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11th Sep 2024

Velocys sees bright future from UK SAF Mandate passed in the House of Commons

Velocys, the sustainable fuels technology company, welcomes the progress towards the Sustainable Aviation Fuel (SAF) mandate effective from 1st January 2025.

This is a significant step for the UK in establishing one of the world’s first binding regulations compelling fuel suppliers to ensure a certain proportion of their fuel meets SAF criteria. The central role that SAF must play to achieve net zero greenhouse gas (GHG) emissions from the aviation sector by 2050 has been recognised by the International Civil Aviation Organization and by governments around the world, many of which have introduced mandates or are working towards doing so. Notably, the European Union’s RefuelEU legislation is expected to play a major role in driving the growth of the SAF industry. However, the UK’s legislation has some crucial new features which go beyond what others have done to date to provide investors with greater certainty and confidence in investing in new SAF production plants.

First, the UK has recognised the need to invest in SAF production from feedstocks other than vegetable oils. SAF made from waste materials such as household waste and forestry residues taps into a much bigger sustainable resource and can deliver bigger GHG savings. By progressively introducing a cap on oil-based SAF, the UK is encouraging investment in both the waste-to-SAF route, as well as in power-to-liquids i.e. the conversion of low-carbon electricity into liquid fuels known also as e-SAF, in respect of which the SAF Mandate also introduces an obligation on suppliers.

Secondly, the UK has recognised that not all SAF produced has an equal impact on GHG emissions, and made the rewards available under the SAF mandate directly proportional to the lifecycle GHG savings achieved, thus aligning the mandate with the ultimate objective.

Both of these features are highly advantageous to Altalto Immingham, the waste-to-SAF project that Velocys is developing in the UK in collaboration with British Airways, with the support of a £27M award from the Department for Transport’s Advanced Fuels Fund (AFF). This project aims to  achieve GHG savings of over 150% through a combination of sustainable feedstock and sequestration of co-produced carbon dioxide.

The mandate also introduces a buy-out price which suppliers of fossil jet fuel have to pay if they cannot procure enough SAF to meet their obligations. This price is set at £0.137/MJ (megajoule), equivalent to approximately £5,875 per tonne at 70% GHG savings, but as noted above, Altalto is expected to achieve 150% savings.

In addition to the mandate, the UK Government has also announced its intention to introduce a SAF Revenue Support Mechanism Bill as part of its primary legislative programme for the current Parliament. This revenue support mechanism is expected to underpin the value of SAF produced in the UK and thus allow projects like Altalto to attract project finance as well as creating jobs and industry growth opportunities in the UK.

Velocys strongly welcomes these groundbreaking developments, which provide strong economic foundations for the pioneering Altalto project and provide a valuable example for legislation to support other developments worldwide using Velocys technology, including both e-fuels projects and those based on solid feedstocks such as municipal solid waste and forestry waste.

Henrik Wareborn, Velocys CEO, said:We are delighted to see that the UK Government has moved swiftly to progress the SAF Mandate and signalled its commitment to providing the necessary revenue support mechanism to support and incentivise SAF industry development. The focus on greenhouse gas emissions is exactly what is needed to encourage timely investments in the next generation of SAF production, which Velocys technology enables.”

The site for the Altalto Immingham project

Visualisation of the Altalto Immingham project

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