Gevo, Inc. Q4 FY2025 Earnings Call

Thank you for standing by. Welcome to Gevo's Fourth Quarter 2025 Earnings Conference Call. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Eric Frey, Vice President of Finance and Strategy. Please go ahead, sir.

Good afternoon, everyone, and thank you for joining us on today's call to discuss Gevo's Fourth Quarter and Full Year 2025 results. I'm Eric Frey, Vice President of Finance and Strategy at Gevo. With me today, we have Patrick Gruber, our Chief Executive Officer; Paul Bloom, our President; Leke Agiri, our Chief Financial Officer; and Chris Ryan, our Chief Operating Officer. Earlier today, we issued a press release that outlines our fourth quarter and full year 2025 results and some of the topics we plan to discuss, as well as a slide presentation that we will discuss on today's call. Copies of the press release and the slide presentation are available on our website at www.gevo.com. Please be advised that our remarks today, including answers to your questions, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently anticipated. Those statements include projections about the timing, development, engineering, financing, and construction of our alcohol to jet projects, our future carbon credit sales, our Gevo North Dakota and RNG plants, and other activities described in our filings with the Securities and Exchange Commission, which are incorporated by reference. We disclaim any obligation to update these forward-looking statements. In addition, we may provide certain non-GAAP financial information on this call. The relevant definitions and GAAP reconciliations may be found in our earnings release, which can be found on our website at www.gevo.com in the Investor Relations section. Following the prepared remarks, we'll open the call for questions. I'd like to remind everyone that this conference call is open to the media, and we are providing a simultaneous webcast to the public. A replay of this call and other past events will be available via the company's Investor Relations page at www.gevo.com. I'd now like to turn the call over to the CEO of Gevo, Patrick Gruber. Pat?

Thanks, Eric. What a year. Successfully acquiring and integrating our North Dakota ethanol and carbon capture assets has transformed our adjusted EBITDA and has enabled us to learn and capture value from carbon, treating it as an important co-product in addition to the ethanol, animal feed, and oil that we produce. Gevo North Dakota has performed superbly well. It's the well-run operations combined with our learnings on how to capture value from carbon dioxide that have allowed us to turn positive on operating cash flow in the fourth quarter. We also now have 3 quarters in a row of positive non-GAAP adjusted EBITDA. I'm very pleased with the progress and what we are learning. Great operating results, combined with consolidating our debt in early 2026, has strengthened our balance sheet and increased our cash on the balance sheet without tapping into equity markets. We also continue to make progress on our ATJ-30 plant, the jet fuel project that is targeted for our North Dakota site. I believe Gevo is in a really good place. I make this point because you probably all recall that I'm retiring as CEO on March 31. Paul Bloom, who has been with us 5 years now, will assume the role of CEO on April 1. He has been instrumental in helping us build the business platform to where it is today. He also knows technology and processing, operations, market development, and business. I'm convinced he's the right person to take over. I think he will be a really strong CEO, and I'm excited for him to take the helm. Paul, it's your show today.

Thanks, Pat. To begin, I'm extremely honored to be taking on the role of CEO starting April 1. Pat has led the company for nearly 2 decades, guiding Gevo through some incredible times and put us in a great spot with our current business that sets the stage for future growth. From developing our intellectual property portfolio to shaping Gevo's business system from field to flight, Pat has been a visionary leader for renewable fuels and chemicals. I'm happy to announce that after Pat's retirement, he will continue to serve on Gevo's Board of Directors, and the company will continue to benefit from his expertise and insights. Thank you, Pat. Now I'm pleased to highlight some of the progress we made in Q4 and on our full year for 2025. 2025 was truly a transformational year for Gevo. The successful acquisition and integration of the Red Trail Energy assets now operating as Gevo North Dakota marked a pivotal moment in the company's growth story. I want to express my sincere appreciation for the outstanding people and great community who have welcomed us so warmly. Their partnership and dedication have been essential to our success. The team did an outstanding job across the board in 2025, delivering record-setting biofuel production, starting up our carbon business and leading the industry with some of the first large-scale 45Z clean fuel production tax credit sales. All of this was accomplished while substantially advancing our alcohol-to-jet growth platform. Our execution in 2025 led to 3 consecutive quarters of positive adjusted EBITDA with almost $8 million in adjusted EBITDA in Q4 as we continue to make solid progress on our goal of reaching $40 million in adjusted EBITDA on an annualized basis from our current asset base. Leke will give more color when he highlights our financial results. Gevo's operations team exceeded the nameplate capacity of our ethanol production facility, reporting a record of about 69 million gallons of ethanol produced during the full 12-month period of 2025 while capturing 173,000 metric tons of carbon dioxide. To further build on these strong results, I'm happy to announce that we've approved our capital plan for Gevo North Dakota to expand capacity to 75 million gallons per year, produce more co-products, improve energy efficiency, capture more carbon dioxide and invest in our operational reliability. We are reinvesting in Gevo North Dakota to grow our base business and improve our returns while we set the table for alcohol to jet. We have an aggressive time line to deliver these projects and anticipate they will be starting to deliver returns in early 2027. Chris will say more on this during his operations update. During 2025, we also started up our carbon business. The team has done extremely well developing the business from scratch, and we believe we are the first biofuel producer to develop and operate this business model. We believe our flexibility to sell carbon value either with our fuel products or separately in the voluntary carbon market provides a distinct advantage for optimizing returns and will apply to our ATJ growth platform in the future. In Q4, about 80% of our carbon benefits remained attached to ethanol gallons sold into low carbon fuel markets, and we built our inventory to roughly 30,000 tons of carbon dioxide removal credits or CDRs, by the quarter's end to meet future demand from spot and contract sales. Our customer base for CDR credits continues to grow beyond those previously reported such as NASDAQ and now includes companies like PayPal, Bank of Montreal, and additional international clients. As the market develops, we are confident that Gevo is well positioned to produce, certify, and supply high-integrity carbon credits that can help supply the growing market demand. In addition, Gevo retired carbon credits from Gevo North Dakota to offset substantially all our own air travel in 2025. At Gevo, we're committed to leading by example. We don't just talk about our values. We put them into action by utilizing our own products and solutions. Turning to our growth platform. Let me comment on ATJ-30, which stands for alcohol to jet at 30 million gallons per year in North Dakota. We refer to this as Project North Star. As we've mentioned before, we anticipate that by adding Project North Star, once constructed, we could deliver $150 million in adjusted EBITDA per year from the fuels, carbon value, and co-products. From there, we believe we can enable and create a franchise approach to deploying synthetic aviation fuel globally. But first, we need to build serial #1 and demonstrate the value proposition monetizing our commodities and carbon. Project North Star is designed to be a modular build that we can copy, edit, and paste to meet the growing global demand for synthetic aviation fuel. North Star lays the groundwork for building out a franchise that is deploying many similar plants, either with our own capital or through partnerships to meet the growing global demand for jet fuel as the world flies more, not less. We are developing the playbook containing Gevo's intellectual property and business system, which can be effectively replicated and implemented on a global scale. The work we are doing at Gevo North Dakota and with Verity is critical and provides the blueprint for what needs to happen at more ethanol plants in the future. Low carbon ethanol is the feedstock for our synthetic aviation fuel. We need more of it, and we can help enable it. In fact, we started to sign letters of intent with third-party ethanol producers to bring Gevo's carbon business and Verity capabilities to other locations along with carbon management services. We believe our collaboration with Frontier Infrastructure Holdings and the options we are exploring to transport and store third-party carbon dioxide at Gevo North Dakota may enable more low-carbon ethanol facilities to be viable sites for additional ATJ plants. As we started to show at Gevo North Dakota, there is money to be made in setting the table with low-carbon ethanol today and potentially a lot more with ATJ additions in the future. We currently believe that this will take the form of us delivering and getting paid for our technology, business system, and know-how. It could give us more flexibility between investing our own capital and more of a capital-light type growth model, the franchise model. While we are very optimistic about this growth, we will continue to be laser-focused on getting Project North Star to the finish line. Our goal is to reach FID on the project in 2026. We have a conditional commitment from the U.S. Department of Energy's Office of Energy Dominance Financing, or EDF, for a loan guarantee to finance the construction of an ATJ plant. As previously announced, we are discussing using that loan for ATJ-30. EDF is an excellent goal-aligned partner and a strong option for us, assuming we can get all the details worked out. Our goal is project level non-dilutive funding to build ATJ-30. Finally, as part of our growth strategy and what we've learned at Gevo, North Dakota, we'll also stay on the lookout for more acquisitions that are accretive, that strategically fit our platform and further scale our adjusted EBITDA. It was a transformational 2025 that we are leveraging to make 2026 even better. With that, I'll turn it over to Leke.

Thanks, Paul. Starting on Slide 4 of our earnings presentation. For the full year 2025, we had revenue of $161 million, a loss from operations of $20 million, non-GAAP adjusted EBITDA of $16 million, a record-setting low carbon ethanol volume of about 69 million gallons plus 173,000 metric tons of CCS at our production facility. During the fourth quarter of 2025, we turned positive on cash flows from operations, generating $20 million during the period. We increased cash, cash equivalents, and restricted cash to $117 million at year-end, which is a $9 million increase versus the third quarter. All of the restricted cash we had at year-end was released after we completed our debt consolidation transaction in February 2026. Finally, we maintained our strong 2026 outlook, including our previously communicated near-term organic growth target of achieving annualized non-GAAP adjusted EBITDA of about $40 million and a neutral to positive operating cash flow in full year 2026. Turning to Slide 5. Our full year 2025 results showcase a transformative year and highlight how we executed on and integrated our strategic acquisition of Red Trail Energy assets. In comparison to the prior year, revenue during full year 2025 increased by 849%. Loss from operations decreased by $71 million, non-GAAP adjusted EBITDA increased by $74 million, and the cash flow from operations increased by $44 million. On Slide 6, we can see the step change and the strong foundation for growth that we have built. The past 3 quarters have averaged $43 million to $45 million in revenue. Going forward, we expect revenue to vary quarter-to-quarter depending on the market prices of ethanol, RNG, and environmental benefits. However, we expect our adjusted EBITDA drivers to remain resilient and grow in 2026. One of our adjusted EBITDA drivers, which does not depend on the market prices that I just mentioned, is our production tax credits. Last year, we sold $52 million of production tax credits related to Gevo North Dakota as we produced ethanol and sequestered carbon. We received about $41 million in cash proceeds in 2025 and expect the remainder in the first quarter of 2026. As a reminder, we book production tax credits as a reduction to cost of goods sold each quarter. Looking forward to 2026 operating results, we are confident in our execution capabilities and remain focused on achieving our target of approximately $10 million in adjusted EBITDA per quarter in 2026 or roughly $40 million on an annualized basis. We're also now targeting neutral to positive operating cash flow in 2026. With that, I'll turn it over to Chris.

Thanks, Leke. 2025 was a record operational year. Gevo North Dakota recorded 69 million gallons of low-carbon ethanol volume during the full 12-month period and achieved a yield of nearly 3 gallons per bushel, which is close to the theoretical maximum. Included in that number is approximately 2 million gallons of cellulosic ethanol that was produced from corn kernel fiber. That adds incremental value due to its lower carbon score. Our carbon sequestration system sequestered 173,000 metric tons of CO2, exceeding our previously stated benchmark of 165,000 metric tons. Operationally, the plant is running reliably and efficiently. Our focus now is on; one, debottlenecking to increase ethanol, CO2, and co-product volumes; two, reducing carbon intensity further; and three, preparing for the fabrication of modules for our ATJ-30 project. We think our debottlenecking and expansion organic growth projects can increase efficiencies, put more money in the pockets of our farmer partners and local communities, drive down our carbon intensity score, optimize our production tax credits, and finally, increase ethanol production to as high as 75 million gallons per year and we'll raise carbon sequestration to at least 200,000 metric tons a year. Most of these projects have a 1- to 2-year payback, and the remainder of the projects will improve our operational efficiency and asset life. In 2026, we plan to deploy about $26 million of capital, which further positions us to achieve stronger operating results starting next year. In addition to the incremental organic growth, Gevo North Dakota provides an exceptional foundation for our ATJ-30 project. We have our own captive low-carbon ethanol feedstock, our own operating CCS, we have rail infrastructure. We have about 500 acres of space, and we have a great operations team. This is why we believe ATJ-30 is the right project for the site and why Project North Star will be a good showcase to pursue Gevo's long-term copy-paste strategy. Back to you, Pat.

Thanks, Chris, Paul, and Leke. While the company has solid economic footing with a clear path to grow adjusted EBITDA even without building the jet plant, investors should be able to see how the cash flow from our businesses benefits us prior to the ATJ-30 plant coming online in the future. We built a strong foundation from which to grow. I believe the ATJ opportunity is exciting, especially with Project North Star and the franchise approach. It has taken longer than I ever wanted to get to the point where we are today, but here we are. And looking back, what a journey it's been. I'm incredibly pleased with where we are and where we are going. I'm most proud of the terrific team we have. I hear from investors and partners all the time how impressed they are with our people. We work to deliver, and we are incredibly persistent because we believe in what we are doing with deep conviction. So for me, the timing is right. The team is strong. The balance sheet is looking good. There are what I believe to be great opportunities in front of us. It's time for me to pass the torch to Paul, who I have bet will be a great CEO. And with that, we'll take your questions. Operator?

Certainly. And our first question for today comes from the line of Jeff Grampp from Northland Capital Markets.

I was curious on the CI front. I believe there were some changes in the calculations that kicked in at the start of this year. I was just kind of curious to contextualize those a bit more. Is there any way you guys could share maybe like what your CI score were in the back half of 2025 and how much of a benefit that could be for you guys looking ahead into this year?

I think we should provide an outline of the kind of numbers that you're seeing.

Yes. Absolutely. Thanks, Pat. I think high level, so last year, our Gevo North Dakota, as you know, we generated and monetized $52 million of tax credits. That was based on a CI score of low double digits last year. With the changes to the guidance and then the 45Z-GREET model, how that's going to work in terms of the effective CI scores are going to be reflected in the amount of 45Z that we generate for our Gevo North Dakota asset in 2026, not necessarily 2025. And the impact that, that has on our CI score is it's going to reduce our CI score by pretty much 6 to 7 CI points. When that happens, we expect to generate an incremental $0.10 per gallon in 2026. That is what we expect to see from our facility in 2026 in terms of 45Z. So based on our projected production of our Gevo North Dakota asset in 2026 of 67 million gallons, we are going to be in that threshold of $0.90 per gallon of credit generation in 2026. Changes to the 45Z guidance have very little to no impact on the 45Z generation for our RNG production or RNG asset at this time.

Perfect. I appreciate it. That's exactly what I was looking for. My follow-up is on the ATJ side. I believe that DOE extension that you guys got last year has maybe a couple more months remaining, at least on the original extension. Is it fair to assume that something gets figured out with them or another party by that deadline? Do you think additional time may be needed? I know you guys are targeting this year for FID on that, but wasn't sure if there's other things at play to reach that FID outside of financing.

Yes, great question, Jeff. We have been working on this for about three years now, and we are eager to reach the finish line with the Department of Energy. We are excited about our current position and our continued progress. With the extension granted through mid-April, we will collaborate with the DOE to possibly secure an additional extension. Additionally, we are engaging with other interested parties who recognize the value of the ATJ platform, so it's a multifaceted effort.

Yes, I would like to emphasize that the economic outlook is favorable. One noteworthy development is our engagement with the Department of Energy, where they fully recognize our preference for constructing the ATJ-30 plant in North Dakota instead of a 60 million gallon facility in South Dakota. The economic factors are strong, as we have low carbon ethanol at a prime location. Carbon capture is within our control, and we have already built half of what we would have needed in South Dakota at the North Dakota site. Additionally, there is interest from other parties wishing to collaborate with us on financing this project, especially due to the franchise model that Paul discussed.

And our next question comes from the line of Dushyant Ailani from Jefferies.

Pat, it was a pleasure working with you and Paul. Again, congrats on the new role. My first question, I know that you kind of talked about that incremental $0.10. Maybe could you give a little bit more on the details on the path to get to that $40 million in EBITDA, the bridge? I know you guys have highlighted that before, but maybe if you can talk a little bit about the timing of it and how you can think about that going forward?

Paul, that's a question for you, and then you and Leke teaming up on it, I think.

Yes, absolutely, Dushyant. As you can see from our current position, last quarter we were at a $20 million run rate in EBITDA. With the increased focus on carbon and our positive sales in low carbon fuel, we're making progress. As Leke mentioned, we won't exceed around a dollar per gallon with the 45Z tax credits. Combining those factors with our existing assets, even before any expansion, we anticipate an average of about $10 million per quarter moving forward. That gives you a clearer picture. Leke, could you provide some additional details?

Paul, no, I think you captured it. I think the trajectory is we are on track with really just how our EBITDA mix is made up to be tracking exactly as to how we're projecting, which is that $10 million per quarter. We feel very confident. I think 45Z is going to be part of the story, but we also do believe that really the intrinsic EBITDA margin that our assets can also generate also from the carbon monetization that we're doing, we're on the right track to achieve that goal.

Understood. And then my follow-up was, I know you mentioned some talk around potential acquisitions as well. Maybe could you dive a little bit further into that, what kind of assets you're looking for and maybe around timing of those?

Yes. I want to emphasize an important point about Gevo and Leke and his team in comparison to other companies discussing 45Z. Leke and his team have actually secured funding, which is a significant distinction. It's not just a theoretical concept; it's a tangible achievement. Regarding the possibility of applying our expertise to similar opportunities as Gevo North Dakota, Paul, would you like to elaborate on that?

Yes, sure. I mean, look, I think this is what we're learning at Gevo North Dakota that there's a lot of money to be made kind of setting the table as we think about the ATJ franchise. So as we look for how do we build out that franchise, we're looking for similar things that we've already identified. And it was a good learning for us going from South Dakota to North Dakota. We have on-site CCS and capture. So that's good. You got to have good corn. You got to have good logistics, right? You have to have all the good things that we're proving that are critical. And again, that kind of sets the base for then how do you grow ATJ. And so as we look through this and we talk to others, we know there aren't that many of these different assets out there, but we're going to keep our eye on that because I'd sure like to have another Gevo North Dakota if it exists. But we're going to just keep watching for that and be opportunistic.

And our next question comes from the line of Sameer Joshi from H.C. Wainwright.

Just sticking to ATJ-30 and the financing thereof. The FID is expected during 2026. Is it dependent on the EDF loan guarantee transferring to this? Or is it independent of it?

Sure, Sameer. It definitely speeds up the process. We can finalize the debt sizing and move forward to complete the loan. We’re focused on maintaining momentum. As we mentioned previously, we're collaborating with others to advance the engineering. Remember, we did extensive work in South Dakota. When considering how to integrate this project in North Dakota, we're reducing the size from 60 million gallons to 30 million gallons. The good news is that we now have two different design sizes for our franchise, which means we have slightly less capital to raise. We're evaluating the debt and equity we’ll need and determining the right partners to collaborate with. Regardless, we want to expedite this project because, as Pat mentioned earlier, North Star has excellent economics. We believe the potential to generate up to $150 million in EBITDA by incorporating the ATJ-30 and Gevo North Dakota is significant.

And you have to remember that we're a lot more interesting than we used to be. We're positive cash flow kind of situation here. And so that makes us a whole lot less risky. And that's not lost on all kinds of people who invest in these types of things, right? There's a good base, same thing we were talking about, strong base, good economics up there. Everything is under our Gevo control, and it's a good situation. So yes, there are other options available.

Makes sense. It was interesting to see the 2 million gallons of corn fiber cellulosic ethanol being produced. What are the considerations for either increasing that volume or achieving a higher CI score? Can we do 4 million next year or 7 million? I just wanted to understand the limits or extent of that.

Certainly. We produce corn fiber ethanol using new enzymes that we incorporate, and there's definitely potential for optimization. We are continuously working on this, so you can expect gradual increases. Additionally, we are focused on maximizing ethanol production from the plant, which includes investing in improvements to eliminate bottlenecks. This will also lead to an increase in corn fiber ethanol production. The key factor is indeed the enzymes.

I believe there are several ways to enhance the overall economics. Chris just mentioned the increased production of ethanol. We are currently capturing a significant amount of CO2 and can capture even more as we produce additional ethanol, which is great. We also have the potential to optimize co-products like protein and corn oil. Additionally, we discussed the importance of cellulosic production. There are several avenues to pursue, which is why addressing any bottlenecks is crucial; every improvement counts. We prefer to secure $1 per gallon from tax credits, as it also generates more CDRs that hold value in the marketplace. It's important to note that these are entirely separate from production tax credits. We are expanding the variety of products we offer by enhancing our efficiency in capturing co-products alongside ethanol production.

Got it. Just one last one. I don't think we discussed Verity in any detail. But are we on track to sort of commercialize that during this year for feedstock traceability, agricultural applications? Just would like to see where Verity is at.

Well, that’s a great question, Sameer. We’re really excited because we finally have a significant catalyst. We mentioned the 45Z tax credits, and recent guidance from the treasury indicated that agricultural benefits may be included in these credits. This aligns perfectly with the carbon accounting and traceability solutions that Verity was designed to provide. Over the past quarter, we’ve been signing up more customers than ever before, which is a combination of needing traceability and simplified compliance services. There are many complex calculations involved, and Gevo needs to manage them as well. This tool was created to make our lives easier and more accurate, and it serves the same purpose for our Verity customers. We’re eager to enhance its usability with farmers. Additionally, we've announced a partnership with Bushel, which offers farm management and grain software to support farmers' regular operations. We are now integrating Verity with farm business software to make it a key component in their operations, including necessary tracking and traceability for monetization. We’re really enthusiastic about this, so thank you for your question.

Yes. sounds really good. Thanks, Patrick, for bringing the company so far Paul, good luck for the future.

And our next question comes from the line of Derrick Whitfield from Texas Capital.

Congrats on a strong year-end. And Pat and Paul, congrats on your respective updates. And Pat, hopefully, you can enjoy some well-deserved time off in retirement. Starting maybe first with the bigger picture. With what you guys have accomplished over the last year, I mean, it's quite remarkable as you look at Slide 5. Paul, for you specifically, as you think about, again, this progress that the organization has accomplished and where you'd like the organization to be next year at this time, how would you paint the picture of what changes, if any, to expect? And it could be as simple as emphasizing certain aspects of the business, but just kind of how you think about the business and where you'd like to be 1 year from now?

Yes, absolutely, Derrick. This is a really exciting time for us because we've made significant progress over the past year. Our carbon business is something we're very enthusiastic about, and it's just beginning to develop. We're working on selling fuel with carbon included or separating it out. The key lesson we've learned is figuring out how to effectively sell and monetize that carbon. We're starting to see our sales increase with recognized brands. While we have a long way to go, the market is just beginning to take shape. Current statistics show that around 44 million tons of carbon has been sold in the removal markets, but only about 2.8% of that has been delivered. We are among the pioneers in actually producing and delivering carbon credits and have a strategy that allows us to choose between selling into low carbon fuel markets with favorable returns or separating the carbon if it holds more value in different markets. Enhancing our carbon business is crucial, not only for our low-carbon ethanol efforts but also as we approach our ATJ business with a similar mindset. We're able to sell fuel with carbon attributes, which have different classifications known as Scope 1s and Scope 3s when sold with the fuel. However, we can also sell those attributes separately from the physical fuel, meaning we are maintaining the same business model across different products. As we refine our skills in this area, we have already secured contracts covering about half of the carbon output from ATJ-30. We see this becoming a vital component of our operations, one that we can franchise and offer to others without needing to own every ethanol or ATJ plant globally. We have a replicable business system that allows us to assist others while monetizing our expertise and methods. This leads us to consider how capital-intensive we want our operations to be. We appreciate the high returns we’re seeing from Gevo North Dakota and would love to expand our assets. However, we must manage our growth so that we can balance our capital requirements against a more capital-efficient strategy, which aligns with our franchise model. This approach also applies beyond ATJ. We recently licensed our technology for IBA for diesel in India, showcasing how our model is adaptable for various applications, including renewable chemicals and isobutanol. As we advance these business systems, that will be our focus moving forward, and we look forward to collaborating with partners and expanding our reach while getting compensated for our expertise.

Great. No, that's a great update. And maybe shifting over to ATJ with my follow-up. One of your industry peers has experienced some challenges with their ATJ project over the last year. As we inch closer to your FID, could you speak to how your ATJ-30 project is different from a scale process and risk perspective to that other project that I'm referring to?

I believe I can offer some insights and then hand it over to Chris. One of the key points is that we are utilizing established unit operations that have been proven at a commercial scale. We didn’t rely on anything innovative like some others may have; we avoided taking concepts from a lab that haven't been validated. Our approach includes unit operations that are accessible and familiar, sourced directly from the petrochemical sector. In that sense, there is nothing groundbreaking. The way we combine these elements, lower the carbon intensity score, and optimize the process is unique, but that's not the core of our project's success. Chris, Paul, do you have anything to add?

I'll add just a bit and then Paul can chime in. So Pat, I'll echo what you just said, which is, yes, we're using proven technologies and their technologies from a proven company that has commercialized many, many things at large scale, including at oil refineries. In fact, the engineering that's been done, so at the heart of the process is from a company called Axens. But as we design the entire process around it, we only use engineers that have experience working on these things and have the capability of supporting operations once we get operating. So these engineers aren't just desktop engineers. They've actually operated assets, and they have experience starting up plants. And so it's that experience. And like what Pat said, there's no new technology gives us a lot of confidence this is going to start up very easily. Paul?

Yes, I think Chris summarized it well. When we engage with various companies during diligence, especially in the petroleum sector, they often realize that they already have operational assets in place, although not necessarily linked in the same way. We've adopted a proven strategy because we understand that these unit operations function effectively. Although they may be integrated differently, we've been collaborating with companies like Praj, which successfully combined these unit operations into a fully functional integrated pilot plant. I had the opportunity to experience this firsthand when I opened the valve and saw jet fuel come out while ethanol was fed in. It was impressive. I believe that our use of established technologies, along with strong partnerships and skilled engineers who fully understand these processes, positions us uniquely compared to the other group you mentioned, assuming I'm correct about who that is, and we are prepared to implement effectively.

We have a different perspective on this. Our goal is to create something that is scalable at a large scale with low costs. We are not focused on one-off specialty products and we are not venture-backed. Our aim is to address a real-world issue by delivering jet fuel that is competitively priced with petroleum. We will also sell the associated carbon attributes. Relying on waste as a strategy is not feasible, as it tends to increase costs, which we have seen repeatedly. Carbohydrates serve as an excellent feedstock, as they are abundant and oversupplied globally. Paul has a great saying about this; Paul, what would you do with them?

We take those carbohydrate calories from the waste line to the airline so fast.

I see one more opportunity to produce jet fuel from waste products. This represents a completely different scale of our objectives. We approach this very practically and aim to avoid technology risks. This mindset has enabled us to successfully pass due diligence with the Department of Energy and our major partners. Our initiative isn't merely about generating enthusiasm; it is focused on creating something tangible for the long term and achieving success.

That's a great answer. And maybe one if I could just follow up on the $40 million run rate. I think based on what I've heard you guys say, there appears to be some upside with debottlenecking that hasn't necessarily been factored into the $10 million per quarter run rate. And then also when you kind of think about what's happening in the LCFS markets now and where you're going to place the product, it feels like there might be a little bit of extra upside there because you now have a few more markets competing with one another for those molecules. But again, any color you can offer on that front would be helpful.

Yes, sure, Derrick. A couple of things there. If you look at the LCFS markets first, right, we're still applying for pathways where we want the pathway with carbon capture. We've got pathways today without carbon capture and sequestration, but we'll look at applying and we're in the process of applying for those today and positive outlook on getting those done. But places like Canada in Canadian CFR, right, where the credit prices are $2.50 or higher, right, really nice from a carbon perspective, and that looks positive. We're obviously selling into markets today that have good returns on LCF markets. But the other thing that you have to remember is we're also inventorying some CDRs to build inventory to satisfy some of our contracts and spot sales in that market that we think is going to grow later. And as we do that, that's carbon value that we can't sell into those existing LCF markets that we're selling into today. So it's a little bit of a delayed revenue there. And so what you probably will see and Leke was talking about this a little earlier, we'll have this kind of push and pull with inventory build on carbon that we sell separately into carbon dioxide removal markets. LCF markets that have more immediate returns. And so you'll see that kind of balance out a little back and forth. And then, yes, I think, of course, as we continue to finish up some energy efficiency projects, we get a lift from additional or lower CI score on 45Z going forward. All those things are going to be adding up to get us to that number.

And our next question comes from the line of Peter Gastreich from Water Tower Research.

Congratulations to the team on the results. Pat and Paul, congratulations to you both, and I wish you the best during the transition. I have a couple of questions. First, regarding the CDR inventory and carbon credits that Paul mentioned, what are you seeing in terms of pricing in the voluntary CDR market? What is your outlook there?

Thank you, Peter, for the congratulations. The carbon markets are still developing, making it challenging to assign a specific value. That's why our investor presentation outlines a range. In the voluntary markets, we typically see prices between $100 to $300 per ton for carbon dioxide removal credits. It's exciting that Gevo has moved from being nearly nonexistent in this area to now being one of the top 10 suppliers. Regarding the low carbon fuel markets, as mentioned in our investor presentation on our website, we've observed that prices can be lower, with markets like California going down to about $50 per ton, which isn't very appealing, especially given our optionality. However, with Canada and Oregon increasing prices to over $200, we see a competitive landscape between voluntary carbon dioxide removal markets and compliance markets for low carbon fuels. We'll continue to leverage this competitive environment to optimize our decisions on volume placement for both our commodity and carbon value to maximize returns for Gevo.

Okay. Great. So my next question is just about your share CCS capacity. So it looks like the Frontier partnership that's really going to help accelerate the plans there. I'm just curious, first of all, are you able to share what would be a realistic timeline for starting to bring in that third-party CO2? And the second question related to that would be, once you reach a critical mass of volume, I don't know if that's in terms of contracts or whatever, will you have incremental CapEx of any sort, perhaps above ground that will be required to accept those incremental volumes?

Yes, of course, Peter. The collaboration with Frontier Infrastructure Holdings has been intriguing because we've seen a lot of potential with these pipelines. We anticipated a pipeline in South Dakota that ultimately did not come to fruition. This has led us to explore the option of transporting CO2 by rail, which is thrilling as we aim to produce more fuel and carbon dioxide co-product, particularly in North Dakota. Currently, we are utilizing only 16% to 17% of our pore space, which indicates we have substantial room for storage. Our primary objective is to ensure we capture Gevo's carbon dioxide while also assisting other companies. Our work with Frontier has revealed numerous ethanol companies that could benefit from our support. This ties into our carbon management services; if we can import CO2 by rail and make effective use of our pore space, it presents a significant opportunity for us, potentially generating revenue through storage fees and carbon marketing. We are still in the design phase, working on the scope, and it may take time as we need to establish a terminal. Nevertheless, this prospect becomes particularly exciting if we can fully utilize our available capacity while also exploring additional pore space opportunities. This aligns with our investor presentation, where we discuss unlocking value to increase adjusted EBITDA from $40 million to $110 million by monetizing pore space and assisting others in the carbon sector. Moreover, the more low-carbon ethanol plants we enable through our carbon management services, including both physical and digital support, the more sites we can prepare for future alcohol-to-jet plants. It’s about generating revenues now while also creating pathways for expanding opportunities at 10, 15, or even 20 additional sites in the future.

This does conclude the question-and-answer session of today's program. I'd now like to hand the program back to Pat Gruber for any further remarks.

Thank you all. It was a fantastic year with a lot of potential. Our carbon business is extremely interesting as it allows us to make decisions about where to capture the most value. We are pioneering efforts in this area, and it's quite exciting. I'm really grateful for the team at Gevo North Dakota; they've done an outstanding job managing that plant, and I'm glad we acquired it. Bringing that asset under our control has resolved many issues. We now have low carbon available, which is a significant achievement. The sequestration site is remarkable; we didn't fully realize how advantageous it is compared to others. We are the only ones in that formation, and the well is exceptional. We are learning more about its importance, evident from our certification as a 1,000-year well by Puro.Earth. The potential in our projects, like the IBA in diesel fuel, is promising. We have continuously worked on IBA, even if it's not needed for jet fuel, as it serves other fuels. We aim to complete the ATJ plant, as Paul mentioned, and develop a franchise model to support other ethanol companies that want to learn from us. We have a greatly reduced risk compared to the past, a wealth of intellectual property, and substantial growth potential. This is around my 59th or 60th earnings call, and it will be my last one. I want to thank you for your investment and for challenging us to improve over the years. I appreciate the opportunity to work with all of you and wish the team the very best. Thank you.

Thank you. And thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.