Gevo, Inc. (GEVO) Earnings Call Transcript & Summary

Hey, good afternoon, everyone. Welcome to H.C. Wainwright's fireside chat with Gevo, Inc. From Gevo, today, we have Lindsay Fitzgerald and Eric Frey. Lindsay is VP of Corporate Affairs. Eric is VP of Finance at the company. Gevo is a renewables energy play, a story that is quite a bit diversified from where it was maybe even 12 months ago in terms of its operating segments. And the objective of today's fireside chat is to go over recent developments at the company, but also get a little bit more insight, especially from Lindsay, on the regulatory aspects of Gevo's execution going forward. So I'll stop there, and maybe I will let Lindsay introduce herself and give us her background and an overview of maybe how Gevo is navigating the regulatory side of things. So Lindsay, please feel free to take the conversation in the direction you feel may be most helpful for investors.

Thank you very much. So let me just take a minute and give some background for you. So I've been in D.C. for 20 years now. It's officially given me gray hair. I started off my time there working at the EPA. I started working on the renewable fuel standard, so very policy renewable fuels based. I joined the National Biodiesel Board, who is now Clean Fuels Alliance America, so had that biodiesel, renewable diesel side, and then moved on to government affairs with Renewable Energy Group. It was there that I spent a lot of time working on the Oregon Clean Fuels Program, as well as some federal and international issues before coming over to Gevo. So today, I'm the EVP of Corporate Affairs, where we really shape the narrative and the strategy for our government relations, but also that corporate and public communications on a global level. To add to that portfolio, I also am on my second term as Chairwoman for the Board of the Low Carbon Fuels Coalition. So, if you had any question on where I feel about policy and clean transportation, clean fuels policy, that should cement it for you. Going into kind of the regs and where we're looking at things as we move forward. So obviously, regulations are pivotal to Gevo and anybody else in this renewable fuel space. We want to see things like -- or we're looking at things like 40B, 45Z and the tax policy, things that incentivize sustainable fuels like SAF, ethanol, RNG, the RFS. We are always actively collaborating with the policymakers to ensure that long-term clarity and durability within whatever framework we're looking at. We're also very clear and very persistent on wanting to see things like climate-smart ag practices, CCS, renewable process energy, included in how you're looking at the fuel because we're moving into this space of -- we can produce volumes, right? We did that under the RFS. We continue to do that. But how are we looking to move forward? We're looking at carbon intensity. We're looking at how do we take these gallons that we have today and do better and make them go further and think about the whole entire supply chain, in our case, from fuel, all the way through to combustion of that or use of that product. You may remember, last year, there was -- if you're in the D.C. area, you may have seen a Go Green campaign that actually won some awards because we were advocating for that green modeling within 40B and then within 45Z to really drive home what matters. So counting all of the carbon actually matters, and we were successful in seeing that through 40B. And I believe -- I know -- I feel very confident that we will see that within the 45Z framework as well.

Understood. Also, Lindsay, on the regulatory side, right, there are views and opinions on how the new administration at a federal level may try and do things going forward. But there are also sort of local realities in the geographies you guys are planning to operate in. Can you talk a little bit about where some of the opinions on the federal level of how things may play out may not necessarily apply at the local level and how you're navigating some of these nuances?

Yes. So, look, we have been in administration changes before. And every single time, it creates this ripple of, oh, my gosh, what's going to happen? And people start to get a little bit panicky. But if you've been here for a hot second and you've seen this change, you know there's always so much talk of this could happen, this could happen, but you have to take it all in stride. There is a process. There is a framework for getting things done. And there's also a case of, to your point on 45Z or on IRA, this program is out there. This program is in effect, and it's benefiting a lot of places, whether it's a red state or a blue state. And I do not anticipate that there is going to be some giant cut. There may be some things that get tweaked and changed. But when you see certain projects, especially in the renewable fuels space, like ethanol, biodiesel or SAF, these things are favorable. These things are in rural America. They're working on agriculture, the rural economy. They're looking at investment in infrastructure, and those things are favorable, no matter whether you have a D or an R behind your name. So I think that this -- we have to give it a minute. We all have to kind of breathe and let this play out. But this is all normal, and we're going to continue to work with whoever is in office to be successful. I have no doubt about that.

Understood. And when -- investors are now sort of confused a little bit of this uncertainty around what is the IRA, what is the DOE -- the conditional commitment that we received is another DOE loan program, which is a little bit separate from the IRA. Can maybe you or Eric just give some color to investors from how you are explaining that nuance to investors?

So let me jump in, and then I'll pass to Eric if you don't -- if that's okay. So I think the first thing I want to say on DOE specifically is, look, we're working to get this closed in a timely fashion, and we would be doing that no matter who is in office. So that's a given. As you mentioned, those loan funds are already committed, and that does not change with the administration. And the way we view this project and a lot of people view this project is, it's a win for American taxpayers and farmers and consumers, and that really does transcend party lines. So the IRA portion is -- like you said, is separate, and there are various programs within the IRA that are -- that kind of hit all of those buckets. But where we are playing, we hit all those buckets.

Understood. And Eric, maybe to you, just as a follow-up from Lindsay's comments, there are certain benefits, I guess, we are seeing from the IRA side of things for the RNG business today. How will that change? Or do you expect any changes to that segment? I know it's small, but it is cash flowing, it's profitable and it could be growing quite meaningfully in the future. So it's an important part of the business. So, any color on how we should think about cash flows from the RNG being impacted by any regulatory changes?

Yes. So let me double-click on RNG in just a second. But real quick, before I do that, I just want to zoom out for a moment. When you're looking at Gevo, when you're looking at clean tech companies generally and clean energy companies like ourselves, I think there's a temptation to say, okay, it depends on one thing, like there's this one law like the Inflation Reduction Act, and that's the only thing that matters. It does matter. It's important. But actually, there's a whole constellation of state and federal and international laws and regulations that benefit Gevo. And so when you think about the risk exposure of Gevo in the clean energy space particularly, there's a lot of resiliency that's built in. It's not just dependent on like the 45Z tax credit in the Inflation Reduction Act, even though that is important, and we're focused on it. In addition, I think it's important to realize that the 45Z tax credit in the Inflation Reduction Act, that is essentially an extension of what used to be called the blenders tax credit, which has been around for a long time. It's not really a new thing. It's a tweak to something that's been around quite a long time. And it specifically, in the case of the 45Z, rewards reduction in carbon intensity. So instead of being $1 per gallon or $1 per unit of fuel produced, it's X cents per unit of fuel, depending on how much you succeeded and proved that you could actually reduce carbon footprint because that's what taxpayers are effectively paying for, or that's what anyway the tax is being reduced to pay for. When it comes to RNG, when you take dairy manure and avoid the methane emission that comes out of dairy manure, you are dramatically reducing the impact of greenhouse gas emissions. It's a good way to reduce greenhouse gas emissions. And so because of that, the value of the biogas 45Z tax credit that's in the Inflation Reduction Act is very high for Gevo. Just to give you a sense, if you look at some of our previous presentations, we haven't put like a precise number on it, but kind of ballpark, if your carbon intensity is negative 350 from RNG, that biogas tax credit is worth something like $20 million or more per year to Gevo if we're producing 400,000 MMBtus per year, okay? That's just kind of quick high-level math. That's very meaningful for Gevo, and it's basically a function of we've significantly reduced greenhouse gas emissions, but at the same time, you're making a product, methane, CH4, that can go in someone's stove or their gas grill and we don't have to have electric stoves and electric grills or hydrogen-powered stoves, hydrogen-powered grills. You can have the same sort of fossil fuel industry and same downstream infrastructure, but now you've cost-effectively reduced the greenhouse gas emission of that. So the 45Z for Gevo is really exciting just for biogas. But then, again, there's a whole sort of range of voluntary -- what we call voluntary and policy-driven incentives for all the things that Gevo is doing. But the biogas 45Z is an important one that's easily overlooked.

Understood. Timeline -- like while we're on this topic, maybe any color on what your expectations with respect to timeline are for the conditional commitment to close? Is it end of the year? Or is that too aggressive? Do you think this spills into 2025, maybe?

I can answer that unless you want to, Lindsay. I'll go ahead since I'm talking already. So people ask us this all the time, and it's understandable because it's a cornerstone of our Net-Zero 1 financing, and we've been working on it for a while. The conditional commitment is a huge milestone. In our view, the current and the next administration can't simply take that away because it's a commitment. But at the same time, we do need to work diligently with the incoming DOE staff to ensure there's no delay in the definitive documentation. Of course, Gevo has to meet our conditions too, to satisfy the loan. But the commitment is in place, and we don't expect that to go anywhere. In terms of timing, I wish I could give a date certain. I can't. And we've addressed this -- we address this all the time, and we talked about it in our last earnings call. We can't provide a date certain of this is when the funds will be disbursed. What I can say is that our strategy has been one of conserving Gevo's balance sheet and beginning construction when we have the financing in place. So what that means is that the timing is an output, not an input of that strategy. We could have chosen a different strategy. We could have put more of our balance sheet at risk and gotten into construction and then had a much bigger financing risk during construction, right? We didn't choose that strategy. So I wish I could give a date certain right now. I can't. All I can say is, we think we've crossed the biggest hurdle and achieved the biggest milestone. There's more to do, but the conditional commitment is something that we're really excited about. And I think some folks have -- the market maybe doesn't fully understand how significant a milestone that is, regardless of what's happened since we announced it. Lindsay, if I missed anything, please jump in. But hopefully, that....

I think you nailed it. I totally think you nailed it, Eric. And I just want to reiterate the fact that you're going to see a lot coming out in articles. I think I saw 3 yesterday about questions around DOE and what's happening. Remember our project. Remember what we're doing. We're working with agriculture. We're working on rural infrastructure, energy security, food security, jobs and innovation in renewable fuels that can be used in existing infrastructure. This is something that is favorable, no matter where you are or who you are. So I think that this can be a win for whoever sees this close.

Yes. I think the company has made a lot of progress this year, guys. You have, I think, 4 or more lines of businesses potentially now. Verity, you have the RNG business that is already cash flowing. You have the Red Trail acquisition that's about to close. And now, you have the conditional commitment for the SAF business. And then, you have this -- the olefins licensing revenues potentially coming into play as well. So there's a lot going on here compared to 12 to 18 months ago. If we stay on the Net-Zero 1 side of things, even if there are delays, et cetera, with the DOE loan, Eric, can you maybe or Lindsay give investors a sense of how some of these other initiatives are ramping up and how you are a very different operating company going into 2025 with all of these initiatives picking up momentum? Red Trail is adjusted EBITDA positive. So just giving investors a sense that this is not the same Gevo of 2, 3 years ago where we weren't really operating at scale in any manner and how that is changing going into 2025 and beyond with or without NZ1.

Yes, absolutely. And so, real quick, before I go into some of those other topics, I did want to add a couple of points about Net-Zero 1. The other -- to Lindsay's point about the fundamental merits of the project and the reason it should have appeal, just keep in mind, it's the largest economic investment in the history of the State of South Dakota. South Dakota happens to be a red state, but it's also a rural state. It will return about $170 million annually to the local South Dakota economy. When you think about a crude oil refinery, people accept that, that creates jobs, it creates and generates energy, right, for the economy. A crude oil refinery, its biggest expense is crude oil. And when you think about comparing and contrasting that versus our project, not saying that there's anything wrong with crude oil refineries, but our project, there is no Aframax vessel from another country that's going to deliver the corn to that facility. That corn is going to be grown by American domestic farmers. It's going to be energy and food that's being used domestically. The wind energy, again, there's no vessel that's going to show up at the dock and deliver that and a lot of the cash flow goes to that. The plant is being powered by a 100-megawatt, 20-turbine wind farm. South Dakota is a windy state. They have wind resource. So we're using resources. We're helping the rural economies use renewable resources that they have that are not being fully utilized because there's not big population centers in South Dakota to exploit that wind resource, right? But if you build an electrified plant, now you can use that resource. So we're not asking for people to get comfortable with something that is swimming upstream, that is consuming energy. It's going to produce energy and produce economic value, and that's why in states -- in ways that makes sense, both if you care about the environment and if you just care about U.S. domestic energy production. That's -- I just want to make sure we emphasize those points on Net-Zero 1. So on zooming out to Gevo generally, catalysts in the near term -- obviously, we haven't closed on Red Trail yet. Red Trail will have their shareholder vote on December 5. But that's very exciting because Red Trail has an operating ethanol plant in North Dakota and an operating carbon capture well in North Dakota with 1 million tons per year of pore space capacity for CCS. That's very unique and very powerful for Gevo because we think that as a new owner of Red Trail, we can maximize the value of that reduced carbon ethanol and also later upgrade that ethanol to sustainable aviation fuel because you're starting with low-carbon ethanol and you can do SAF. So that brings -- last fiscal year, Red Trail had $200 million of revenue. That alone is transformative for Gevo. And they're audited SEC filers, and you can see their financial statements on the SEC website. On RNG, we've slowed down the sale of our environmental attributes, the LCFS credits, basically because we're expecting that final pathway. That will perhaps double the cash flow that we see from our RNG business. And then, the biogas 45Z, as I said, depending on where the CI score shakes out, it could be a very large number. But of course, we don't know. It could be a much smaller number if the -- depending on what the final regs are like. And then, on Net-Zero 1, of course, we've reached a huge milestone. We're working on the third-party equity that will be joined with the debt to do the construction financing at Net-Zero 1. And so we're working on that and the definitive documentation with the DOE to get the loan finalized and get construction started. Like I said, our strategy at Gevo has been -- even though we've spent a considerable amount on the design, the electrified design and modular design of Net-Zero 1, the site acquisition, the permitting, all that stuff, in spite of that, we've generally adopted a strategy of conserving our balance sheet and waiting to put -- not waiting, but not going full construction mode at Net-Zero 1 until the complete financing is in place so that Gevo is not taking that full risk. So between Net-Zero 1, Red Trail and RNG, I would say those are the main ones. Also at Verity, we said at the beginning of this year that we would get first revenue. It's getting pretty close to the end of the year, but stay tuned. We do expect that we'd achieve that. So those are all really exciting things. Verity is a very low capital intensity business. It's a carbon tracking software business. So it's really complementary to Gevo, but it's also part of sort of a diversified business that Gevo has, right? That has a different risk profile, but it doesn't need lots of capital. It doesn't require outside third-party investors. Gevo can stand that up. It just requires a lot of smart people who know both agriculture, policy and fuels basically and software. So that's -- Verity actually is really exciting, and we expect to release a lot more details about that next year.

Yes. And on the Verity side, can you -- is there an AI component, Eric, to how that software will help customers? I know it's based on the blockchain, et cetera. But any color on how Verity is being designed? And initially, obviously, you're probably using it for farm customers, et cetera. But is that opportunity potentially going beyond just the agricultural market to track -- just on what Lindsay was pointing out earlier, just making sure everything is tracked appropriately, et cetera? Can you maybe talk a little bit about how that touches sort of the entire value chain of the fuel process? And in that context, it can potentially be a pretty big opportunity for the company.

So to start with the endpoint, you're going to sell a gallon of ethanol or a gallon of sustainable aviation fuel to an airline, or you're going to generate a tax credit and you have to go to the U.S. government and say, here's what we did. Please give us our tax credit. Or you're going to go to the State of California or another state or Minnesota or Illinois and apply for credits there because they have SAF tax credits. Or in fact, there's also the opportunity to go to just do B2B sales. There are corporate customers who are interested in basically purchasing the Scope 3 reduction so they can claim it on their books and no one else can. Now, you have to count it once and only once. You can't double count, but that has value. And the question is, who actually consumed -- if you're a business and your employees fly on an airline, which business actually consumed the sustainable aviation fuel and gets to claim the reduction against their Scope 3 emissions, right? That's a question, and that has value. And so there's multiple ways, sort of multiple shots on goal for the industry to monetize these attributes. What Verity does is it doesn't take claim to the corn or, for that matter, the soybean oil going into a biorefinery. It doesn't take claim to the ethanol or the renewable diesel or the sustainable aviation fuel. All it does is ensure that there are adequate sensors and controls using mass balance principles, tracking that feedstock all the way through the value chain, which is more -- which is pretty complicated, but ensuring, using software and an audit trail, that you can then go to the regulator and say, here's my audit trail. You could use Excel spreadsheets to do this. But it'd be -- it'd take a lot of time, it'd be confusing, and you could have errors, right? What Verity does is it automates the process, provides a dashboard for that ethanol plant or that farmer to pull it up on their mobile device and see easily, okay, if you do X, Y or Z, if you use a different amount of fertilizer, let's say, what will be the carbon intensity of your corn? And if your corn is in California, what is the carbon intensity versus under the 45Z? It can automate that and give an -- and provide an audit trail. And the way -- you asked about blockchain and artificial intelligence. The way blockchain comes into it is, that technology is just used not for cryptocurrency in this case, it's just used to provide an immutable tokenized audit trail basically instead of Excel spreadsheets, so something that anyone can audit quite easily. And then, artificial intelligence comes into play probably -- mostly in regard to both Verity, but also our recent acquisition of CultivateAI. So, CultivateAI is a business that does a number of things that aren't looking specifically at carbon intensity, but they look at environmental attributes and agriculture inventory broadly. So, for example, you spray one type of fertilizer -- sorry, or chemical on part of your field to see if it works better, and you can use infrared sensors from drones to then collect data and say, okay, did your crop grow better or worse, that type of thing. That's big data, and it's also complicated data. So it's ripe to be optimized using AI. And just like anything with AI, you'll always need humans to kind of provide the oversight, but the AI is a tool that can give you suggestions and say, well, did you notice this pattern in the data? Did you notice that you could tweak things and optimize? And it turns out that people think that agriculture is finished. It's completely optimized and it's mature. And actually, that's not the case. We can tell from -- in the world of big, cheap data, it's -- we're increasingly seeing that there's a lot more room to go to optimize and improve the efficiencies, both from a yield perspective and from a carbon footprint perspective, when it comes to a lot of agriculture.

Yes. And I'll jump in for half a second. So, also just to give the background of CultivateAI, it's Cultivate Agricultural Intelligence, just for people's background. And the one thing that I love about -- a lot of things I love about Verity. But one of the things that I love about Verity, I was just in South Dakota and Minnesota last week, and you're talking with farmers, and it gives them an opportunity to say, what from this menu of climate-smart ag practices could I do on my field that makes sense? Maybe it's lowering my inputs, it's reducing costs somehow to these farmers, and at the same time, it's increasing the value of the product that they have to sell. And then, you're able to take that and follow that through the supply chain. So if you're an airline, you're not doing -- you don't have to do an offset now. You don't have to go buy a tree and plant it. You can take this inset now and you have impacted how the fuel that you are using as an airline is grown, is manufactured, and you have power over that. And we're doing this cycle of continuous improvement through agriculture, through conversion of that product into a fuel and then how it's used at the end of the day.

Yes, makes sense. I'm excited to see how that progresses for you guys. And then, switching to the carbon sequestration side, this is an area, I feel, where there is buy-in from the legacy energy players, as well as the new emerging clean tech companies. And from a policy basis as well, it looks like there's buy-in from sort of both sides. Lindsay, maybe can you talk about where people -- policymakers are at on this front? And do you see any further support to accelerate the carbon sequestration, carbon capture side of improving emissions, et cetera, going forward from a regulatory angle?

So, I'll start, and then I'll pass it to Eric for some of this. We have 45Q in place. And so, that is something that's there to incentivize additional carbon capture and sequestration from our ethanol plants. That's an opportunity to go beyond just producing gallons. That's an opportunity to reduce your footprint. And so we need to give that a little bit of time to get set up. And that leads to how are you sequestering? Are you a part of a pipeline? Are you railing it? Do you have sequestration on site? All of this takes a little bit of time to figure out and to get put in place. This goes back to our -- one of our policy goals of we need long-term consistent policy because this stuff does not happen overnight. It takes time and it takes planning and it takes awareness that we're going to have this structure in place for a while, so I know where things will be in 5 to 10 years. But I think it's -- where we are today is a good spot today. As you said, there is support for this, and I think we're going to continue to see that support. I feel very confident with that.

Because with Red Trail, Gevo has an interesting asset that is ready to go versus a lot of other folks in the process of developing these assets. So maybe, Eric, I don't know if you have any additional color on how quickly, once the deal closes, the carbon sequestration business can be scaled up. I don't know if it is doing or generating any meaningful revenues right now. But going forward, I mean, this is a pretty significant opportunity for you guys as just creating synergies from the deal itself. Just any color on how you're thinking about scaling that revenue opportunity?

Yes, absolutely. So, in terms of Red Trail specifically, there's a number of opportunities to increase the revenue there that we think that Gevo brings as a new owner. Kind of in no particular order, let me take -- the long-term, more capital-intensive opportunity would be to install an ethanol-to-jet facility to take the existing low-carbon ethanol and make sustainable aviation fuel. We have an ethanol-to-jet design that we can modify to be suitable for that location. So it's a great location for that. But that's a little longer term, and that will take additional capital. There's other things that are shorter term that will require less or even no -- minimal capital, things like using Verity to track the corn that's coming in the door because it turns out that not all fields are the same. And also, if you track things and show farmers data, it can help them improve or make smarter choices with the information they have. So tracking the climate-smart agriculture benefits of the individual bushels coming from individual fields, from individual farmers, that may be significant when there's a 45Z for ethanol that if it goes as we think it will, we will respect climate-smart ag, but 40B currently has a provision to account for climate-smart ag, and we're hoping that that's improved in the 45Z was sort of a step in the right direction. There's also the ability to monetize voluntary carbon credits from Red Trail, again, using Verity to prove the process that was done. We can also do sort of smaller projects like combined heat and power, CHP, to add a little extra CO2 to the existing well. Currently, the well sequesters about 160,000 metric tons of CO2 per year, but its permitted capacity is about 180,000 per year. And then, in addition to that, you have the pore space, which we believe can sequester up to about 1 million tons of CO2 per year. Now, that would require -- that could require additional wells that have to be drilled and permitted and paid for. But a carbon capture well is not something that requires hundreds of millions of dollars, not even close. It's something on the order of $20 million. It's something like in that ballpark. So that -- but that's something that has to be developed, right? It's sort of like undeveloped acreage of an oil and gas company. That would sort of almost be analogous to the undeveloped acreage that you have in terms of the pore space at Red Trail. You'd have to source the CO2 from either South Dakota or from other third parties like other ethanol producers. But what you -- but the great thing there about that business is the counterparty is really a tax credit. And Red Trail has been generating 45Q tax credits for a number of years and dividending those to their shareholders. Gevo will have a different strategy. We'll claim those 45Q tax credits when we qualify for the Q and then sell them to corporate taxpayers basically. That's traditionally the way it's done when you yourself are not a taxpayer. Someday, we hope to be a taxpayer, and then we'll claim it ourselves. But until then, that's how we'll do it.

And there's also an opportunity, too, with the other programs. So, right, ethanol -- that ethanol can go into Canada, right? It can go into the federal program or B.C. It can stay in the U.S. for the RFS program. We've got pathways for -- or there are pathways for Oregon and Washington. And that's just for the ethanol portion. So there's also an opportunity, and we're working on this opportunity to get the CCS to be able to qualify towards the carbon intensity in California. We expect Washington to follow. So there's definitely some additional -- there's other programs out there that we can add on and build, and we're seeing that additional support grow.

Also, can you guys maybe talk a little bit about the geography for the Red Trail asset in terms of having access to the Canadian markets? Maybe people haven't paid as much attention because there are incentives in that market as well that you can take advantage of, and that provides a little bit of a buffer against anything that may not play out over here in the U.S.

Yes. That's true. There are markets in Canada. There's -- British Columbia, for example, has its own LCFS standard. And I think the important thing here is that these are not binary outcomes on the U.S. administration. We plan to work well with the current and the next U.S. administration and the previous U.S. administration, for that matter. And we think we have a strong merit because of all the things we talked about supporting U.S. domestic energy resiliency and U.S. jobs. But having said that, it's not just about who controls the White House. British Columbia has their own low-carbon fuel standard, and Oregon and Washington. And Canada has a Canada national CFR. And so, those are -- Minnesota has a SAF tax credit, and so does Illinois. So that's the important thing as it pertains to Red Trail, but also Gevo generally.

Yes, you're seeing that kind of grow. So in addition to those federal programs, you have a bunch of state programs and you have additional states. I think we're going to see a handful -- a small handful of additional states that create their own low-carbon fuel standard in the next upcoming years, next year, maybe the year after. We saw New Mexico go earlier this year. So those all create additional optionality for fuel and where it can go. And it also continues -- they have this cycle of being able to support each other price-wise because now you have an option. Are you going to go to California? Are you going to go to Washington? Or maybe the Canadian or the B.C. market looks really good today. And they all end up supporting each other and giving -- again, giving you that optionality for where you want to go and how much of that carbon reduction will they account for. And whoever accounts for the most is likely going to see that product coming in.

But in terms of geography, Amit -- sorry, you asked about geography, too. Obviously, North Dakota, right, is proximate to Canada, and that's a big market. Canada is about the same in terms of market size for consumption of ethanol as California, and California is a gigantic market. In addition, about half or even more than half of Canada's consumption of ethanol is imported from the United States. So that's a great market. Actually, the local market is good, too, in North Dakota. And also in terms of geography, I just mentioned this again, too, North Dakota is an area with good corn basis. So it's a good place to buy corn. It's a good place to grow corn. And it's a good place in terms of Red Trail sits on top of the right rock. It's in the core of the Broom Creek formation, which is the rock where you can sequester carbon about a mile underneath the site. And we have a map in one of our slide decks that kind of shows the thickness of the Broom Creek formation, and Red Trail just happens to sit on one of the core areas of that. So it's a very well-positioned site geographically for all those reasons.

Understood. The balance sheet, Eric, post the Red Trail acquisition, can you give investors a sense of how the balance sheet will look like? And at a high level, maybe what your OpEx needs are, at least for 2025, if you can provide any color on that?

Sure. So we're fortunate because we have a really strong balance sheet relative to the type of company that we are. We're well capitalized, and we aim to be prudent stewards of our capital. And so the way that we're approaching the Red Trail acquisition is, the purchase price is $210 million. There will be some working capital adjustments, $210 million approximately. We expect to fund that with more than $100 million of third-party capital in the form of debt financing. And so, Gevo will equity fund the remainder of the purchase price. Keep in mind, I mentioned this before, that Red Trail comes with it in fiscal 2023, $200 million of revenue. So this is really transformative for Gevo as a company. When it comes to Gevo's primary other cash uses, the biggest one by far has been Net-Zero 1. And we've mostly spent -- we're pretty close to spending what we expect to have spent on Net-Zero 1. So we expect that by financial close, we will have something like $200 million, $250 million of equity in the Net-Zero 1 project in terms of our internal and external costs to develop, to design the plant, to get all the permits done, to get all the work done, to do the due diligence with the DOE and all that kind of thing. And we've spent most of that already. We said in our retro announcement, we reiterated the range of -- okay, from June 30 to financial close, our range of spend -- cash spend for Net-Zero 1 was $67 million to $102 million was the number. And that was just a reduction from the previous range because we had spent some since that time. So the range came down. We expect to come in below that range. So, that bottom number, $67 million, from June 30 to financial close, we expect to spend less than that. So Gevo's cash spend and cash burn is on a downward trajectory, while our revenue is going to have a massive step-up basically. And for that reason, we don't expect and don't intend to issue equity to finance these projects. Never say never. We haven't committed or said we guarantee we would never under any circumstances do that. But what I'm saying is that all of our planning is aimed to not do that. If there's a very accretive growth project, we would consider it. But the point I'm trying to stress is our current balance sheet is sufficient to bridge Gevo to both fully finance the acquisition of Net-Zero 1 and get to positive EBITDA next year.

Understood. And Lindsay, how much time are you spending in D.C.? What's sort of the company's plan to maybe lobby the new administration? Any color on what the game plan on that side is going forward under the new administration?

Well, I live in the area. So I'm there. We have a footprint there. We have -- we've got -- I have other colleagues that are there. We have a nice footprint of assets on the ground in D.C. So we are obviously out there on a daily basis talking to our champions, talking to people who don't know us and making sure that they know who we are and what we're about and they understand what we need to see in place, not only to benefit Gevo, but it benefits agriculture and it benefits renewables and it benefits a lot of things there. So we are actively pushing on getting that 45Z guidance to be put out there, and I am confident that we will see that come out. I really think that -- I think we're going to see it come out before the change of administration. That is the goal. And then, we're going to keep working on DOE staff with new staff coming in, old staff going out. We work with EPA staff and talking to them about the RFS. We talk to folks at USDA. This is what we do on a daily, moment-by-moment basis is making sure that we are talking to folks. That is how we live and breathe. So it's not a, how often can I get in? We're there.

It's good to hear that you're very -- being proactive on that front, or at least the company is being proactive on that front. We have some questions from other listeners and participants, I guess. Maybe I'll just read some of them. One of them reads, is Gevo likely unable to announce NZ1 until after the Summit pipeline application is approved in South Dakota? I don't know if that -- those 2 are connected, but if you want to take that, Eric or Lindsay?

Yes. I don't -- so, Lindsay, you can -- I'll be brief. I'll let you jump in, too, Lindsay. I don't know what the questioner means by announce. We've said -- we've already announced that we're in a process to get the DOE loan, right? We've already announced that we got conditional commitment. And so, if the question is, when will it fund, there are conditions Gevo has to meet, probably the most important one being that we have the additional third-party equity that, jointly with Gevo, will fully fund financing. We have to complete an environmental assessment pursuant to NEPA, but that's very mature, and we don't see that being the gating item. We have said that the Summit Carbon Solutions pipeline is important. The reason it's important is because it sequesters CO2 from the plant. And that's -- we put a lot of effort into harnessing -- taking that CO2 out of the atmosphere, separating it from protein -- value-added products like protein for animal feed that feeds people ultimately, and from the sugar that becomes the fuel ultimately, and then pump that underground. We work really hard to do that as cost effectively as possible. And we want the plant to get rewarded for that and then be able to pass on a lot of those rewards to the local community. That's the goal. And so, that is really important. And we've said that if it doesn't get approved, we have other sites that we're looking at that we're considering. Having said that, if you look at our carbon intensity walk, it's a complicated situation in a good way for Gevo because there are a number of tools for us to bring down the carbon intensity of that plant at or below 0. Without carbon capture, you can still have a very low carbon intensity. It's just not as low as it otherwise would be. So it's a little bit of a complicated story there, but I would say just high level, we've already announced the DOE loan, and we're moving forward regardless. I don't know, Lindsay, if you want to add to that.

I think that's as clear as we can be. We also have the opportunity to utilize the well that we have with Red Trail or that we intend on having with Red Trail. So if the Summit process is still working -- they did resubmit their application to the South Dakota PUC yesterday. So that process is going to happen, and we will be there along the way to help support that process because at the end of the day, this involves more than just Gevo. This involves 57 ethanol plants, including ours. So this is benefiting agriculture and landowners and communities. We want to see it successful. But at the same time, we have this option or potential option at Red Trail, and we have options in other locations if we need to.

Great. The other questions on this dashboard, we've already discussed those, so I won't go over those again. But overall, any parting thoughts, guys? What can you leave listeners or participants with in terms of near-term catalysts or any milestones that could be on the horizon going into the end of the year?

Lindsay, do you want to maybe recap some of the points about policy? And then, I'll probably talk about milestones.

Yes. So I think key things that we're looking at, let's get that 45Z guidance out so that we all know what we're working with. We will work on an extension when tax extenders time comes. We're already laying the groundwork for that. But when that time comes, we'll work on an extension. Working with DOE and LPO, obviously, that is on our list of things that we are currently doing. So we will work with this administration and the next until we get this closed. That is our mission in life. That's what we're here to do. So I feel really confident in moving forward with whoever we're working with. And we're hearing names rolling out now for appointments. That's not going to happen until the end of January. So we'll work with transition teams, and then we'll work with who is in office, and we will get this done and we will get this across the finish line because it's a good project, and it's the right thing to do.

Yes, Amit, so in terms of milestones and things that shareholders should look out for, I do need to remind you that we have achieved a bunch of milestones in the past 2 months that we frankly don't think we're getting full credit for at all, right? By my calculations, we're actually trading under the value of our cash on our balance sheet in spite of the fact that we've made some major announcements in the past 2 weeks -- not 2 weeks, 2 months. The acquisition of Red Trail, which will -- we expect to close in the first quarter. So that's one in the future, but also just in the past. The commitment -- the conditional commitment on our DOE loan for Net-Zero 1, the fact that we've started selling fewer of the environmental attributes at our RNG facility in preparation for getting our final carbon intensity score with California, the biogas 45Z that's on the -- that should be on the horizon. I wish I had a precise number for it, but it should be on the horizon. And a couple of patents on ethanol olefins, our technology that we've been developing to pursue into an agreement we'd have with LG Chem. And our acquisition of CultivateAI for Verity, which -- in addition to that, we're seeing Verity start to invoice customers. But CultivateAI also brings over $1 million of revenue with it in 2024. So there's been a bunch of exciting things that we're -- I would say we're actually not getting full credit for even right now. But then, if you look at the next few months, it's closing Red Trail. They have a shareholder vote on December 5, and that will be important. We're optimistic that they're excited for what we've offered them. There's obviously closing the DOE loan, which is in the future, too. But then, there's other things, too, like progress on Verity. We're going to see revenue growth at Verity. And we haven't provided a lot of details on that yet, but that's coming. It's coming soon. And then, there's getting our final pathway through California with CARB for our RNG project, as well as claiming 45Z -- biogas 45Z at RNG. That's in our future because that takes effect in January. So those are all things in the future. If the things we just announced in the last 2 months aren't enough for you, then those are all the things that are in the future. Again, we're pleased that we've been rerated, but I also do feel like there's been a reaction since the election. We are -- we have $300 million of cash on our balance sheet, including the restricted cash of $68 million. So when we look at the way we're trading, we're very bullish, even when you look at [ powers ] that we've just announced.

Thank you, Lindsay. Thank you, Eric. Congratulations on all the progress the company has made this year and look forward to seeing you hit all the other milestones next year and beyond. So thank you again for doing this. And with that, I will bring this to a close. Thank you, guys.

Thanks, Amit.

Thank you.