movement on the biofuel/SAF stocks. This is the link to USDA’s press releases Press Releases | USDA

[Catalyst_59]

$AMTX awarded contracts to the Indian government. Difficult to take a position at this time as this thing is up 240% over the last two months. <:pepecry:899174773110763530>

[Catalyst_59]

https://www.nasdaq.com/articles/stifel-initiates-coverage-of-clean-energy-fuels-clne-with-buy-recommendation Stifel iniates coverage on CLNE and has a buy reccomendation.

[Catalyst_59]

I decide to grab a $5c for 01/24 for .90. Decent OI at that strike, the company will benfit from government grants going forward, average PT are in the $9 range and natural gas, which this company produces, is still relatively low.

[Catalyst_59]

$AMTX More news, awarded first permit for carbon sequestration well in California 2023-07-18 | NDAQ:AMTX | Press Release | Aemetis Inc

[DonDegenerate]

AMTX is up substantially in the last 60 days. Very interesting field. Any thoughts on a target entry now? I’m feeling hesitant to jump in

[Catalyst_59]

To be honest, no clue. It sold off a bit this week and bounced around $7.40 so that could be short term support. If I were going to do anything it would be slow DCA on shares. I’m frankly disappointed in myself for not starting to do that when I first started looking at it but hindsight is 20/20.