$50/barrel renewable fuel credit approval process started!
Today, we are excited to announce that Manta Biofuel is leveraging a small portion of funds from current Republic investors to begin work to secure federal renewable fuel credits. These credits will be worth an additional $40-60 of revenue for every barrel of renewable crude oil we produce!
In practice, this means that each barrel of our oil will command a $50 premium in the marketplace. As I write this update, crude oil prices sit at $50/barrel, meaning our 100% renewable product will generate roughly $100 in revenue per barrel. Importantly, this credit revenue has limited cost of goods sold, meaning our business will generate substantially more cash flow.
With regard to our blended heating oil product, this development only improves the value proposition to our customers. Once approved, our customers will benefit from lower prices backed by the EPA, a smaller carbon footprint, and peace of mind knowing that our product has received third-party verification from Alcor Petrolab, showing that our blended heating oil product meets the ASTM D396 spec.
More about the RFS program: The Renewable Fuel Standard (RFS) is a federal program administered by the EPA that encourages the adoption of sustainable fuels through a volume-based credit generation system. It is a rare program that has bipartisan support because it is both a renewable energy policy and one that supports farmers.
We are working with the EPA to accelerate the approval process as much as possible, and expect to have made meaningful progress towards our gaining approval prior to raising our Series A. This will have a profound impact on valuation and cash flow, and improve Manta’s ability to scale in the coming years.
Other renewable energy credit programs: As Manta continues to grow, we plan to further leverage California’s Low Carbon Fuel Standard (LCFS) and the 45Q Federal Tax Credit, which can add another $100 of revenue per barrel. All together, these programs could boost our revenue to $200/barrel of crude oil, and improve gross margins to over 80%, all in today’s low-oil price environment. This is unheard of in the energy industry, and even fossil fuels cannot compete with these unit economics.
Finally, this update is incredibly special to the Manta team because this initiative would not have been possible without the support from the Republic community. It is the direct result of your support, so for that reason, we owe you all a huge THANK YOU!
Happy holidays, everyone. Keep an eye out for more exciting updates!
Ryan, Andrew, Zach, and John