Aemetis, Inc. (AMTX) Earnings Call Transcript & Summary

[Audio Gap] You have a very unique company, and we have a lot of investor interest in understanding a little bit more about your company. You put out a guidance a few days ago, targeting $1 billion in revenues by 2025, an EBITDA of about $325 million or so. That's a strong margin. So help us understand the company a little better, help us understand the guidance. What gives you the confidence you can get there? And we'll let you start with that, sir.

Thank you, Manav. I appreciate the opportunity today to meet with you and with Betty as well as all the other investors that are going to join us today. Why don't we start out with a little review of our business that we'll do in the form of a slide show. And I think we have an opportunity to talk together about what the business is and activities at Aemetis. Our overall strategy is to lead the transition to below zero carbon. Not zero carbon, but below zero carbon intensity inputs, which feed the transportation marketplace. In the transportation marketplace, we have a unique opportunity to decarbonize the human condition. Specifically, we've created a number of policies at the federal and state level in the United States that have specifically measured the effectiveness of a company at its role in climate change. And if you use below zero carbon intensity inputs to create biofuels, you then end up with a specific measurement mechanism in California called the Low Carbon Fuel Standard. And at the bottom of this slide, you can see that over the last several years, we've actually been reducing the number of available Low Carbon Fuel Standard credits in the marketplace, even though the production of the credits has increased. And what that means is, essentially, the policy is working very, very well. The production of these LCFS credits is increasing, but it also means that we need more production. So as we talk through our company, the overall strategy is to assist in reversing climate change, which is measured by Low Carbon Fuel Standard credits in California, Renewable Fuel Standard Credits at the federal level and IRS 45Q carbon sequestration. So the more effective we are at creating these 3 types of credits, the more effective we are at actually reversing the effects of climate change. And so our plant owns 100% of the largest biofuels plant in California. It's on the left here. It's an ethanol plant, does 65 million gallons a year. On the right, we built and own 100% and operate the largest biodiesel plant in India. It's a 50 million gallon plant. Both United States and India have very deliberate climate change goals. In India, for example, a 5% biodiesel mandate requires an additional 1 billion gallons of capacity beyond the current 250 million gallons. So definitely a growth market. But today, we're going to focus on the bottom left. This plant is an existing corn ethanol plant, but we have developed 2 additional expansion projects in order to optimize the economics of the corn ethanol plant. So if you look under projects, you can see that we're -- we have completed Phase I, and we're now operating -- but we're expanding a negative 416 carbon intensity, dairy renewable natural gas project. The renewable natural gas is actually used to replace diesel. That's how it generates LCFS and other credits. But it is an actual problem we had and an opportunity we had at our corn ethanol plant that led us to completely replace petroleum with natural gas, which has a carbon intensity of about a positive 100 with negative 460 dairy natural gas that got us into this business. The second bullet point is our carbon zero renewable diesel inject fuel plants. The opportunity there was one of the outputs of the corn ethanol plant is corn oil. And by making a very, very low carbon intensity ethanol plant, we ended up with very low carbon intensity corn oil. Well, we've developed a plant where we use that corn oil, and we innovated by using a local feedstock of carbon-negative hydrogen which you can see here under the second bullet point on this. We have a 45 million-gallon plant, but its development includes below zero carbon intensity cellulosic hydrogen. So hydrogen that's from cellulosic material, which means basically wood material, is being used to make the hydrogen and what we'll note here is it's a negative carbon intensity of negative 80 is what we expect to be the final number. And that is compared to a positive 170. So we're a literally 250 Low Carbon Fuel Standard credits below what is currently used to make the renewable diesel at virtually every plant in the world. So it's a sustainable advantage, but it draws on local feedstock that's just not available to these other plants, which we'll talk about in a little bit. So to simplify what we're doing as a business is we're upgrading our existing biofuels plants, the 65 million-gallon plant, under bullet 2 has some upgrades, which basically reduced the use of petroleum natural gas that's very high carbon intensity, and replace it with carbon zero solar arrays with battery storage in order to create electricity that powers the systems like dehydration. Mitsubishi Ceramic Dehydration runs on electricity, which allowed us to not use the petroleum natural gas carbon-intensive input. We instead were able to convert over to solar as the import. Mechanical vapor recompression means that whatever we use in terms of steam actually can be used again. We're recompressing it. What's the recompression equipment? It's electric. So now zero carbon intensity solar is replacing plus 100 carbon intensity petroleum natural gas. So in order to fully appreciate what we're really doing is, we're a 15-year-old company, it is an optimization of all the inputs and all the outputs from the corn ethanol plant in order to be able to optimize the carbon intensity, Low Carbon Fuel Standard, federal and RINs. In this slide, you can see that as you move to the right, you get a higher value fuel if you have lower carbon. And the federal regulation called the Renewable Fuel Standard has ethanol at D6. And then it stacks up like a cake with D5, D4 and D3 RINs, D3 being the most valuable. But our strategy is to use local non-food, negative carbon, hydrogen and dairy renewable natural gas via -- delivery to our plant via pipeline to displace remote high carbon food, feedstocks and inputs, specifically petroleum natural gas from Texas and, frankly, eventually corn from the Midwest. And by doing so, you generate significant amounts of these Low Carbon Fuel Standard credits, et cetera. Our Board of Directors, several of whom have been with us for 15 years, most of the management team has been with us since 15 years. Lydia was with the Chevron Corporation for 38 years, including 20 years primarily as the Corporate Secretary of Chevron. And Naomi Boness of -- Dr. Boness, is Head of Stanford University's Natural Gas Initiative and is very, very focused on opportunities for natural gas, which include renewable natural gas. And I should mention that Jack Block -- John Block, has been on our Board for almost 15 years. But he was the United States Department of Ag Secretary for 5 years under President Reagan, which has helped us in our close relationship with USDA. As you'll see later, we have $125 million conditional commitment letter with the USDA, and we have additional significant financings with the USDA there in process. We won't talk through this in much detail, but we do have 35% CAGR in our revenue growth. But as you can see, please look at the yellow at the bottom. That's our ethanol plant revenues. We're not really projecting to grow our ethanol plant much. What we're doing is we're optimizing the plant. We're not taking 65 million gallons and expanding its production. We're actually just optimizing the inputs and outputs. And as we review this, you'll see how many -- how these credits are really us having a greater and greater impact on climate change. And the opportunity we have here is simply by building these new units that use the inputs and outputs more intelligently, we dramatically increase revenues. Now 190% CAGR on our EBITDA, of course, sounds pretty amazing. But when you start with a low number, by the way, all statistics can get pretty high. So I don't want to unduly impact decision-making here. Fundamentally, as our dairy natural gas grows, that is the opportunity here with the sort of the red color. You can see that, that drives our cash flow very strongly. And as we'll talk later, this is essentially a monopoly business where we own the pipelines. We own the offtake essentially and the processing to convert biogas into renewable natural gas. So it's a 25-year contracted business. The feedstock is essentially free. And we own the pipeline that is the monopoly component of the equation. So pretty highly confident in the cash flow streams there. And then the blue is our scaled up jet diesel plant, which uses our corn oil and our carbon-negative hydrogen. The cash flow comes from the fact that we're using carbon-negative hydrogen. So our plant will be generating substantial profits when pretty much every plant that runs petroleum natural gas to make jet diesel is frankly losing money. So it's a very sustainable competitive advantage. And of course, being in California with our existing local markets, it's a pretty good place to be. Just a consolidation for you to look at. This map shows the 35 miles of pipeline that we're building. We've already completed Phase 1. So on the top, you can see 2 dairies. We've actually built the digesters, built it on site. Hydrogen sulfide extraction units, already built the pressurized pipeline, already built the injection into the Aemetis plant, already generating the revenues. And all we're doing is expanding it. And we've received the California Environmental Quality Act approval for the remaining 30 miles of the pipeline. And what we get here is a network effect, where as you're passing through the local dairy environment, there's over 1,200 dairies in California, but we supply 80 of them with animal feed from our ethanol plant, the byproduct of corn ethanol is -- we're the largest animal feed producer in the state. And our relationship with dairies are very, very special and very important. We supply most of the dairies in our local area with valuable, low cost, high-protein animal feed. But what we really do is we have basically about a decade of relationship and so to ask a dairyman for a 25-year lease on a football field size part of his real estate or her real estate -- one of our first dairyman actually is a lady. And we asked for a 25-year relationship with them. And we invest very substantially. It's a $102 million total investment to build this out. But the dairyman is not asked to make a cash investment. What they're asked to make is an investment to reducing methane emissions. In California, we passed Senate Bill 1383, which made dairy men and women liable under the Low Carbon Fuel Standard because 25% of the methane emissions in California come from these lagoons, this dark area that you're looking at. So by going to the dairy and putting out very substantial investment to cause the dairy not to be put force in a position of having to buy Low Carbon Fuel Standard credits, basically not to have to act like an oil refinery or a natural gas plant, and instead give them cash so that they can both improve the environment as well as improve their economic activities. We have created a much more sustainable dairy model in Central California while reducing air pollution, reducing carbon emissions and frankly, reducing the smell of dairy operations. So our opportunity in dairy is matched by what we're doing with our corn oil. And the feedstock in the top left is also grown in the Central Valley of California and is the almond wood and vineyard and forest waste, but primarily almond and walnut wood, which is commonly burned. We have about 1.5 million acres of almonds and walnuts, and every year, there's about 1.6 million tons, 3.2 billion pounds, of waste wood that is ground up in the field and then burned in the field that doesn't have a ready market. So by putting it through a gas-fire step, which the gas [indiscernible] set we'll talk about in a second, but it has over $425 million of investment by the Department of Energy and Waste Management and is operating commercially. By converting this into renewable hydrogen, what's unique is we end up with a carbon-negative renewable hydrogen. When we combine that with the corn oil from our Keyes plant, remember, this is all about trying to optimize what's going on at the Keyes plant. What we find is we use the local carbon negative, negative 100 approximately, orchard wood, creating a carbon-negative 80 cellulosic hydrogen, matched it with our very low carbon corn oil, and end up with probably the world's lowest carbon jet renewable diesel, which has not only the best economics, but frankly, it enables us to expand this business and have a very sustainable business model. What we show here in our 5-year projection is that we end up with 90 million gallons. Each plant is 45, so this is basically representing 2 plants operating. And we generate EBITDA of about $136 million a year on a little less than $500 million of revenue, running only 2 plants. With the amount of orchard wood needed to supply these plants, we're only using about 5% of the available waste orchard wood in the Central Valley. And in the process of building out this development, we actually went out and got the financing process going for cellulosic fuels and got the support of Tom Vilsack. Tom is here in this -- in the middle, just to the left of the television is Tom Vilsack. He served for 8 years as a Secretary of Agriculture under Mr. Obama and Mr. Biden, and now he was recently brought in last week again as a Secretary. Not in this image, though, is sitting to my right, you can see his hands, is Jack Block, the former Secretary of Agriculture. And so we've met a couple of times with Mr. Vilsack, certainly knows his team extremely well. We received $125 million cellulosic biofuels related loan commitment letter for them. This is a 20-year loan with basically $100 million of taxpayer financial commitment to the success of our project related to the jet fuel project. Last little topic I want to cover is feedstock. When looking at carbon-negative biofuels and bioenergy, you really need to start by understanding the availability of the feedstock, the price sensitivity of the feedstock to demand changes. Really the make or the break of the project, carbon intensity, as well as the feedstock price, is the feedstock. Well, California has a waste feedstock stream that is massive. And it's derived by the fact that 99% of all the almonds grown in the entire United States are in the Central Valley of California. A former inland ocean, it stretches from just north of Sacramento to south of Baker's Field, it's about 50 miles wide, about 200 miles long. It's very unique area because it has fog in the winter time, it keeps it from freezing. And then the summertime have some ocean breeze that comes in through the delta, so you don't get scorching heat. It's not Death Valley. And so as a result, you get a very large amount of cold components in the wintertime without freezing and heat components in the summertime without scorching. And you make the world's best almonds. I say that partially because my family and I had McAfee Farms, are an organic almond company where, I think, we have roughly 500 acres of organic almonds and so we know what happens at the end of the organic almond cycle after 20 years is you have to knock down your almond wood, and there's no market for the product. So you end up burning it in the field. And you can see here in this chart in the low left that there's no market. And frankly, as almonds have grown in capacity, we have a projected increase in almond waste that is burned. University of California ran the study for us for our project. And you can see in the upper left that we have 20 years of visibility into the increased amount of almond waste. And therefore, in the bottom left, you can see increased burning that's going to happen. And on the top right, you can see that within a few miles of our plant is plenty of feedstock, considering that 2 of our plants are only 5% in the available almond wood. So this is carbon-negative feedstock that makes hydrogen. Hydrogen plus corn oil from our plant makes renewable jet and diesel fuel. So this is the feedstock, and this is what it looks like actually when you grind it up and chunk it. We signed a 20-year contract, 10 years are fixed price of $15. And total contract that exceeds what we need for 2 plants is actually about 3 plants worth of feedstock. And so we are converting this uncertainty about the price of natural gas, the price of other inputs into very, very highly certain carbon-negative renewable hydrogen feedstock, which we use for hydrogen. The rest of the slide deck, if you look through it, has a lot of our approvals that are already in place. We've been developing the jet diesel plant for over 3 years. This is the assigned exclusive for our gas fire. This gas fire, again, has over 25 years of development, very, very high efficiency, very low cost capital expenditure. And it will be built for us in the modular format. It's actually built and delivered in a prefabricated format. We basically screw it in the ground to put it in place. The site is 142 acres. It's a former army site and is already permitted for this kind of industrial activity. Before I leave the topic entirely, I want to go back to that ethanol plant, which, again, is the core discussion. By converting this plant from using petroleum natural gas to electricity and then optimize electricity with a solar array, we generate about $20 million plus of EBITDA between the savings on natural gas and electricity of roughly $8 million and the -- and increased amount of Low Carbon Fuel Standard credits which is about $15 million. That's about $23 million a year. It's permanent. No matter what the cost of our inputs are, this is $23 million a year of additional cash flow that we get from just the traditional corn ethanol business. Lastly, our India plant has benefited from the National Biofuels Policy in India, which has a target of 1.25 billion gallons. The country has evolved as a leader now in trying to improve its air quality, 13 of the 20 worst air quality cities in the world are in India. The world's worst air quality city is the capital of India, New Delhi. And so biodiesel, which is a 90% reduction in particulate emissions as -- and is 100% renewable, is a very big target for India. India consumes about 25 billion gallons per year of petroleum diesel, and they're trying to wean themselves off petroleum diesel. We built this plant starting in 2007. We founded the Biodiesel Manufacturers Association. We serve as Chairman. I personally met with Piyush Goyal and Nitin Gadkari. These are the ministers of the various energy and agriculture related industries in India. And over 15-plus years, we've developed a good personal relationship with these people. We play in India for one very important reason. That is a massive opportunity for growth in low-carbon biofuels. And we're using a waste feedstock as our input. We were able to develop and complete this plant, and it's completely debt-free. Generates about $168 million at total capacity per year, $168 million of revenue per year. We're also the largest glycerin producer, I believe, in India because we built a pharmaceutical-grade glycerin plant. That's the plant in the middle -- the center of this plant. So we're well positioned in India in a market that, again, is fast-growing, just like the U.S. market. Last thing I wanted to hit here real quickly is that we essentially have built from 1 ethanol plant and 1 biodiesel plant a pure-play but highly diversified, below zero carbon renewable natural gas and renewable fuels company. But remember, it's 1 ethanol plant. This is 1 ethanol plant. We just have been very diligent over a 15-year span at looking at every input, every output and then scaling up what those opportunities are, taking advantage of the monopolies we have in dairy and renewable natural gas, the unique carbon-negative hydrogen and its ability to scale up to literally 300 million gallons a year of production in Central California using carbon-negative wood. So this is not something that just burst yesterday. This is a $200 million revenues company with permits in place for the remaining 30 miles of pipeline for renewable natural gas. Those California Environmental Quality Act permits alone is a 2- to 3-year experience. And those are fully in place. And by adopting new technology, we have granted patents on our sugar extraction technology. We've granted many patents, of course, on the gasifier that are exclusive to the company. We've built a patent moat around the company, a technology moat around the company, so we can scale extremely rapidly with really a unique carbon-negative feedstock that's not available in Nebraska or in Oregon or Texas or anywhere else. That's the carbon-negative orchard wood that's currently being burned in California. And we put all that together, what we end up with is a very strong production of Low Carbon Fuel Standard, Renewable Fuel Standard and IRS 45Q carbon sequestration credits. So Manav, that's my presentation at this point in time, but let's go ahead and take questions if you guys are ready.

How do you think AMTX RNG digester footprint can ultimately be? And what is the current market size? And how much do you think this footprint can grow to?

The dairy RNG opportunity is approximately 1,200 dairies in California. Of the 1,200 dairies, we feed cows at 80 of those dairies. So the initial opportunity for us is about 10 dairies per year times 5 years. Its 52 dairies in our 5-year plan. But as I mentioned, we feed actually 80 dairies, and there's 1,200 in the state of California. The right answer is you can grow as fast as your ability to just deploy permitting and dairy relationships. The -- every dairy in California that has a lagoon will eventually need to cover that lagoon in order to not emit methane, literally 25% methane emissions come from those dairy lagoons. And what we've already proven is you can essentially convert that into a very valuable transportation fuel that displaces diesel used in trucks. And so over time, there's going to be over 1,000 of these in California We are certainly positioned to be, if not the largest by far, probably just the largest in terms of deploying these digesters. The market size for the renewable natural gas is the diesel market. And California is 4 billion gallons of diesel. And so there -- even if you take every single dairy in the entire state, we're still talking about only about 300 million or 400 million gallons equivalent. So 10% of the diesel market could be displaced with this renewable natural gas product. So there's no theoretical way that dairies could ever surpass the total size of the market in California for diesel. Let me last mention the economics, because I think this is where investors have an opportunity to really grasp what our company really produces. For every 1 million British thermal units, every MMBtu that we produce, we generate $2 revenue from selling the actual molecule, the RNG. So we put it in a truck, for example. We got $1 million grant and out of the $23 million of grants we have for our renewable natural gas project, $1 million was to build a fueling station at our plant because we have about 75 trucks that carry 2 million pounds a day of animal feed, a couple of hundred thousand gallons a day of biofuel. So we have trucks to go through our plant. So we'll be fueling those trucks with our own renewable natural gas. We only get paid $2 per MMBtu. Now in and of itself, that doesn't mean much. But how about this, we get $30, 3-0 dollars, for the D3 cellulosic RINs generated by those -- that single MMBtu. The math is this. The D3 RIN price is $2.60, you multiply that times a factor of 11.727, that's set in federal law, 11.727 times 260 gives you $30. So the $2 for the molecule, $30 for the federal D3 RINs. Now let's look at California. You get $105 for the California Low Carbon Fuel Standard impact of a negative 416 renewable natural gas rather than positive 100 petroleum natural gas. That's almost 500 points of carbon intensity reduction that gives you $105. So what's 1 MMBtu worth to us? It's worth $2 as a fuel, but it's worth $137, $105 plus $30 plus $2, as an actual product of the company. So what does Aemetis really produce? We produce Low Carbon Fuel Standard credits, that's $105. We produce D3 RINs, that's $30. And by the way, the vehicle to do that, the mechanism for us to do that, was the $2 of actual natural gas. Similar math is used in jet and diesel fuel, similar math is used in our renewable hydrogen production, similar math is used in corn ethanol. You actually should look at this company as a Low Carbon Fuel Standard credit provider in order for oil companies to be able to continue to produce higher carbon gasoline and diesel and natural gas and sell them in the California market. They are exceeding the goals set by regulators. So they, in order to produce above the carbon limits, need to buy credits from us. So we enable oil companies and natural gas companies to serve the energy needs, including transportation. Not only California, but actually throughout the United States through the federal Renewable Fuel Standard.

A quick follow-up here is how is your negative CI projects different from the competitor renewable diesel projects, some of which are actually using soya bean oil with the carbon intensity of 53?

There are 2 differentiating components. Differentiation #1 is that certainly, distillers corn oil from ethanol plants, especially ones that are electro fuels plants who are using electricity to make the ethanol rather than petroleum natural gas, that's a very low carbon feedstock. We haven't gotten our approval yet through carb, but in theory, it could actually be below 10. It could almost be a 5 or lower, the distillers corn oil. And then secondly, the carbon negative, negative 80 renewable hydrogen, the cellulosic hydrogen we're making at a negative 80, is a dramatic differentiation from the positive 170 under the California Resources Board's grading of hydrogen that comes from Petroleum. It's positive 170 CI score or negative 80. So you put the 2 together, 170 plus 80 is 250. We're 250 carbon intensity points lower hydrogen input to our jet fuel and using nonfood oils to hydrotreat. So we're hydrotreating with carbon-negative into a basically almost a zero carbon oil. The concept of using nonfood feedstock to biofuel is central to Aemetis. The name of Aemetis is Ae-metis. Ae stands for "one" in Scottish, old Scottish, and metis is "prudent wisdom" in Greek mythology. So what's one prudent wisdom? One prudent wisdom is not take food and make it into fuel. That's one prudent wisdom. Another prudent wisdom is use nature to absorb carbon from the atmosphere and then don't emit it back in the atmosphere as methane, which is what happens in the dairy. A plant absorbs carbon, the dairy cow eats the carbon, it eats the food. And then we capture it and don't let it go out as methane. We convert into something that's 1/80 as effective as a greenhouse gas, which is CO2. So we're carbon-negative by helping nature to not have to put carbon back in the atmosphere. So nonfood below zero carbon, not zero carbon, below zero carbon, is the key to what we're doing at the company.

Perfect. I'll pass it on to Betty. She has some ESG related questions for you.

Sure. Thank you.

Great. No, thank you. I really appreciate the economic breakdown that you just provided. I'm just curious, given how attractive this is and between the RIN credit and then the LCFS credit, do you see the dairy farmers increasingly wanting a piece of that economics in order to supply you the -- really, the feedstock?

We signed approximately 18 dairy within a year after launching this project. And we share with the dairies in the economics of what we're doing. The first way we share is that each dairy would have to invest probably about $18 million to $20 million in order to be able to do the digester, the hydrogen sulfide cleanup, the interconnection, the cleanup compression. All of that together to be able to get the first dollar of revenue from the utility pipeline. It's probably about $20 million per dairy. We gave him an alternative, which is -- one of our first dairymen is actually a lady. And we gave them an alternative, which is we'll put up the capital, we have an ethanol plant which has fuel, so therefore, we can actually create low carbon fuel standard credits without even interconnecting to the utility at all because we own the ethanol plant, we can do that. We'll build the pipeline, we'll build the HTS, we'll do all the permitting, we'll deal with the county. We'll make this happen and we'll not only pay you money upfront, which we do. Upon signing we give the money upfront, which is a substantial amount. It's enough to -- it's not Christmas money. It's a substantial amount. And then every year for 25 years, instead of them becoming liable to the Low Carbon Fuel Standard, which goes up every year in terms of what their liability is, they're actually getting monthly payments from us for creating a fuel and mitigating their otherwise very harmful emissions. And what we now have is a network effect. When you put 35 miles of pipeline in place, anybody that's not signed up with Aemetis is not getting a very substantial amount every year and is at a competitive disadvantage to those who are. And we are now at the point which people are calling us basically saying, "Hey, don't forget. We're on your list. We're one of your 80 dairies that you do business with. We need to sign up. We're not about to let our 5 neighbors all be getting very substantial checks every month and we're not getting anything. This is -- that's not going to work. We need to be a part of this network." And so if we were to share in cost where we asked them to put a path to cost or even 10% of the cost, I'd be concerned about our scalability. Dairy is a business of small business owners, but we are asking them to make a 25-year relationship commitment to us. We're giving them cash upfront. We're then putting the cash into developing the extension of our pipeline of system that connect them to it. And then, quite frankly, we're their feed partner. With new feeding 120,000 dairy cows, we're the largest animal feed producer in California. And so we've been doing that for a decade, and we plan to do it for the next several decades. And that kind of permanent relationship is imperative to be able to have a dairy and make this kind of commitment. We're asking them for a relationship commitment, leasing us a football field sized chunk of property, giving us access to 25 years. And they've got a trust that we're going to deliver. And that trust doesn't come easily.

That's incredible. And sort of a follow-up to that, as I think about your competitive advantage, what really allows you to scale. We do think -- is it the existing pipeline that you can utilize or increase the utilization? Is it the relationships with the dairy -- with the dairy farmers? Or is it the permits that you have already in hand? Or is it technology? Help us think about -- you mentioned monopoly, sort of how far [ in the west ] are you relative to your competitors who are looking at this really attractive market?

CVX is a little company that is here local in California, and they've made a big financial commitment to dairy renewable natural gas. And you'll see it happening around the country. Central Valley, California, again, with about 1,200 dairies, over 1.7 million dairy cows. We're proposing to only really in 5 years only do 52 out of the 1,200. Certainly, we should do a whole lot more than that. And the reason why is because of the dairymen's ability to join in with their fellow dairymen to participate in making transportation fuel for what is currently a waste product that's going to cost them under the LCFS. And we offer them a zero cost way to do that with, I would argue, the most credible counterparty. Because unless you have an ethanol plant, your proposal to the dairy farm is, "Please let me come, have a 25-year contract, spend a lot of time and energy on your farm, but I'm not going to have any revenue at all until the utility," which in Pacific Gas and Electric, actually the banker of utility -- "Until the banker of utility gives me interconnection, permitting, spend several million dollars and all those kind of things." There's no revenue here at all for any other developer that doesn't own an ethanol plant. But if you happen to own an ethanol plant, we generate Low Carbon Fuel Standard credits as soon as we interconnect, which we did last September. The first day, we're generating revenue. And we again generated 100% of the Low Carbon Fuel Standard value without ever interconnecting utility at all. And so that is a unique sustainable advantage that we expect will then give us this network effect, which is at the Aemetis pipeline. So Aemetis has all the signed largest areas, it's Aemetis that's generating most revenue for everybody. And it's just -- it becomes a relationship of dairymen. I happen to be privileged to have a family business called Organic Pastures, which is the world's largest unprocessed dairy business. It's on 400 acres in the Central Valley, California. I milk 1,200 cows every day before I come to work, and then milk them again before going to bed. I have some help, of course, doing that. But we're dairymen, and we understand how important these relationships are. And now if you've been running something for 20 or 30 years with your family, you're not going to go make a 25-year commitment to just somebody who shows up with a nice, shiny pickup. You really want to go with the member of the community. I've graduated from Fresno State University and been representing the area for 26 years as a member of the California Manufacturers and Technology Association. I was elected Board member position, representing all the large ag industries but also all the oil refineries, all the aerospace companies, all the electric car companies, Tesla Motor included. I've been elected member of the Board for over 500 manufacturers in the state of California for 26 years. And so this lifelong commitment haven't grown up on miles square chunk of real estate in the Central Valley is where we get these value propositions of, "What do you do at the end of an almond orchard?" Well, I got 500 acres of this. "What do you do at the end of it?" Well, right now, you burn it, which I just think is terrible. If you go to YouTube and type in Eric McAfee TEDx, you'll see that in Chandigarh, India, 50 miles from the Pakistani border, I gave a TED Talk about the burning of orchard wood in California being similar to the burning of agricultural waste at the base of the Himalayas that leads to the worst air quality for the world in Northern India and that we need to develop technologies and processes that connect agriculture and very big markets, specifically energy, so that we can not only just mitigate, we can actually reverse the adverse effects on climate and pollution from burning products in the field. So please go visit that on YouTube, and you'll see some very personal reasons why we're building this company, and have done so for 15 years.

Eric, I have a few questions, which I've got over the e-mail as you have been talking. So one risk here is, obviously, currently, the dairy RNG that you have classified as minus 460 and stuff, is there a reason that there could be a regulation change because of its -- that number could be moved higher, because that would be a business risk. So could you talk about that?

We're not actually the -- even close to what the record is. The record is a dairy in, actually Arizona, which just got a negative 762. And there are several dairies up near Sacramento that have negative 600, 620 or whatever. So we're not actually setting any records with a negative 416. We do have potentially an opportunity to improve on that. There's a basic concept in the way that the carbon intensity scores is calculated. And here's what the concept is. A cow emits a certain amount of waste product that creates a certain amount of methane. And so it's really how many cows at the dairy is the calculation. It's not really whether the CI score is negative 350 or negative 520 or whatever. It's what is the amount? How many dairy cows do you have? And are you capturing all that methane and destroying it? Because that's where your CI score, that's what your carbon intensity score really comes from. And so we, of course, have a process that captures and converts to transportation fuels all the methane per cow. And so the regulatory structure is very well established. The given CI score is really just a calculation for a given dairy of how that equates to their particular size of herd, et cetera. But negative 416 is certainly fine. We might be better off than some and slightly worse than others. But I think that as a planning tool, negative 416 is perfectly fine. Frankly, think about it, if you have 2,200 dairy cows when you start, but you make them financially more successful, they're going to grow. We already have seen this with our existing dairies. So now they're generating 20% more revenue than you projected. So the negative 416 is actually off because your revenue is not to make 416, your revenue is from how many cows you have. So we -- we're in the business of creating success with dairies. That's where our real business is. And what we do by partnering with them to convert their methane and transportation fuels is we take a waste product that's very damaging and causing cost of LCFS credits over time, and we turn that into a revenue stream. And then they grow their herds. They actually end up having better animal nutrition, end up with, frankly, a better dairy because of the financial stability that we provide to them.

Perfect. I've got one more over e-mail. Does the 2021 to '25 EBITDA guidance include the benefit of using orchard wood feedstock for the aviation fuel facility?

It includes the benefit of orchard wood feedstock making the renewable hydrogen for the jet and diesel facility. Yes, it does.

Okay. And look, you discussed this a lot. I just have one last one on this one. Why can't your competitors replicate your RNG network in the Central Valley?

They could, but -- and I hate to disparage people, but if you're from Boston, you went to Harvard, and you show up in the Central Valley with a nice brand-new pickup and you go over to a dairy and say, "Hey, guys, I've got a great plan. You're going to let me use a big chunk of real estate, and I promise you that I'm going to spend $100 million, and I'm going to be here for 25 years to give you checks every single month." And then I show up with some of our guys who graduate from local high schools and say, "Oh, by the way, we've already spent a couple of hundred million in this area. We already feed your cows plus 79 of your neighbors. We already have a pipeline that's permitted. Go and come on down the road. I'll show you how we're putting it into the ground. We probably got 4 miles done. Oh, and we have 2 dairies that you can go and visit. And I'm here with a checkbook. I'm going to give you a check." Who's going to win? There is a company that has $248 million of grants already issued, been working in the mid-Central Valley for more than a decade. And to our knowledge, they've built 3 digesters in that span of time with $248 million grants. We got $3 million of grants and built 2 digesters in a year. $248 million grants, 3 digesters in over a decade. That's the difference, and I'm not going to disparage anybody, but the bottom line is, I'm a dairyman. It's a lifestyle and a business. It's not a business and lifestyle. So if some guy wanders on my property, the only way that they end up with a business deal is if they've got family relations and they've been around for a couple of decades. Then you say, "Okay, maybe I'll start talking to this guy." It's a relationship intensive opportunity. Now certainly, they're also very strong businessmen and very wealthy in many cases. And so to have a counterparty that has this kind of capital is a very high priority and asking them to participate as a partner with us, I think, gives them a business opportunity that they are unable to match with other folks that don't have the capitalization that we do.

Okay. My last question to you is -- and I know you have been very generous with your time. My last question is, I do happen to cover that very small company, CVX, that you did talk about. And I know the push that they are making in RNG. And so one day, they end up at your front porch there, go there and say, "Let's do a deal and hand over the business to us." Would that be something you would be interested in?

Well, on our Board of Directors, we have 6 people. 2 of them have long careers at CVX. And we're very privileged to have that quality of person who was interested in being on our Board. They both retired, one after 38 years at Chevron, 20 years of which she was the first Corporate Officer at Chevron. It's been 20 years as the Corporate Secretary reporting to the CEO and the Board. So we think that every major oil company is treating climate change seriously. Certainly treating the regulatory framework of the federal and state and as well as IRS 45Qs, which is carbon sequestration, very seriously. We reuse our CO2, so we generate IRS 45Qs. We do believe that there is a leadership, generational change happening at major oil companies. And you could pretty much rank oil companies based upon how their leadership is starting to understand low zero carbon and the other opportunities that they have. I personally -- this is my eighth public company. Combined market cap, $4 billion. I have founded oil companies. My first biofuels company did $1.6 billion of revenue and grew to almost $2 billion of market cap. I'm not here to sell a company. I'm here to build a company. And if a major oil company can be an excellent resource in us achieving that goal, I think we'll have a great partnership. And what form that is going to be beneficial to our shareholders. I'm the largest shareholder of the company, and I'm the most alluded by doing any financing that's diluting to shareholders. And you might note that between 2014 and when we went on to NASDAQ in 2020, we virtually didn't sell any shares to anyone. Yet we grew an entire business to $200 million. So I have a very strong appetite to respect shareholders and give us all the opportunity to have a long-term participation in what I think is a permanent trend of climate change amelioration that our company is going to play a major role in beyond our already leading position, I believe, we've achieved.

Perfect. Thank you so much, Eric. Thank you so much for your time. This is a great story. Thank you.

Thank you, Manav. Thank you, Betty.