Shares of Gevo Inc. (GEVO) rose by 3.23% during yesterday's trade after announcing receipt of an approval for a pathway for isobutanol production at their Luverne, MN plant. In early trade, the stock prices soared by 11.6% on a trading volume of 7.45 million, before ending just 3.23% higher than the previous day's trade and closing at $3.84.

During last week's trade, share prices plummeted as repairs on its Luverne plant were halted. However, Gevo has announced plans to complete further upgrades to the plant during the closure that have the potential to increase production. (See also: Gevo Shares Slump 8.3% as Luverne Repairs Continue).

EPA Pathway Approval

The company announced on Tuesday, January 17, 2017 that the U.S. Environmental Protection Agency (EPA) issued the approval for the isobutanol to be considered an advanced biofuel under the Renewable Fuel Standard Program (RFS). The isobutanol created by Gevo in its Luverne plant is made using starch from feed corn. The process produces alcohol known as isobutanol that can be converted into renewable jet fuel or gasoline.

The pathway approval from the EPA is the first of its kind for an advanced biofuel created from the starch of feed corn. The pathway approval anticipates that Gevo should achieve the 50% greenhouse gas emission reductions required in order for the company to claim the advanced D5 Renewable Identification Number (RIN). Biofuels are assigned individual RINs, which are serial numbers used to track production and usage. At this time, Gevo's isobutanol production from feed corn currently generates D6 Renewable Identification Numbers.

Now that the EPA has issued a pathway approval, the company should also be able to generate D5 RINs, as long as it can achieve a 50% or larger greenhouse gas emission reduction.   

RINs are able to be traded or sold, giving them a monetary value that could contribute to the company's bottom line. It's also worth noting that any renewable jet fuel or gasoline produced using the isobutanol may also qualify for RINs.

Dr. Patrick Gruber, Gevo's CEO said that the pathway provides a route for advanced fuels that has the potential to open up new business opportunities for the company.

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