Gevo Inc (NASDAQ: GEVO) started today’s trading session 22% higher after a deal for biofuel worth $2.4 billion was announced with Kolmar Americas.
The deal between the two companies states that Gevo will supply 45 million gallons of renewable, net zero fuel to Kolmar every year.
The fuel will be produced in different variations – one for use in the aviation industry, the other as a vital ingredient for renewable gasoline.
Aviation is among the industries that have a high carbon footprint and the sector is responsible for roughly 2.5% of CO2 emissions.
Both types of fuel will most likely be produced at the Net Zero 2 plant located in the Mid-West.
Kolmar Americas – subsidiary of Kolmar Group AG, a renewable fuels giant in Switzerland – becomes Gevo’s largest client to date and will utilize the entire output capacity of Net Zero 2.
Gevo commented that this biofuel capacity comes from the plant’s “current” design, hinting that a redesign may be in the works already, as fresh cash is on the way.
That cash will be to the tune of $300 million gross every year and will include different environmental credits.
The total amount could exceed the formally announced $2.4 billion and reach $2.8 billion with current best-case projections.
“With this agreement, Kolmar is investing in the future, and this kind of foresight makes for another excellent partner and should make clear to our investors that we have traction in the market,” said Dr. Patrick R. Gruber, Gevo’s CEO.
At the time of publishing shares saw some apparent profit-taking and are trading 8% above their open price.