The UK Government has set an ambitious new target to reduce carbon emissions by 78% of 1990 levels by 2035, following recommendations from the Climate Change Committee (CCC).
For the first time, the Carbon Budget will incorporate the UK’s share of international aviation and shipping emissions. As the only near-term solution to aviation decarbonisation, sustainable aviation fuels (SAF) will play an essential role in meeting these ambitious new targets.
The Prime Minister said of the decision, “The UK will be a home to pioneering businesses, new technologies and green innovation as we make progress to net zero emissions”.
Altalto, the UK’s first SAF facility being developed by Velocys and British Airways in North East Lincolnshire, is one such example of the innovative projects that will be required to bring about this progress.
Velocys SAF technology, alongside others, will be key to driving down not only UK but also international aviation emissions in the years ahead.
Velocys, the sustainable fuels technology company, is pleased to announce that it has jointly agreed to extend the current option agreement with British Airways for the Altalto project to 31 March 2022. Exercise of the option would give both parties equal equity ownership (50/50) of Altalto Ltd and the right to appoint a Director. Details of the original option agreement were previously announced on 12 May 2020.
The Company also welcomes the UK Government announcement (16 March 2021) of the launch of a new £15m ‘Green Fuels, Green Skies’ grant funding competition. This funding is intended to support the production of Sustainable Aviation Fuel (SAF). Altalto Immingham Ltd intends to apply for a grant in this competition, on behalf of Velocys and British Airways. The results of the competition are expected to be announced by the Department for Transport on 31 July 2021.
The Company expects the project will be in a position to launch its front-end engineering design (FEED) later in 2021 subject to confirmed UK Government policy support and the addition of new investment partners in the project.
In addition, on 25 March 2021 the Secretary of State for Transport, the Rt Hon Grant Shapps MP, opened a Consultation into amending the Renewable Transport Fuel Obligation (RTFO) to increase the carbon savings it achieves. Velocys welcomes the launch of this process, fully supports its objectives and will be actively participating in the Consultation. The Secretary of State notes that expanding the RTFO to include recycled carbon fuels would “transform the commercial viability” of waste-to-fuel technology and support pioneering projects in the UK looking to develop sustainable aviation fuel from household waste.
Henrik Wareborn, CEO of Velocys, said:
“I thank British Airways for their renewed commitment to our joint efforts to advance the Altalto waste-to-SAF project. Our announcement today reflects the strength of our partnership and commitment to the project.
“SAF remains critical to the decarbonisation of aviation; it is applicable to all flights including long-haul and can be used immediately with no need for modifications to aircraft fleets or refuelling infrastructure. Velocys has the technology to enable the production of SAF from wastes, avoiding landfill or incineration, and our technology can be coupled with Carbon Capture and Storage (CCS) to achieve net zero fuels. Policy support remains critical to the establishment of UK SAF facilities, but with the right support, we can enable a clean future for aviation. Whilst there is no guarantee that the Altalto project’s application to the Green Fuels, Green Skies competition will be successful, we are delighted to see this new Government initiative to support the production of SAF.”
Sean Doyle, CEO of British Airways, said:
“Despite the crisis in global aviation, it is vital for our future that we continue to address climate change and we remain focused on playing our part to reduce the impact we have on the planet. For the last 100 years we have connected Britain with the world and the world with Britain, and to ensure our success for the next 100, we must do this sustainably.
“Progressing the development and commercial deployment of Sustainable Aviation Fuel is crucial to decarbonising the aviation industry and to meet our commitment to carbon net zero by 2050. The UK has the experience and resources needed to become a global leader in the deployment of such sustainable aviation fuel production facilities, and we need Government support to drive decarbonisation and accelerate the realisation of this vision.”
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Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) prior to its release as part of this announcement.
For further information, please contact:
Velocys
Henrik Wareborn, CEO
Andrew Morris, CFO
Lak Siriwardene, Head of Communications & Sustainability
+44 1865 800821
Panmure Gordon (UK) Limited (Nomad and Joint Broker)
Dan Norman (Corporate Broking)
Emma Earl (Corporate Finance)
John Prior (Corporate Finance)
+44 20 7886 2500
Shore Capital Stockbrokers Limited (Joint Broker)
Henry Willcocks (Corporate Broking)
Toby Gibbs (Corporate Advisory)
Sarah Mather (Corporate Advisory)
+44 20 7408 4090
Radnor Capital (Investor Relations)
Joshua Cryer
Iain Daly
+44 20 3897 1830
Field Consulting (General PR)
Robert Jeffery
+44 20 7096 7730
Notes to Editors
Velocys is an international UK-based sustainable fuels technology company. Velocys designed, developed and now licenses proprietary Fischer-Tropsch technology for the generation of clean, low carbon, synthetic drop-in aviation and road transport fuel from municipal solid waste and residual woody biomass.
Velocys is at present developing two reference projects: one in Natchez, Mississippi, USA (incorporating Carbon Capture, Utilisation and Storage) and one in Immingham, UK, to produce fuels that significantly reduce both greenhouse gas emissions and key exhaust pollutants for aviation and road transport. Originally a spin-out from Oxford University, in 2008 the Company acquired a US company based on complementary reactor technology developed at the Pacific Northwest National Laboratory. Velocys is headquartered in Oxford in the United Kingdom.
Velocys is pleased to announce the appointment of David Bate as the Group’s General Counsel, VP Legal and Compliance based in the Oxford office headquarters.
David’s most recent position was at Schlumberger where he was responsible for all legal support to the group’s upstream asset portfolio covering M&A, business development, risk and project management, development financing and other regulatory matters.
Over a 25 year + career in energy, he has previously worked for several large-cap multinationals and AIM-listed energy businesses. These include positions at ENI, Enterprise Oil, Chevron, Anadarko, Valiant Petroleum and E.ON. He has been involved in all aspects of the upstream and midstream oil and gas sector across diverse international jurisdictions, having undertaken roles in Amsterdam, Dublin and Asia. His extensive experience includes establishing and managing legal functions, compliance and corporate governance and expertise in M&A and dispute resolution, as well as the negotiation and application of commercial agreements relevant to the energy industry, project financing and other aspects of the value chain.
He began his career at Clifford Chance specialising in corporate law, is a qualified solicitor and holds an LL.B from the University of Liverpool.
Henrik Wareborn, CEO, said:
“We are very pleased to have David on board in this new company role and to be able to benefit from his specialist expertise. Velocys is accelerating into commercial deployment of our technology now after a long period of research and development, which requires support and leadership by our new highly qualified General Counsel.”
Velocys was pleased to attend the second meeting of the Jet Zero Council, the government-industry partnership focused on developing UK capabilities to deliver net zero emission commercial flight. Sustainable Aviation Fuel (SAF) is a key part of this initiative, and plans to support the rapid commercialisation of SAF in the UK were discussed at the meeting.
The meeting coincided with the launch of a new £15m ‘Green Fuels, Green Skies’ competition, aimed at supporting UK companies and projects to create first of a kind SAF facilities like the Altalto waste-to-fuels plant being developed by Velocys and British Airways in North East Lincolnshire.
Responding to the launch of the new competition, which was first announced as part of the Prime Minister’s Ten Point Plan for a Green Industrial Revolution, Andrew Morris, CFO of Velocys, said:
“The launch of the ‘Green Fuels, Green Skies’ competition is another positive signal that the Government wants to invest in the sustainable aviation fuel (SAF) industry in the UK. As Velocys continues to develop plans for the UK’s most advanced SAF facility, we welcome this move to accelerate projects like ours and to build the British SAF industry as part of a green recovery.
“Building such an industry also requires policy changes, notably the introduction of a robust revenue support mechanism for SAF production facilities. In the year we host COP26, such action and support will show the UK as a world leader and demonstrate how serious we are about Jet Zero.”
The UK Government’s Transport Secretary, Grant Shapps, has reiterated his support for sustainable aviation fuels (SAF) during an interview, saying, “If you’re going to fly around domestically, you will need to use sustainable aviation fuels”.
Speaking on BBC Radio 4’s Today programme following the publication of Sir Peter Hendy’s Interim Report on the Union Connectivity Review, Shapps told listeners that sustainable aviation is “not as far away as people think. Sustainable aviation fuel is already a reality.”
He said that decarbonisation was central to the UK Government’s agenda. “We’re about to produce the world’s first Transport Decarbonisation Plan which will look at our overall output of carbon – transport is the biggest contributor of all to carbon in this country now, nearly a third of it – and making sure we’re cutting that to zero so that by 2050 we are at net zero. Because we are leading the world in many of these areas.”
Velocys’ sustainable fuels technology will have a key role to play in facilitating the aviation sector’s move to net zero. SAF represents the here-and-now solution to aviation decarbonisation, requiring no modifications to existing aircraft or refuelling infrastructure. Appropriate policy support from the Government will help ensure that the UK becomes a world leader in SAF technologies.
The Transport Secretary’s comments can be listened to in full here (at 2.35).
Velocys is among a handful of key industry figures to give its take on the year ahead in the latest edition of leading industry publication, Biofuels International.
Velocys’ CEO, Henrik Wareborn, makes clear that 2021 will be a crucial year in the development of the UK’s Sustainable Aviation Fuels (SAF) industry, particularly in the context of COP26. He argues that “as hosts of the COP26 UN climate summit taking place in November, the UK has a unique platform and once-in-a-generation opportunity to demonstrate global leadership on tackling aviation emissions.”
Pointing to the progress that was made during 2020 with planning permission granted for the Altalto Immingham plant and the formation of the Jet Zero Council, 2021 is the time, he says, to “bring forward the necessary policy to match the ambition shown in 2020”.
This includes establishing certainty on the price that SAF producers can obtain for delivering the benefit of avoided carbon emissions, along with measures to ensure the long term market for the fuels.
Henrik Wareborn concludes, “This is the year for governments across the globe to take action and we look forward to the role the UK can play in spearheading this international movement.”
The full article can be read here.
Velocys took part in Tammy Klein’s Transport Energy Strategies podcast to discuss the future of Sustainable Aviation Fuels (SAF) and the role that Velocys is playing in leading industry efforts on both sides of the Atlantic.
Dr Neville Hargreaves, Vice President, Waste to Fuels, and Drew Miller, Project Finance Director, at Velocys talked to Tammy Klein about the company’s Bayou Fuels project in the USA and its Altalto plant in the UK.
Discussing how the SAF market will develop over the coming decade, Klein commented that policy favourability for the sector seems higher than it has ever been. Dr Hargreaves agreed, pointing to the clear direction in Europe for SAF mandates. He went on to emphasise the important role a ‘Contracts for Different’ approach could play in the UK market by stimulating investment into the sector with the potential to “advance the rollout of the SAF market by many years”.
Drew Miller spoke about regulatory developments in the US where there is increasing discussion around SAF tax credits through the low carbon fuel standard. On the idea of a national Low Carbon Fuel Standard (LCFS), he said, “I expect we’ll see more of a patchwork on the state level LCFS, but I would not discount a national LCFS. The whispers keep growing and don’t go away”.
To listen to the podcast in full, please click here.
Velocys has been featured in the Wall Street Journal in an article exploring how companies are working to turn household waste into low emissions fuels.
In the piece, How to transform garbage into greener fuels, Velocys’ planned Altalto Immingham plant is detailed, including the aim of producing 60 million litres of Sustainable Aviation Fuels (SAF) annually when commercial operations begin in 2025.
The article also notes that emissions from the SAF produced at Altalto are 70% lower than regular jet fuel and that with carbon capture technology, the SAF produced can have a net positive impact on the environment.
The full WSJ article can be read here.
Velocys plc (VLS.L), the sustainable fuels technology company, is pleased to announce the signing of a collaboration agreement with Toyo Engineering Corporation (Toyo) to start the development of their commercial projects to produce Sustainable Aviation Fuel (SAF) and other renewable fuels in Japan.
The agreement follows on from the successful work already conducted in 2020 between Velocys and Toyo at the biomass-to-jet-fuel demonstration facility in Japan. This included the provision of technical engineering and operational services, as well as the completed construction and delivery of Velocys’ Fischer-Tropsch (FT) technology.
As part of this new collaboration the parties have engaged in the preliminary engineering evaluation of the FT island in a joint effort to deliver a commercial scale biomass-to-jet fuel project in Japan.
As previously announced, Velocys will grant an exclusive right for Toyo to secure and use the licence and technical services of the Velocys FT Technology for the commercial plant in Japan. An advance deposit of $4 million was received in 2019 of which $3.5 million remains in escrow, which will be offset against future revenues.
In addition, the collaboration will extend to include the supply of the Velocys FT technology in other SAF, e-Fuels and biomass-to-liquids projects in the Japanese market. This will be led by Toyo, including other partners introduced by Toyo. Subsequent project execution for SAF, e-Fuels and other renewable fuel projects will be delivered by Toyo and their partners, potentially in Japan and other regions, with Velocys providing technical engineering and operational services around the FT technology.
Henrik Wareborn, CEO of Velocys, said:
“Velocys has a long-standing relationship with Toyo Engineering and today’s collaboration agreement further supports this commitment. It indicates that Velocys is now firmly in the phase of delivering our commercial scale technology to our clients’ commercial projects. Making our first steps into commercial delivery in the Japanese market strengthens our position in an additional geography to North America and Europe.
“Our clients recognise the importance of our here-and-now technology solution for commercial scale projects, not only greatly reducing Scope 3 life-cycle carbon emissions but also resulting in synthetic fuels with air quality advantages over conventional fuels. We look forward to working with Toyo and their partners to enable the supply of modern low greenhouse-gas synthetic fuels to the Japanese market.
“Whilst there is no immediate material impact on revenue, we are delighted that the collaboration provides a pathway to commercialisation in Japan.”
Haruo Nagamatsu, CEO of Toyo, said:
“After the successful collaboration with the demonstration plant in Japan, we are pleased to be moving onto the next stage of the plan. The commercial deployment of the integrated technology that has been demonstrated during 2020, including the Velocys FT Technology, is now underway with the first stages of the engineering designs. We are pleased to be working with Velocys and their technical team and look forward to continuing our relationship.”
—
Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) prior to its release as part of this announcement.
For further information, please contact:
Velocys
Henrik Wareborn, CEO
Andrew Morris, CFO
Lak Siriwardene, Head of Communications & Sustainability
+44 1865 800821
Panmure Gordon (UK) Limited (Nomad and Joint Broker)
Dan Norman (Corporate Broking)
Emma Earl (Corporate Finance)
John Prior (Corporate Finance)
+44 20 7886 2500
Shore Capital Stockbrokers Limited (Joint Broker)
Henry Willcocks (Corporate Broking)
Toby Gibbs (Corporate Advisory)
Sarah Mather (Corporate Advisory)
+44 20 7408 4090
Radnor Capital (Investor Relations)
Joshua Cryer
Iain Daly
+44 20 3897 1830
Field Consulting (General PR)
Robert Jeffery
+44 20 7096 7730
Notes to Editors
Velocys is an international UK-based sustainable fuels technology company. Velocys designed, developed and now licenses proprietary Fischer-Tropsch technology for the generation of clean, low carbon, synthetic drop-in aviation and road transport fuel from municipal solid waste and residual woody biomass.
Velocys is at present developing two reference projects: one in Natchez, Mississippi, USA (incorporating Carbon Capture, Utilisation and Storage) and one in Immingham, UK, to produce fuels that significantly reduce both greenhouse gas emissions and key exhaust pollutants for aviation and road transport. Originally a spin-out from Oxford University, in 2008 the Company acquired a US company based on complementary reactor technology developed at the Pacific Northwest National Laboratory. Velocys is headquartered in Oxford in the United Kingdom.
Velocys’ Dr Neville Hargreaves has given an update on the status of the Altalto project during an interview with Andy Comfort on BBC Radio Humberside.
Dr Hargreaves spoke of the strong partnership between Velocys and co-investor British Airways, along with the significant support for sustainable aviation fuels (SAF) amongst the wider aviation sector. From airports and engine manufacturers to aircraft manufacturers and airlines, there is recognition that “the whole industry needs to make this transformation.”
There was also discussion of the attractive investment potential presented by SAF, on which Dr Hargreaves noted, “This is a very attractive space for investors, it’s so aligned with the transition to low carbon energy – portfolios need projects like this in order to deliver what investors want”.
Dr Hargreaves concluded by saying that this year’s COP26 climate summit should provide further impetus for the Government to support the development of the UK’s domestic SAF industry.
BBC Radio Humberside interview (BBC Sounds):