Thank you for standing by and welcome to the Gevo, Inc. Third Quarter 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to Eric Frey, Vice President of Finance and Strategy. Eric, please go ahead.
Good afternoon, everyone, and thank you for joining us on today's call to discuss Gevo's third quarter 2026 results. I'm Eric Frey, Vice President of Finance and Strategy at Gevo. With me today, we have Paul Bloom, our Chief Executive Officer, and Leke Agiri, our Chief Financial Officer. We also have Greg Hanselman, our Chief Operating Officer, and Kyle James, our Chief Commercial and Risk Officer. Earlier today, we issued a press release that outlines our third quarter 2026 results and some of the topics we plan to discuss. Copies of the press release and the slides we are presenting during today's call 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 the debottlenecking and potential expansion of our Gevo North Dakota plant, the timing of a final investment decision for Project Northstar, our expected future cash flows and Adjusted EBITDA, our expected carbon business revenues, our expected future tax credit monetizations, 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're 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 return the call over to the CEO of Gevo, Paul Bloom. Paul?
Good afternoon, everyone. I am very pleased to tell you that this was a record quarter for Gevo. We set records for revenue, net income, Adjusted EBITDA, and cash flow from operations. But I think the significance goes well beyond one strong quarter. Gevo has become profitable. Our operations are generating cash. Our carbon business is creating real value. We are expanding production, and importantly, we are building a stronger operating platform and balance sheet that gives us choices about how and when we fund our next stage of growth. For the quarter, revenue was approximately $83 million. Gross profit was approximately $48 million. Adjusted EBITDA was approximately $44 million, and cash flow from operations was approximately $41 million. We also ended the quarter with approximately $68 million of cash on the balance sheet.
Leke will take you through the financials in more detail, but first, I want to focus on what is driving the business, why these results matter, and where we plan to go from here. Let me start with carbon, because I believe this is one of the most important developments at Gevo. In 2025, when I was Chief Carbon Officer, we set out to build carbon into a distinct product line for Gevo, with its own customers, markets, and revenue streams. We are now demonstrating that commercially. We expect more than $50 million of carbon revenue in 2026. This quarter alone included approximately $20 million of previously banked Canadian Clean Fuel Regulation, or CFR credits, and approximately $10 million of additional revenue from CFR credits recognized during the third quarter.
Excluding one-time items, we estimate our carbon business can generate approximately $30 million of annual revenue on a run rate basis, given our current capacity and market conditions. Here is the important point. Carbon is becoming another product for Gevo. We sell fuel, we sell protein, we sell corn oil, and increasingly, we sell carbon credits created by the way we make those products. Carbon credits have their own customers and markets, giving us a distinct source of value beyond incentives like the 45Z Clean Fuel Production Tax Credits. That is the power of lowering carbon intensity. It is good for the environment, it drives efficiency, and at the same time, it increases the profitability of every gallon we make. And the opportunity does not stop with ethanol.
We are building a model that can create value across our entire low-carbon fuels platform, and I believe that opportunity becomes even more powerful as we move into sustainable aviation fuel and other renewable hydrocarbon fuels. There is still work to do. Carbon markets will evolve, prices will move, and regulations can change. But this quarter is an important proof point that carbon can be a meaningful and profitable product line for Gevo. The second theme I want to highlight is capital efficiency. We are increasingly focused on getting more value from the assets, technology, and intellectual property we have already paid for. Renewable natural gas is a great example. Recent improvements to the 45ZCF-GREET model provide greater recognition for avoided methane emissions from dairy manure, which is one of the environmental benefits our RNG assets were built to deliver.
Based on current estimates, we expect this improvement to create more than $10 million of additional 45Z value from our existing RNG assets in 2026, subject to third-party validation. Importantly, this is incremental to the approximately $70 million of 45Z credits we sold through the third quarter. I like this kind of growth. It doesn't require another plant or significant incremental capital. It's simply more value from the assets we already own. We're applying that same philosophy elsewhere. In India, our alliance with Praj gives us an opportunity to monetize our isobutanol technology through a capital-light licensing and catalyst sales model. Praj is currently constructing the first demonstration plant for a leading oil marketing company in India, which is an important step toward the broader commercialization of isobutanol for diesel blending and other applications.
We're also generating additional value from assets we previously installed at the Trecora facility in Silsbee, Texas. Those assets are running near capacity, producing sustainable racing fuel blend stocks. With demand continuing to grow, we're evaluating opportunities to significantly expand our specialty fuels business using modular hydrocarbon equipment we already own, built with Praj and acquired in 2024. These businesses may look different, but strategically, they fit together. We're building multiple ways to grow Gevo by creating more value from the technology, equipment, and intellectual property we already own. When new capital is required, we'll invest behind demonstrated demand where we see the strongest risk-adjusted returns. That brings me to what this means financially. Based on the progress we've made, we now believe our full year 2026 Adjusted EBITDA could exceed $90 million, including one-time items.
That includes approximately $20 million from the previously banked CFR credits that we recognized in the third quarter and the additional $10 million of RNG 45Z value we currently anticipate. Leke will take you through the details, but I think the more important number for investors is what comes next. After removing one-time items and based on the expected production and current market conditions, we currently anticipate reaching an Adjusted EBITDA of more than $70 million during 2027. That's up from the approximately $60 million we previously communicated. That includes the benefits of debottlenecking at Gevo North Dakota and the anticipated improvement in RNG 45Z value. Of course, that outlook is based on current market conditions, and those conditions can change as we move through 2027. But the direction is important.
The underlying earnings power of Gevo is getting stronger, giving us a significantly stronger platform from which to fund and build the next stage of growth. That leads me to growth. As we've outlined previously, our growth strategy has three steps. First, debottleneck what we own. Second, approximately double the capacity of Gevo North Dakota. Third, add SAF and other high-value hydrocarbon fuels when the commercial market and the returns support the investment. That sequence matters. The first step is happening now. Our debottlenecking program at Gevo North Dakota is designed to increase annual low-carbon ethanol production to approximately 75 million gallons on a sustainable and repeatable basis while allowing us to continue optimizing beyond that level. Some debottlenecking projects are already operating, and the remainder are being commissioned. So, investors shouldn't think about growth as something that begins several years from now.
The first increment of growth is already happening, and we expect the full year benefit to show up in 2027. The next step is considerably larger. We plan to approximately double annual low-carbon ethanol production to roughly 150 million gallons while increasing carbon capture to approximately 400,000 tons per year, with startup expected to begin in 2028. There are several important reasons that we believe we can move quickly. First, we aren't starting from scratch and building a new plant. We're expanding the one that we already own. Second, we've already acquired approximately 50% of the equipment we expect to use for the expansion, including certain long lead time items. That equipment is already paid for and reflected in our current cash position and will be repurposed for the expansion.
We're reusing quality equipment where it makes economic sense and combining it with new carbon capture technology and newly engineered systems designed to use less energy and water and further reduce carbon intensity. The objective is not just to double production. The objective is to build a larger, more efficient, and more profitable low-carbon fuel production platform. Third, we are advancing our project-level joint venture for the expansion with Ara Energy. By combining Gevo's operating and low-carbon fuels expertise with Ara's infrastructure investment experience and strategic capital, we believe we are establishing the right partnership to help accelerate the expansion and reduce execution and financial risk. We expect to finalize the JV in the fourth quarter, subject to closing on its required definitive agreements, followed then by FID and financial close as the next key milestones. Finally, there's another important element to the economics.
As we approximately double production at Gevo North Dakota, we don't expect to see any substantial increase in corporate costs. This gives us the opportunity to spread and optimize our fixed costs across a much larger earnings base, creating meaningful operating leverage and greater cash generation. As we generate more cash, we can strengthen the balance sheet and increase our ability to fund future growth. That brings me to SAF and Project Northstar. I want to be very clear. Our conviction in SAF has not changed. What has changed is the strength of the Gevo North Dakota platform underneath it and the number of attractive opportunities now available to us. The question isn't whether SAF will become an important market for Gevo.
The question is when will investing significant Gevo capital into SAF generate the right risk-adjusted return for our shareholders relative to the other opportunities available to us. Today, we see attractive opportunities to deploy capital into assets we already own, increase ethanol production, capture more carbon, grow cash flow, and strengthen the balance sheet with lower execution risk. So that's where we're putting our near-term priority. That is capital discipline. Importantly, expanding Gevo North Dakota first can make our future SAF opportunity stronger. Think of what we're doing today as setting the table for deploying alcohol-to-jet. It gives us more low-carbon ethanol feedstock, it creates more carbon value, it generates more earnings and cash, and it strengthens the balance sheet from which we can ultimately finance SAF. We have the technology, the proprietary position, and a well-engineered plant design for Project Northstar.
We will continue advancing the commercial readiness of Project Northstar so we can invest when we believe the market and the project economics support attractive risk-adjusted returns for our shareholders. That is not a change in our SAF strategy. That is disciplined capital allocation and sequencing. Let me bring this together. I think the way investors should think about Gevo is changing. We are no longer a company whose future depends on financing and building one large SAF project. Today, we have a profitable operating business. We have demonstrated that carbon can be a valuable product line. We are increasing our production towards approximately 75 million gallons now. We are preparing to approximately double Gevo North Dakota to roughly 150 million gallons per year and double our carbon capture by 2028. We are growing cash flow and strengthening the balance sheet.
We are finding capital-light ways to monetize technology and assets we already own, and we maintain substantial future upside from SAF, and other higher-value renewable hydrocarbon fuels built on an increasingly strong operating platform. We have the optionality in how we sequence our growth projects. We now have choices, and I think that is one of the most important changes for Gevo. Our job is to take the next dollar we generate and put it where we believe it can earn the highest risk-adjusted return for our shareholders. Right now, that means running our plants well, monetizing carbon, expanding production, growing cash flow, and strengthening the balance sheet. As we do that, we create more options for what comes next.
The vision is to build Gevo into a larger, more profitable low-carbon fuels company with multiple products, multiple pathways to growth, and the financial strength to invest when the economics make sense. We are building that company one step at a time, and I believe that this quarter shows that the strategy is beginning to work. With that, I will turn the call over to Leke.
Thanks, Paul. Now turning to our third quarter results. Revenue for the third quarter was a record $83 million, which is nearly double the $43 million reported in the same quarter last year. Third quarter revenue included approximately $20 million from the sale of previously banked CFR credits. Excluding those non-recurrent banked credits, revenue still grew approximately 47% year-over-year, driven by the higher low-carbon ethanol production volumes and pricing and continued growth in our carbon business. Gross profit increased to a record $48 million, representing a gross margin of approximately 58%, compared to $30 million and approximately 30% in the same quarter last year. This margin expansion reflects the growing value we are realizing across the full economics of our low-carbon fuels platform, including fuel, carbon attributes, and 45Z incentives.
We recognize 45Z as a reduction to cost of goods sold when generated, which is why we view gross profit as an important measure of the underlying earnings power of our operating assets. Adjusted EBITDA was a record $44 million, compared to $7 million in the third quarter last year, bringing adjusted EBITDA for the first nine months of 2026 to approximately $64 million. Net income attributable to Gevo was $23 million, or $0.09 per share on a diluted basis, compared with a loss of $8 million in the same quarter last year. Cash flow from operation was approximately $41 million for the quarter, and we ended the quarter with $68 million of cash and cash equivalent. I want to distinguish between adjusted EBITDA and operating cash flow because the timing can be different in some quarters.
Our 45Z credits are generated based on the volumes and carbon intensity of our low-carbon ethanol and RNG production and do benefit adjusted EBITDA in the period in which they are generated. Cash flow reflects when we receive actual cash proceeds from customers who purchase these credits from us, so cash flow can vary significantly from quarter to quarter, even when the underlying earnings performance remains strong. For the 2026 full year, we believe our operating assets are now positioned to generate adjusted EBITDA of over $90 million when we include the benefits of our non-recurrent CFR revenue and at least $10 million of the expected additional 45Z value from our RNG asset. We are also tracking to generate positive operating cash flow for the year. Looking ahead to 2027, we currently expect adjusted EBITDA of over $70 million.
This outlook also includes the additional expected 45Z value from our RNG assets. It excludes the benefit from the non-recurrent sale of the previously banked CFR credit recognized this year and includes a full year of the increased production from our debottlenecking project. The important point is that we expect strong underlying earnings power to continue even after removing the benefit of the banked CFR credit recognized this quarter. We will provide more detail in our 2027 outlook early next year. Turning to capital allocation, our debottlenecking project at Gevo North Dakota is fully funded and remains on track for completion by the end of the year. For the Gevo North Dakota expansion project, we are working with Ara Energy to finalize the joint venture structure, including our respective equity commitments and anticipated project-level debt.
Our objective is to fund Gevo's equity commitment from cash on hand and ongoing cash generation while using capital from Ara and project-level lending to fund the remainder. This approach is consistent with the capital discipline Paul outlined earlier. For Project Northstar, our strategy has not changed. We continue to advance the project and intend to make final investment decision when we have the financeable offtake agreements and financing structure necessary to support the investment. In the meantime, we remain focused on executing disciplined near-term growth opportunities that generate attractive returns and strong cash flow, providing additional capacity to advance Project Northstar. This quarter demonstrates the increasing earning and cash-generating power of our operating assets. We are building a stronger financial foundation while maintaining the flexibility to fund growth in a disciplined way.
That puts us in a stronger position to execute the opportunities Paul outlined and create long-term shareholder value. With that, I will turn the call back to Paul.
Thanks, Leke. It was an outstanding third quarter with record results, and we covered a lot of progress today. With that, I will turn it over to the operator and open the call for questions.
As a reminder, if you would like to ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star one again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Amit Dayal with H.C. Wainwright. Your line is open.
Thank you. Good afternoon, everyone, and congratulations on really strong results. Now you have multiple revenue streams. Which ones can investors sort of expect to be more consistent and steady with respect to the revenue generation and cash flows, and which ones could we see some variance with?
Thanks, Amit. I think you were breaking up there a little bit, but I think I got the question. Look, on the durability, one of the big ones that we like today is obviously the carbon business. So that's where we've been focusing a lot of our time, and that's a combination of the compliance markets, so that's where we're selling our carbon with the fuel, and then the voluntary markets, which are growing. That's a new, more nascent market. But overall, carbon is definitely turning into a durable business for us. We've also got 45Z revenue, which, of course, we think it's great because now we're finally getting credit for the extra methane avoidance that we put in place already with the RNG project. So that's one that we still have to get that validated by third parties, but that's very strong.
The demand for low-carbon fuels, the fuel itself is only going up. We see more states having low-carbon fuel programs. RFS had record RVOs this year. So, the underlying business of fuels, carbon, and incentives, and putting all those together gives us a really durable revenue stream that we believe is going to continue. Then we can add everything else on top of that, just like what we're seeing in some of these new businesses, like racing fuels. But those are more the new ones that we'll give those more time to develop before we say how durable those become.
Understood. Thank you, Paul. Just last one for me maybe. To double ethanol and carbon capture capacity, how much CapEx are we looking at?
Yeah, look, we haven't disclosed what we're doing as far as the total capital that we're going to deploy today, but I think there's a couple important things. One, we've already got about 50% of the equipment that we're going to put out into that plant. I think that's a big step forward, and so we're excited to have that already paid for. So that's really high-quality equipment that we're repurposing from an existing facility while we're putting together the engineering and getting some of the longer lead time items that'll help us reduce the water and improve the efficiency for the carbon intensity that we'll have in the expansion. So that, we think, is a big accelerator, which there's two factors. There's the capital, but there's also the speed that we get this thing done. So, we think that helps us a lot.
I think the other big piece that we're working on today is obviously getting the JV done, like Leke was talking about too, because we plan to finance this with a combination of balance sheet, cash, and project-level debt, combined with what we see coming from Ara as strategic capital. I think that puts us in a really good position. Like I said, we're going to have more details as we reach FID. That's when we'll give you a little bit more background on what we see from the capital. We're in a really good position to keep this moving forward. Leke, any other comments on that?
Well, thanks, Paul. No, I think you captured it. I think from a financing perspective, just to underscore our priorities to make sure that we fund the equity commitments to be able to move the project forward, the expansion project forward, from cash on hand and cash that we generate from our operating assets. We feel very confident that this is the right equation for us to deliver the project in 2028, as we're targeting.
This is by far the best risk-adjusted return that we've got on the plate, so we're going to be going after this. Getting this at the right carbon intensity, the right returns, and expanding this business gives us the platform that we need to grow Gevo. Thanks for the question.
Thank you, Paul. Thank you, Leke. That's all I have.
Your next question comes from the line of Jeff Grampp with Northland Capital Markets. Your line is open.
Hi, afternoon, guys. Paul, given your comments that you have already got a fair amount of the equipment for the ethanol expansion, I was curious if that perhaps provides some timing acceleration optionality relative to some of the timelines you had put out previously, or was that timeline already, I guess, giving credit for the benefits of having a lot of this equipment already on hand?
Yeah, I think it definitely gives us the confidence in that timeline, Jeff. Having about 50% of the equipment, which does include some long lead time items, is definitely kind of the feather in our cap right now. But still, we are on track for 2028. That is really the time, and that is an accelerated timeline to get an expansion done and get it all combined and up and running and still achieve the low CI that we have today. Because really, like I said before, we are expanding the plant, but we have to not just make the gallon, we have to get this low CI, because that is how we derive the value from the carbon business, and that is what we are already demonstrating with the kind of great returns that we are seeing this quarter.
It just continues to build that platform for us, but we really need to focus on delivering the right CI along with those gallons to get the value proposition that we are creating.
Understood. That is helpful. For my follow-up, the production in the quarter was super impressive. I think here, if we annualize Q3 numbers, we are kind of already at the debottlenecking increase you guys had talked about, around mid-70 million gallons at a run rate. Are you seeing some early benefits from the debottlenecking you have done thus far? Is this just kind of organic outperformance? Just kind of hoping to get a little more context on the Q3 numbers.
Yeah, no, good catch on that, because we really like the 19 million gallons of production, right? I mean, that already puts us on the run rate that we want to have going forward. But what we really need to do now is we need to prove that we can deliver that reliably and repeatably and then optimize from there. I think there is a lot of upside that we can do from that, but we got to prove that performance before we really take credit for it. But there is no doubt that the team, the operations team, has just done a fantastic job in pushing that production to near 75 million gallons on an annualized rate this quarter already. Obviously, that gives us a lot of confidence in not only seeing that the 75 million gallons is repeatable, but where do we optimize from there?
Understood. I will turn it back. Thank you, guys.
Your next question comes from the line of Derrick Whitfield with Texas Capital. Your line is open.
Hey, good afternoon, and congratulations on a very solid quarter and update, and thanks for taking my questions.
Yeah, thanks, Derrick.
With respect to your 2027 outlook, could you just kind of, at a high level, give us the gives and takes from your updated 2026 plan?
Yeah. Leke, why don't you go over that one?
Yeah, absolutely. We guided to $60 million last quarter in terms of what we are expecting in 2027. What has effectively changed is, as Paul went over, we expect incremental 45Z generation from our RNG asset this year that is going to translate to next year as well, and that is an incremental of $10 million. This takes us to the $70 million of the projection that we have for 2027. What was really important to take away is the guidance is prudent, and it is something that we feel very strongly about in terms of the ability for our business to actually generate cash, to strengthen our balance sheet, but more importantly, to fund our growth projects. We are really excited with that prospect.
And maybe just to add a little bit there, Leke, this is a good example of us really getting value from every aspect of our business. It is about how we are paying attention to the carbon; we are paying attention to incentives, we are paying attention to the underlying fuel and making sure that we are deriving that value. I mean, it has culminated in a really tremendous outlook for the rest of the year.
Not to set you guys into a much higher number for 2027, but when we were thinking about it, there is even greater upside than what you articulated, because you have got greater run rate across ethanol, then you have got some cost control things that you guys are working through. So, it seems like there is still the ability to move higher as you think about 2027.
Yeah, look, I think it is a good point, and we will be watching that closely. But if we can keep up the run rates that we are seeing in production today, we continue to see strong performance in the RNG business. Obviously, we need to get the final third-party validation on the RNG score. And you put all that together, yeah, we could see some potential upside over that 90. So, we are saying, 90, over 90 is definitely a possibility for us.
Right. Just to clarify, the 90 is for 2026. Just to clarify. I think the 2027 number, if that's what you were speaking to earlier, Paul, is absolutely correct. I think there's runway for upside based on operational performance, so there's headroom there. But again, from a prudent perspective, recognizing where we are from a market dynamic perspective, 70 million is what we can point to. Early next year, we'll provide additional guidance when we know more as well.
Terrific. Then, Paul, with respect to carbon, could you speak to your ability to scale the value of carbon as you double your ethanol capacity in 2028? Can it scale on a one-for-one basis as you see it today?
Yeah, that's absolutely the goal here for us, is that as we continue to scale carbon, we'll be scaling carbon not only on the expansion, but with the debottlenecking as well, right? All that's starting, and we've got upside. This is one of the great things that we have optionality, because we're selling into compliance markets, we're selling into voluntary markets, and you've seen from our last business update that now we even have more offtakes that are, and even multi-year offtakes that are starting in the voluntary market. So, we'll continue to scale our carbon sales at the same time that we're scaling the underlying fuels, and look at how do we optimize that business to get the best returns for our shareholders by doing what we call carbon arbitrage, right? Making sure that we're getting the Where's the market taking us?
Those markets will change, but placing that carbon value as quick as we can in those highest value markets as we scale fuel. Absolutely, we plan to do that simultaneously as we expand volumes and get that revenue as soon as we're able to produce more gallons.
Maybe one last, if I could, just staying on carbon. While I realize you're nearly capped out on 45Z credits for ethanol, how could regenerative ag further improve your ability to lower CI in other regulatory markets?
Great question, right? This is one that we're very passionate about, because this is where our Verity platform really helps us. We've been working with farmers. We believe farmers should get rewarded for contributing to this. We still have a few million dollars, maybe $6 million-$7 million that we think we can capture, and regenerative agriculture can come in and play a part of that. Now, we probably won't capture all of that, because we'll be sharing some of that upside with the farmers who are generating the credits and putting that value to work.
But look, that's a great point, because as we continue to scale, not only today, but as we double our production, then we're going to continue to use regenerative agriculture and those benefits that we're now starting to see in 45Z to get every last bit, again, back to optimizing all the value and making sure every component of our business is getting that value, that regen ag is a key point. Thanks for the question.
Thanks, guys. Great update.
Your next question comes from the line of Peter Gastreich with Water Tower Research. Your line is open.
Thank you. Yes, congratulations on the result, Paul. It is great to see the earnings, the power of your platform, and also to hear about your disciplined capital strategy.
Thanks, Peter.
Thanks for taking my questions, Thank you.
Yeah.
First of all, could you talk a bit more about the CO2 hub, how the third-party attraction is evolving there, and what sort of, in terms of building that, what kind of milestones should investors be focused on there with respect to that strategy?
Yeah. Right now, Peter, it's a great question, because we do have more capacity. Today, we're only using about 17%-18% of the capacity that we have at Gevo North Dakota to store carbon dioxide. Our first goal is not necessarily store somebody else's CO2. Our first goal is to get the expansion done and then increase. With debottlenecking, we're going to be up, and even right now, we're run rates of around 200,000 tons. We're going to be close to 400,000 tons of carbon capture for ourselves. That takes us to about 40% utilization. That's our primary focus and where we're deploying capital today, because not only do we have to make more fuel, but we have to capture more carbon. There's extra capital that goes into that.
Right now, I'd say the priority is not storing carbon for others, so we'll continue to monitor that as that opportunity develops. That's going to be incremental revenue down the road, but not anytime in the near future.
Okay, thank you. My next question, turning to India. Could you talk about the Praj partnership and how you'd size that market opportunity, and how should we think about the timing and the structure there of that licensing revenue?
Sure. Again, we're excited about this one because this is how we monetize technology that we've already owned and developed. There's really two sources of revenue that we see coming out of this. One, licensing fees that's going to be based on installed capacity, and the second part is a reoccurring revenue stream that we will get from selling biocatalysts, right? So, the yeast, basically. The good news is Praj is already moving forward, and they're building a demo plant for a major oil company. If all goes well with that and the continued testing and the approvals that we're seeing, those revenues could probably start in 2028.
There's still a lot that needs to happen, but just thinking about the market, you asked about the size of the market, so think about a 10% blend, which is kind of where everybody's targeting, but that puts the total addressable market in India about 3 billion gallons of isobutanol. So, we're talking a lot of plants and a lot of catalyst sales. Again, we like this because it helps us monetize our technology that we already have, and Gevo doesn't really need to make a huge additional investment here. Once this gets going in India, we can continue to deploy the technology globally. So, we think it's a really good fit and a great next step for the isobutanol technology and isobutanol platform.
Okay, great. Thank you. I'll just ask one more question about RNG. That was definitely a big surprise. It's been sitting there quietly for a while, but suddenly we've got these big numbers coming through. Does this sort of change how you think about, or whether you think about growing that business from a production or capacity standpoint in the future, whether it's debottlenecking or other sort of growth opportunity?
Peter, I think it really just reinforces that we're getting the cash and the returns out of every asset that we have today. As we think about what we do next, we're going to continue to optimize that asset just like we're optimizing others and continue to derive as much of the incentives and the carbon value and the base fuel value as we possibly can. Wouldn't say this changes our mind on how we grow that business. Really, the focus on that was to be able to take that gas. I mean, the strategic reason was to take that gas and to put it into and power a SAF plant. So that's where we started, but it wasn't really to build a renewable natural gas business and continue to grow that. Good question.
Great. Okay. Thanks, Paul. Congrats again.
Thank you.
That concludes our question-and-answer session. I will now turn the call back over to Chief Executive Officer Paul Bloom for closing remarks.
Well, thanks everyone for the questions. I will just close with this. I believe Gevo is in a fundamentally stronger position today than it has been in the past. We are profitable, we are generating cash, carbon is becoming a meaningful product line, and we have a clear path to grow production and earnings from the assets we already own. Importantly, that gives us choices. We can invest capital where we see the strongest risk-adjusted returns while maintaining the upside from SAF and other high-value fuels as those markets develop. We still have a lot of work ahead of us, but I believe this quarter demonstrates that the strategy is working and that we are building a larger, more profitable, and financially stronger low-carbon fuels company. I want to thank our employees, our partners, customers, communities, and the shareholders for their continued support.
We look forward to updating you on our progress next quarter. Thank you.
Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.