Executive Summary / Key Takeaways

• Aemetis is transforming into a diversified, low-carbon renewable fuels and natural gas producer, strategically leveraging innovative technologies and supportive government policies to drive significant growth and improve its financial standing.
• Recent operational milestones include a 30% increase in RNG production capacity in Q3 2025, CARB approval for seven dairy LCFS pathways with a negative 384 carbon intensity score, and the legislative approval of E15 ethanol blending in California, which is expected to substantially increase demand.
• The company anticipates a strong exit to 2025 and expanding cash flow through 2026, fueled by the monetization of federal Section 45Z production tax credits (PTCs), rising California Low Carbon Fuel Standard (LCFS) credit prices, and the operational launch of key projects like the Mechanical Vapor Recompression (MVR) system.
• Key factors for investors to monitor include the timely issuance of the Department of Energy's updated 45Z calculation for dairy RNG, the sustained increase in LCFS credit prices, and the successful refinancing of substantial debt.
• Aemetis' specialized focus on negative carbon intensity products and waste-to-fuel technologies provides a competitive edge in a rapidly expanding renewable energy market, positioning it for long-term value creation despite its smaller scale compared to industry giants.

A Strategic Pivot Towards a Circular Bioeconomy

Aemetis, Inc., founded in 2006, has evolved into a renewable natural gas and biofuels company dedicated to developing and commercializing innovative technologies that reduce fuel costs and emissions. Headquartered in Cupertino, California, the company's overarching strategy is to build a local circular bioeconomy by converting agricultural products and wastes into low-carbon renewable fuels. This foundational approach has shaped its current market position and strategic responses to the burgeoning demand for sustainable energy solutions.

The broader industry landscape is characterized by increasing global energy demands, partly driven by emerging sectors like AI and data centers, which require substantial power. This trend underscores the critical need for renewable energy sources and low-carbon fuels. Aemetis is strategically positioned to capitalize on these dynamics, particularly through its focus on negative carbon intensity products. Government policies, including California's Low Carbon Fuel Standard (LCFS), the federal Renewable Fuel Standard (RFS), and new federal tax credits like Section 45Z, act as significant catalysts, creating a favorable regulatory environment for companies like Aemetis.

In this competitive arena, Aemetis operates as a specialized player, differentiating itself from larger, more diversified energy and agricultural conglomerates such as Archer-Daniels-Midland , Valero Energy , and Chevron . While these industry giants benefit from economies of scale, extensive distribution networks, and robust financial health, Aemetis carves out its niche through technological innovation and a sharp focus on environmental impact. The company's emphasis on waste-to-fuel technologies and negative carbon intensity products provides a unique value proposition, particularly in regulatory-driven markets.

Technological Edge: Driving Decarbonization and Value

Aemetis' core competitive advantage lies in its differentiated technologies designed to produce low and negative carbon intensity fuels. These innovations are central to its strategy and future financial performance.

The company's California Dairy Renewable Natural Gas (RNG) segment utilizes anaerobic digesters to convert dairy waste into biogas, which is then upgraded to RNG. This technology offers significant environmental benefits, as evidenced by the California Air Resources Board (CARB) approval of provisional LCFS pathways for seven of its dairy digesters at an impressive average negative 384 carbon intensity (CI) score. This compares favorably to the temporary negative 150 default pathway score, and these approvals are expected to increase LCFS credit revenue for these dairies by 160% starting in the third quarter of 2025. The company aims to reach an annual RNG production run rate of 1 million MMBtus by the end of 2026.

In its California Ethanol segment, Aemetis is implementing a $30 million Mechanical Vapor Recompression (MVR) system at its Keyes ethanol plant. This system is designed to reduce natural gas use by 80%, a tangible benefit that will significantly lower operating costs and the carbon intensity of the ethanol produced. The MVR project is projected to add an estimated $32 million in annual cash flow starting mid-2026. Approximately $20 million of the project's cost is funded by grants and federal Section 48C tax credits, underscoring the strategic alignment with government decarbonization initiatives.

Furthermore, Aemetis is developing a Carbon Capture and Underground Sequestration (CCUS) facility at its Riverbank Industrial Complex, designed to inject up to 1.4 million tons of CO2 per year underground. This technology leverages California's Central Valley's favorable geologic formations for CO2 storage. The Riverbank site is also slated for a Sustainable Aviation Fuel (SAF) and Renewable Diesel (RD) production plant, capable of producing 90 million gallons per year of RD or 78 million gallons per year of SAF. This plant is designed to utilize low-carbon hydroelectric electricity and renewable hydrogen generated from its own byproducts, showcasing a closed-loop, low-carbon production model.

These technological differentiators contribute directly to Aemetis' competitive moat. By producing fuels with significantly lower, and often negative, carbon intensities, the company can command higher values for associated environmental credits (LCFS, D3 RINs, 45Z PTCs). This enhances financial performance through increased revenue streams and lower operating costs, strengthening its market positioning as a leader in sustainable biofuels. The ongoing research and development at its Minneapolis lab, focused on extracting sugar from cellulosic feedstocks and producing low-carbon ethanol, renewable hydrogen, SAF, and RD, further supports its long-term growth strategy by targeting future innovations and market opportunities.

Financial Performance and Liquidity: A Turnaround in Progress

Aemetis' financial performance in recent periods reflects both the challenges of its capital-intensive growth phase and the early signs of a strategic turnaround. For the three months ended September 30, 2025, the company reported revenues of $59.2 million, an increase of $7 million from the second quarter of 2025. This sequential improvement was primarily driven by the fulfillment of biodiesel orders in India and stronger ethanol production and sales pricing. Despite this, the company recorded a net loss of $23.7 million and an operating loss of $8.5 million for the quarter.

Year-to-date for the nine months ended September 30, 2025, revenues stood at $154.3 million, a decrease from $220.6 million in the same period of 2024, largely due to delays in India biodiesel contracts. The net loss for the nine months was $71.7 million, relatively flat compared to $71.3 million in the prior year. The California Ethanol segment saw its revenue decrease by 9.40% in Q3 2025 compared to Q3 2024, primarily due to a planned reduction in production rates to optimize yields, resulting in a 5% decrease in ethanol sales volume and a 10% decrease in WDG sales volume. Conversely, the segment's gross profit increased significantly by 1784.7% in Q3 2025 to $1.43 million, compared to $85 thousand in Q3 2024.

The California Dairy Renewable Natural Gas segment recognized $4 million of revenue from 12 operating digesters in Q3 2025. However, its gross profit decreased by 31.50% to $1.3 million in Q3 2025 compared to the same period in 2024, primarily due to increased costs of goods sold from a higher number of operating digesters and a 23% decrease in the average price of D3 RINs. The India Biodiesel segment posted $14.5 million in revenues for Q3 2025, but this represented a 55.10% decrease from Q3 2024, mainly due to delays in receiving tender contracts from Oil Marketing Companies (OMCs) and a shift to fixed-price contracts. The segment's gross profit plummeted by 96.10% to $74 thousand in Q3 2025.

Aemetis faces significant liquidity challenges, with a "substantial doubt" about its ability to continue as a going concern over the next twelve months due to its accumulated debt and reliance on its senior secured lender. Cash and cash equivalents at the end of Q3 2025 were $5.6 million. The company's strategies to improve liquidity include optimizing ethanol operations, reducing natural gas use at the Keyes Plant with the MVR system, monetizing new Section 45Z tax credits, expanding dairy digester operations, and increasing LCFS credit revenue. The India business has historically been self-sustaining from a cash perspective. The company is actively raising cash through equity sales and pursuing refinancing options for its substantial debt, which totaled $353.5 million as of September 30, 2025.

Outlook and Strategic Initiatives

Aemetis' forward-looking strategy is heavily focused on leveraging policy tailwinds and project execution to drive significant improvements in cash flow and profitability. The company expects to reach over 500,000 MMBtus of renewable natural gas production capacity by the end of 2025, expanding to an annual run rate of 1 million MMBtus by the end of 2026. This growth is supported by $50 million in USDA guaranteed financing, with an additional $75 million in USDA guaranteed long-term financing currently in process.

The Mechanical Vapor Recompression (MVR) system at the Keyes ethanol plant, expected to be operational by Q2 2026, is projected to increase annual cash flow by an estimated $32 million. This project, along with the recent legislative approval of 15% ethanol blending (E15) in California, is anticipated to significantly enhance ethanol margins and demand, with E15 potentially increasing the California ethanol market by over 600 million gallons per year.

A major catalyst for future revenue is the federal Section 45Z production tax credit, effective January 1, 2025. Aemetis is in the process of monetizing $12 million in investment tax credits and $10 million in 45Z production tax credits. The company anticipates a substantial increase in 45Z income, particularly for dairy RNG, once the Department of Energy issues an updated calculation spreadsheet, expected by January 2026. This update, stemming from the "One Big Beautiful Bill," is projected to more than double 45Z credits in 2026 for both ethanol and RNG.

The company is also targeting an Initial Public Offering (IPO) for its India subsidiary in early 2026, aiming to sell 20% to 25% of the entity at a valuation range of $100 million to $200 million, with potential to reach $300 million. A portion of these proceeds is earmarked for parent company debt repayment, while the remainder will fund expansion into biogas and ethanol production in India.

Risks and Challenges

Despite the promising outlook, Aemetis faces several material risks. The "substantial doubt" about its ability to continue as a going concern highlights the critical need for successful debt refinancing and consistent positive cash flow generation. The company's reliance on its senior secured lender, Third Eye Capital, for debt extensions and the potential for accelerated maturity in case of covenant defaults, presents a significant financial risk.

Operational profitability remains susceptible to volatile commodity markets, where the spread between input costs (e.g., corn, natural gas) and product revenues (e.g., ethanol, D3 RINs, LCFS credits) can fluctuate widely. Regulatory uncertainties also pose a challenge, as evidenced by the delay in the Department of Energy's 45Z calculation for dairy RNG and the unexpected pause in the implementation of California's LCFS amendments, which temporarily depressed credit prices. Furthermore, the market for D3 RINs has seen oversupply and price reductions, from approximately $3.50 to $2.45, influenced by EPA actions that could disincentivize new investment in D3 RIN creation. Lastly, the company has identified material weaknesses in its IT general controls and internal controls over financial reporting, which require ongoing remediation.

Competitive Positioning and Strategic Responses

Aemetis occupies a distinct position within the renewable fuels industry, characterized by its specialized focus on negative carbon intensity products and waste-to-fuel technologies. This approach differentiates it from larger, more diversified competitors like Archer-Daniels-Midland (ADM), Valero Energy (VLO), and Chevron . While ADM leverages its vast agricultural supply chain for scale and cost advantages in ethanol, and VLO benefits from integrated refining operations and extensive distribution, Aemetis' strength lies in its innovative processes for carbon reduction.

For instance, Aemetis' dairy RNG projects, with their negative 384 CI scores, offer a significantly higher environmental value proposition compared to conventional biofuels, appealing to markets driven by stringent carbon reduction mandates. This technological edge allows Aemetis to capture premium pricing for its environmental credits, a segment where larger players may not have the same specialized focus or carbon intensity profile. However, Aemetis' smaller scale can lead to higher operating costs per unit compared to the economies of scale enjoyed by ADM or VLO, potentially impacting its overall profitability and market share in price-sensitive segments.

Against Chevron (CVX), an integrated energy giant with growing renewable investments, Aemetis' niche in India-based biodiesel and specialized RNG operations provides a unique market entry point. While Chevron's vast resources enable broader technological advancements and stronger financial backing for R&D, Aemetis' agility in waste-to-fuel processes could offer higher efficiency in specific applications. Aemetis' customer and supplier dynamics, such as its reliance on J.D. Heiskell for ethanol sales and OMCs for India biodiesel, present higher customer concentration risks compared to the diversified supply chains of its larger rivals.

Aemetis' strategic response to these competitive dynamics involves a dual approach: deepening its technological moat in low-carbon solutions and expanding its operational footprint in high-growth renewable segments. The MVR system and CCUS projects are direct investments in enhancing its carbon intensity advantage, while the India IPO and expansion into Indian biogas and ethanol markets represent strategic diversification into new, government-supported growth areas. The company's ability to secure USDA-guaranteed financing for its RNG projects also helps mitigate its capital intensity challenges, allowing it to compete for project development against larger, more self-funded entities.

Conclusion

Aemetis stands at a pivotal juncture, transitioning from a foundational biofuels producer to a more diversified and technologically advanced player in the low-carbon energy sector. The company's core investment thesis hinges on its ability to leverage innovative waste-to-fuel technologies and supportive government policies to unlock substantial value from environmental credits and expanding renewable fuel markets. While significant financial and operational challenges persist, particularly concerning its debt structure and the need for consistent positive cash flow, the strategic initiatives underway signal a clear path toward improved financial health.

The anticipated ramp-up in RNG production, the transformative impact of the MVR system on ethanol profitability, and the potential for substantial revenue from Section 45Z production tax credits are critical forward-looking indicators. Aemetis' technological leadership in achieving negative carbon intensity scores for its RNG and its strategic positioning in the evolving E15 ethanol market and the nascent SAF sector provide a distinct competitive advantage. As regulatory clarifications materialize and its projects mature, Aemetis is poised to convert its innovative capabilities into sustainable financial performance, solidifying its role in the green economy and offering a compelling long-term investment proposition.