Did you hear? An incredible milestone was just made in the aviation industry.
United Airlines (Nasdaq: UAL) just became the first commercial airline to fly a full passenger load using 100% sustainable aviation fuel (SAF).
The historic flight on a 737 MAX 8 departed Chicago's O'Hare International Airport on Dec. 1 with more than 100 souls, arriving safely at Washington, D.C.'s Reagan National.
The flight used 500 gallons of SAF in one engine and the same amount of standard jet fuel in the other (airlines can only use up to 50% SAF).
But this wasn’t just some PR gimmick …
- United has bought over 7 million gallons of SAF so far this year, which produces almost 80% less greenhouse gas than conventional fuel.
Other carriers have joined United in committing to reduce or offset carbon emissions, too, including International Consolidated Airlines Group’s (OTCMKTS: ICAGY) British Airways, Delta (NYSE: DAL), JetBlue (Nasdaq: JBLU) and Qantas (OTCMKTS: QUBSF).
And the use of biofuels in transportation to reduce greenhouse gases isn’t limited to airlines.
A recent study from Harvard and Tuft Universities found that ethanol emits 46% less carbon than gasoline when used in automobiles.
Given that there are still 279 million petroleum-powered vehicles on American roads, the shift to all electric vehicles (EVs) will take years ... even decades.
- Given this, many say the U.S. needs to prioritize more biofuel production, including ethanol.
Geoff Cooper, head of the Renewable Fuels Association, supports raising the amount of ethanol in gasoline from 10% to 15%:
We’re going to be using hundreds of billions of gallons of liquid fuels for the next several decades ... why not take steps now to reduce the carbon intensity of those liquid fuels?
And even with clean energy argument aside, in 2019, ethanol helped create 360,000 American jobs.
On Nov. 23, I recommended ethanol producer Green Plains (Nasdaq: GPRE), an ethanol producer with a production capacity of 1.1 billion gallons per year, made possible with its 11 U.S. plants.
After hitting its 52-week high last month, shares took a breather and recently broke its 50-day moving average during the Omicron-induced market sell-off.
And if you are still thinking about buying shares, now looks like a great time before it resumes its long-term uptrend, supported by its 200-day moving average.
Biofuel Boost
On Dec. 7, the U.S. Department of Agriculture (USDA) announced up to $800 million to support biofuel producers and infrastructure.
Coincidentally, on the very same day, shares of biofuels company Gevo (Nasdaq: GEVO) jumped like a startled cat, spiking by as much as 22% in early trading.
Why?
The company snagged an eight-year deal to supply 45 million gallons per year of renewable hydrocarbons — including SAF — to Switzerland-based renewables firm Kolmar Americas.
- That amounts to the entire expected output of Gevo's Net-Zero 2 production facility currently under development.
And while the company expects the Kolmar deal to generate $2.8 billion in revenue over eight years, Gevo also signed lucrative agreements with Delta and energy giant TotalEnergies (NYSE: TTE).
With a market cap of $1.03 billion, Gevo produces isobutanol, ethanol and high-value animal feed at its plant in Minnesota and renewable jet fuel at its Texas facility.
Although the company is still a few years away from commercial-scale production, investors are getting excited.
Despite the surge in share prices on Dec. 7, the stock recently dipped under its 50- and 200-day moving averages.
With recent news of Gevo’s deals with Delta, TotalEnergies and Komer Americas, savvy investors should keep this company on their watchlist … or use recent weakness as a potential entry.
Speaking of entries, if you’d like to get more tailored picks to investment megatrends, I encourage you to check out my Wealth Megatrends service. In it, I give more specific recommendations to my subscribers. If you’d like more information, click here now. Remember to always conduct your own due diligence before buying anything.
All the best,
Sean
