Aemetis Biogas: A Decarbonization Play with Catalyst-Driven Growth Ahead

The recent CARB approvals for Aemetis Biogas's seven dairy digesters mark a pivotal moment for the company's financial trajectory and strategic positioning in the renewable natural gas (RNG) sector. With carbon intensity scores ranging from -327 to -419, these projects qualify for LCFS credits that will double Aemetis's Q1 2025 revenue—a near-term catalyst that underscores the company's shift from regulatory uncertainty to tangible, high-margin earnings. This article explores how these approvals, coupled with upcoming projects and an attractive valuation, position Aemetis as a compelling investment in the decarbonization boom.

The LCFS Credit Catalyst: Doubling Revenue and Unlocking Liquidity

The CARB-approved pathways for the seven digesters—effective retroactively from January 1, 2025—mean Aemetis can now claim LCFS credits at an average carbon intensity of -384, compared to the temporary -150 baseline. This shift alone increases LCFS credit revenue by 100–120%, translating to an estimated $6 million annually at current prices. For Q1 2025 alone, this retroactive approval adds a significant one-time boost to cash flow, while setting a baseline for sustained growth as more digesters come online.

The timing aligns perfectly with California's LCFS program, which requires fuel suppliers to meet stringent carbon-reduction targets. With Aemetis's projects already producing 550,000 MMBtu/year of RNG (scalable to 1.6 million MMBtu/year by full capacity), the company is primed to capitalize on upcoming LCFS regulatory changes—including potential credit multipliers that could amplify values by 300%—as early as 2026. This regulatory tailwind, combined with its 11 operational digesters and a four-dairy cluster nearing completion, reinforces Aemetis's leadership in the RNG space.

Growth Drivers: Scaling Capacity and Diversifying Revenue

Beyond LCFS credits, Aemetis is advancing projects that amplify its revenue streams:
1. RNG Pipeline Expansion: The $27 million Centuri expansion will expand its biogas pipeline network to 60 miles, connecting more dairies to the Keyes facility and unlocking $70 million+ in tax credit sales from Section 45Z and 48 credits.
2. Sustainable Aviation Fuel (SAF) Plant: With critical permits secured, the 78-million-gallon-per-year SAF plant—set to start production in 2026—will diversify revenue while targeting the high-demand aviation sector.
3. Carbon Sequestration: The Riverbank project, designed to sequester 1.4 million tons of CO₂ annually, adds another layer of decarbonization revenue through carbon credits.

These initiatives, combined with the Keyes ethanol plant's $32 million/year cash flow boost from mechanical vapor recompression upgrades, create a robust, multi-year growth pipeline.

Valuation and Investment Thesis: A Buy at Current Levels

Despite recent stock momentum (up 10.6% year-to-date), Aemetis remains undervalued relative to its peers. With Ascendiant Capital's $20 price target (implying 50% upside from current levels) and a market cap of $300 million, the stock offers asymmetric reward potential. Key valuation metrics:
- 2025E EBITDA: Estimated at $25 million (excluding LCFS upside).
- Debt-to-Equity: Managed at $125 million total debt, including USDA-backed loans, with no near-term repayment pressure.

Risks and Considerations

• Regulatory Delays: While CARB approvals are on track, delays in LCFS program updates or India's biodiesel mandates (a secondary market) could temporarily stall momentum.
• Execution Risk: Scaling RNG and SAF production requires capital discipline; the $27M Centuri expansion and SAF plant's permitting history are critical watchpoints.

Conclusion: A Strategic Buy for Long-Term Decarbonization Exposure

Aemetis Biogas is at an inflection point. The CARB approvals have crystallized a near-term revenue catalyst, while its diversified projects and low valuation create a compelling risk-reward profile. With Ascendiant's bullish stance, a $20 price target, and a sector-leading CI score, this is a rare opportunity to invest in a company directly profiting from the global decarbonization shift. Act now—before the LCFS credit windfall fuels a rerating.