Joining us today. Welcome to this WTR Insights Conference Session with Gevo, Incorporated. I'm Peter Gastreich, Managing Director of Energy Transition and Sustainable Investing at Water Tower Research, and I'm hosting today's conversation. Joining me today is Paul Bloom, Chief Executive Officer of Gevo. Paul, welcome, and thanks so much for making the time for us today.
Well, thanks for having me, Peter. It's great to be here.
We'll have a couple of housekeeping items get out of the way here before we start. Gevo's safe harbor statements are available on the investor tab of the company's website. Investor questions are welcome. Please put them in the chat box and we'll take as many as we can or address them in our forthcoming management series report. Also, if you'd like to request a meeting with Gevo's management, you can indicate that through the conference portal. With that, let's get started. Paul, as always with these events, there will be some investors who are joining us who may be new to the story at Gevo. Keeping that in mind, could we start with a high-level overview of what Gevo does across low carbon ethanol, carbon capture and storage, and its emerging businesses?
Absolutely, Peter, and look, we've had a lot change at Gevo in the past couple of years, so it's always good to give everybody an update. But really, Gevo produces low carbon fuels and does carbon management, fundamentally. We do that in our low carbon ethanol business. We've got a 67-million-gallon low carbon ethanol plant that's connected to carbon capture and sequestration in North Dakota. We just call that Gevo North Dakota. That plant we're in the process of expanding, and then we also have a renewable natural gas platform, and that's in northwest Iowa. That renewable natural gas, we take and produce renewable natural gas from dairy manure biogas, and upgrade that, sell most of that into the California markets. Then we've got some new, smaller markets that are developing today, things like racing fuels, which we're pretty excited about.
Small markets, but growing in high performance kind of areas. Those are kind of the three main segments where most of our value comes from. Where we're really focused is on Gevo North Dakota. That's our platform site where we're basically today expanding that facility through what we call debottlenecking as a step one, going from 67 million gallons to 75 million gallons. That's going to be done by the end of the year. Then we've got a larger expansion to double the size of that facility, an additional 75 million gallons that we're working on right now. We're working on financing and all the engineering and lead time equipment that is going to go into that. Then step three is really where we have our alcohol-to-jet platform, where we've been talking about this, we call it ATJ-30.
It's a 30-million gallon alcohol-to-jet facility where we'll make jet fuel, low carbon jet fuel. Over the whole business, we basically monetize our fuels, we monetize carbon, and we maximize the value from the incentives that are available for these fuels.
Your ethanol production is generating revenue in a very different way from a conventional producer because yours is, of course, low carbon. Could you walk us through the layered revenue model, RINs, state low carbon fuel credits, and the federal Clean Fuel Production Credit, and how does that combination push your realized margin considerably higher when compared to standard ethanol producers?
Sure thing, Peter. When we think about that, we call it the stack. So what's the stack of the value that we're creating from these different things? Fundamentally, we do the same thing. We produce a fuel, whether that's RNG or low carbon ethanol that we put into the market. Those are the BTUs that people need. The cost-effective fuel solutions that help provide low cost gallons for consumers. On that piece, that's basically what other ethanol producers do. But then we have our carbon capture that we just talked about not too long ago, where for every ton of fuel we produce about a ton of carbon dioxide. We capture that carbon dioxide and sequester that in a deep well under our North Dakota facility.
That creates the opportunity for us to do two things, to create the carbon value, which we can sell then into compliance or voluntary markets, and then to go after and maximize incentives, which are things like 45Z or Clean Fuel Production Credit tax credits and RINs. Those are the ways that that stacks up. If you look at just what we have done from the time when we acquired what was then Red Trail Energy, now it is just Gevo North Dakota, we have had about a 7x increase in the overall adjusted EBITDA out of that facility. But that really, that big stack, the commodity component, the fuel component is essentially the same. The additional value that we are driving there comes from both the carbon and from the incentives. All in all, that adds up to something around $1.50 a gallon.
A lot of value, obviously, from 45Z, which that is a popular topic today for 45Z with One Big Beautiful Bill really enabled 45Z, and now we have had additional rules that just came out on 45Z ag benefits. All that wraps into the incentive piece. Of course, RINs for the Renewable Fuel Standard, that is another component that helps support it. Most of our fuel gets sold with the RIN, so that just helps support the value of the underlying fuel that is there. Then the carbon value. The carbon value where we can sell into the voluntary or compliance markets, that is really a differentiator for us, right? Building this carbon business, we call it carbon arbitrage.
We can sell between a compliance market, like a low carbon fuel market like California, or you have got now Canadian CFR, so the Canadian Clean Fuel Regulations market in Canada that is starting to really take off. But you can only sell that carbon credit once. So we can either sell it into that kind of compliance market, where the carbon goes with the fuel, or we can take that carbon and strip that off from the fuel and sell it into a voluntary market. In most of those cases, we are talking about the carbon dioxide removal space, or CDR markets. That is growing. It is still a nascent market, but it is growing and we see more customers show up in that market every day.
Last quarter you delivered a, excuse me, a positive surprise to the market when you doubled your EBITDA outlook for this year. Could you tell us about that trajectory compared to last year and how your carbon business is really driving that?
Yeah. If you look back to 2025, we ended the year with about $16 million in adjusted EBITDA. Going into this year, we were definitely more optimistic. We started out saying, "Hey, we can get to $30 million." So almost doubling of what we anticipated. As we think about our carbon business, we knew that we wanted to continue to increase the optionality that we have there to where we can sell our product, how we can monetize our carbon. Couple of the big things that we were able to do to get us from that 30 that we talked about to the 60 that we anticipate by the end of this year is, one, we needed to unlock new carbon pathways. So one that we just talked about, the Canadian Clean Fuel Regulations, that pathway.
We already had a pathway into Canada, but it didn't include the carbon capture and sequestration of the carbon value that's coming from carbon capture in that pathway. So getting that pathway this year and being able to monetize was a big unlock there. The other factor was we had some improvements in the amount of carbon credit or 45Z tax credits that we could actually capture, with changes that happened under 45Z. Things like removing ILUC, some of those and just being more efficient, we're able to capture more value from our incentives as well. So that combination of things really was an unlock for us this year to take us from that $30 million that we were anticipating to now have our sights set much higher at the 60 for the end of the year. But very, very happy that that's the case.
But the team has been doing a good job. These things don't happen overnight, right? So these things have been in progress for two, three years, right? To make sure we can have as many pathways as possible. We're not done, right? We're still continuing to unlock new pathways and continuing to develop the carbon market so we have as much optionality to basically figure out where do we monetize our carbon and get the highest value for that.
Gevo is one of the very few ethanol producers anywhere with a fully permitted operating Class VI carbon sequestration well, right? Can you explain how that asset works and why you view it as a growth lever, excuse me, rather than simply a compliance cost?
Sure thing, Peter, and thanks for pointing that out because, look, we think this is a big differentiator. There are not too many sites and definitely we believe we have got one of the best sites in the world for carbon capture and sequestration in North Dakota. It is really the reason that we acquired the facility, and we saw the opportunity to take, and this is what Red Trail Energy was already doing. They originally built this site and great group and high quality, one of the best sites, again, in the world to take the CO2 that actually comes off of ethanol fermentation and put that down whole. Basically, for every ton of ethanol that we produce, we get about a ton of carbon dioxide that is in the fermentation in the head space.
We capture that, and then we can inject that into a deep well in a reservoir that sits underneath the plant that is over 1 mi deep. Then once it goes into that formation, it stays there permanently, right? This is how we get permanent type of carbon ratings that says we have got a permanence that is going to last for over 1,000 years. It is actually going to mineralize and turn into rock over time, right? It is basically CO2 forms limestone long- term. That is kind of how it actually works. But in practice, because for every ton of fuel, we actually remove a ton of carbon dioxide.
That gives us that opportunity then with this asset to say, "Now, do I want to take that and generate a credit to go into a compliance fuel market, or do I take that into a voluntary market?" But it is all right there. It is all contained. We do not have to wait for a pipeline. We do not have to depend on a pipeline. We do not have to depend on anybody else. We have got everything we need right there. That is why it is so great, because we have got that capability. We can expand that capability, too, if we add more low carbon ethanol or jet fuel in the future, these different things, right? It really enables the platform to be able to capture that carbon value and return that value to our shareholders.
Paul, certainly with your background and previous role, you know the carbon crediting and CDR markets about as well as anybody at your company. A great deal has really been committed to CDR purchases industry-wide, yet it appears that very little has actually been delivered yet. Gevo, meanwhile, is among the very select few buyers that are delivering at scale today. How is the pricing buyer behavior evolving, and where does Gevo kind of sit in that market?
Yeah, sure. Great question, Peter. This is one that we are really proud of because, like you said, the market, there has been about 50 million tons of carbon contracted in the carbon dioxide removal markets, but only about 3% of that has been delivered. Gevo is one of those companies that can deliver, and we have been delivering. We have been on the top supplier leaderboards on some of the websites that track this for some time. I think this is where you start to see customers, more and more customers, coming to us for their carbon dioxide removal needs. The market is developing. If you look on average carbon dioxide removals, my information is coming from CDR.fyi. There is a website that tracks all this. I would encourage everybody to go check it out.
On average, right around $200 a metric ton is kind of their posted price on where that is. A lot of this market today is still done through price discovery and things like that. This is where carbon arbitrage for us is really important, right? Because we have got compliance markets or voluntary markets. You can only sell that carbon credit once. So we are going to make sure that we are selling that to the highest value market, so we have got that optionality. That helps us make decisions on how much are we selling into a compliance market, how much are we selling into voluntary market. Really, the voluntary markets have a way to go, but we see more customers showing up. We have done two years of deals now with NASDAQ, for example. That is a good one.
We have got other customers coming. We had a LinkedIn post that just came out with Whirlpool, and that is pretty exciting for us. You start to see some other customers like Amgen and PayPal and others who are showing up on our registry. This is all done through Puro.earth registry. So all of our carbon gets tracked, and then those who take title to that, if they want to buy a carbon dioxide credit, will show up on the registry, either with their name or.