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Velocys, the sustainable fuels technology company, is pleased to announce its unaudited preliminary results for the year ended 31 December 2022 (“FY22”).

» FY2022 Results

Velocys plc (VLS.L), the sustainable fuels technology company, is pleased to announce that further to the award of the grant from the UK Government’s Department for Transport (“DfT”) Advanced Fuel Funds of up to £27 million for the Altalto Immingham Sustainable Aviation Fuel (“SAF”) Project, announced on 12 December 2022, Altalto Ltd* has completed the work necessary to claim the first tranche (£7 million) of the grant up to 31 March 2023. In addition, as planned, the project has obtained the first tranche of private funding for the period from 1 April 2023 from its existing private sector participants.

The Altalto project’s aim is to deliver a commercial waste-to-SAF plant in Immingham, UK. The DfT grant and matched funding will enable Altalto to complete the Front-End Engineering Design (“FEED”) stage of the project. Following the completion of FEED and a successful final investment decision, construction will commence in 2025 with full commercial operation expected in 2028.

Since the award of the DfT grant in December, the Altalto Immingham Project has entered into a number of technology license and engineering services agreements with project technology licensors and the FEED contract with Bechtel Limited, utilising the first tranche of grant funds provided by the DfT. Pursuant to the terms of the grant, further draw down of the grant is subject to demonstration of project milestones with matched funding requirements to be met over the two years to 31 March 2025.

In March 2023, the Company announced the appointment of a leading global investment bank to advise on the financing of Velocys’ Reference Projects and to assist in obtaining the matched funding from private sector investors, which is on track to be in place during Q4 2023.

As previously announced, Velocys’ cash contribution to the Altalto Project over two years from April 2023, including its contribution to the first tranche of private funding of £1 million, is not expected to exceed £8 million, with Velocys intending to recover any funding it provides at the earlier development stages (as from 1 April 2023 onwards) following receipt of third party project investment.

* a wholly owned subsidiary of the Company.

This announcement contains inside information for the purposes of the UK Market Abuse Regulation.

For further information, please contact:

Velocys
Henrik Wareborn, CEO
Philip Sanderson, CFO
+44 1865 800821

Panmure Gordon (UK) Limited (Nomad and Joint Broker)
Hugh Rich (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)
James Thomas (Corporate Advisory)
+44 20 7408 4090

Radnor Capital (Investor Relations)
Joshua Cryer
Iain Daly
+44 20 3897 1830

Buchanan (Financial PR)
Helen Tarbet
Simon Compton
+44 20 7466 5000

— Ends —

Notes to Editors

Velocys is an LSE-listed, international sustainable fuels technology company, traded on the AIM, providing customers with a technology solution to enable the production of negative Carbon Intensity synthetic, drop-in fuels from a variety of waste materials. Synthetic fuel is the only commercially available, permanent alternative to fossil aviation fuels. The Velocys technology is IP-protected in all major jurisdictions.

Two reference projects (Bayou Fuels, US, and Altalto Immingham, UK) are designed to accelerate the adoption and standardise the Velocys proprietary Fischer Tropsch (FT) technology with an integrated end to end solution, including renewable power and carbon sequestration.

Velocys is enabling commercial scale synthetic fuel production in response to the clean energy transition, with significant additional positive air quality impacts.

Velocys plc (VLS.L), the sustainable fuels technology company, welcomes yesterday’s consultation paper from the UK Government which contains a number of proposals aimed at supporting and financing the development of the sustainable aviation fuel (“SAF”) industry. Velocys believes this will help to support the further development of its UK reference project, Altalto Immingham and other UK pipeline opportunities, building on the recent UK government grants awarded from the Advanced Fuel Fund.

The Government has confirmed its desire to establish the UK as a global leader in the development, production and use of SAF by creating secure and growing SAF demand, kickstarting a domestic SAF industry and working in partnership with industry and investors to build long term supply. Yesterday’s consultation comes amid growing support for decarbonisation and further supports the UK Government’s ambition of reaching net zero by 2050 and its Jet Zero strategy. The Gasification plus Fischer Tropsch (FT) process has been identified as the main pathway to sustain SAF uptake to 2030 and beyond. Velocys’ patented FT process is well positioned to fulfil this demand.

The proposed SAF mandate offers a guaranteed level of demand and creates a long-term requirement to supply SAF, provides incentives to SAF producers in the form of tradeable certificates and signals the vital role SAF will play in the future of UK aviation. The tradable certificates are intended to close the gap between the cost of jetfuel and the cost of SAF, with additional certificates awarded in proportion to avoided carbon dioxide emissions.

The proposals in this consultation will help support the ongoing development and financing of the Company’s Altalto Immingham reference project. As announced in December 2022, Altalto Immingham was awarded £27 million from the Department for Transport’s Advanced Fuel Fund to support Front End Engineering Design, the final engineering phase required prior to construction, subject to matched funding.  

Due to begin commercial operation in 2028, the biorefinery is expected to be one of the first commercial scale waste-to-jet fuel facilities in the UK. It will convert over half a million tonnes per day of commercial, industrial and municipal solid waste into 20 million gallons per year of sustainable fuel, with an overall lifecycle emissions saving of more than 300,000 tonnes carbon dioxide per year, equivalent to taking 140,000 cars off the road.

Henrik Wareborn, CEO, said: “Velocys’ technology is immediately ready to support commercial scale production of SAF with ultra-low carbon intensity and input from a range of feedstocks.

“There is a clear groundswell of legislative and policy support for the use of sustainable aviation fuel with the Inflation Reduction Act in the US, the ReFuelEU initiative in Europe and now today’s news from the UK. This level of government support is critical, so that industry and policy can work in parallel and at speed to reduce emissions. There is still a need for a clear mechanism to ensure price stability for SAF, but the proposed mandate is an important step in the right direction.

“Today’s news further underpins the investment case for our Altalto reference project in Immingham. The project will put the UK firmly at the forefront of the global move to decarbonise the aviation sector.”

For further information, please contact:

Velocys
Henrik Wareborn, CEO
Philip Sanderson, CFO
+44 1865 800821

Panmure Gordon (UK) Limited (Nomad and Joint Broker)
Hugh Rich (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)
James Thomas (Corporate Advisory)
+44 20 7408 4090

Radnor Capital (Investor Relations)
Joshua Cryer
Iain Daly
+44 20 3897 1830

Buchanan (Financial PR)
Helen Tarbet
Simon Compton
+44 20 7466 5000

— Ends —

Notes to Editors

Velocys is an LSE-listed, international sustainable fuels technology company, traded on the AIM, providing customers with a technology solution to enable the production of negative Carbon Intensity synthetic, drop-in fuels from a variety of waste materials. Synthetic fuel is the only commercially available, permanent alternative to fossil aviation fuels. The Velocys technology is IP-protected in all major jurisdictions.

Two reference projects (Bayou Fuels, US, and Altalto, UK) are designed to accelerate the adoption and standardise the Velocys proprietary Fischer Tropsch (FT) technology with an integrated end to end solution, including renewable power and carbon sequestration.

Velocys is enabling commercial scale synthetic fuel production in response to the clean energy transition, with significant additional positive air quality impacts.

Velocys plc (VLS.L), the sustainable fuels technology company, is pleased to announce that it has completed the appointment of a leading global investment bank to advise it on the financing of its two key technology reference projects; the Bayou Fuels project in Natchez, Mississippi, and the Altalto Immingham project in the UK.

Henrik Wareborn, CEO, said:
“Following the recent announcement of our master relationship agreement with Bechtel, today’s announcement further supports the acceleration of our commercial and strategic vision for Velocys.”


For further information please refer to the Notes to Editors or please contact:

Velocys
Henrik Wareborn, CEO
Philip Sanderson, CFO
+44 1865 800821

Panmure Gordon (UK) Limited (Nomad and Joint Broker)
Hugh Rich (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)
James Thomas (Corporate Advisory)
+44 20 7408 4090

Radnor Capital (Investor Relations)
Joshua Cryer
Iain Daly
+44 20 3897 1830

Buchanan (Financial PR)
Helen Tarbet
Simon Compton
+44 20 7466 5000


Notes to Editors

Velocys is an LSE-listed, international sustainable fuels technology company, traded on the AIM, providing customers with a technology solution to enable the production of negative Carbon Intensity synthetic, drop-in fuels from a variety of waste materials. Synthetic fuel is the only commercially available, permanent alternative to fossil aviation fuels. The Velocys technology is IP-protected in all major jurisdictions.

Two reference projects (Bayou Fuels, US, and Altalto, UK) are designed to accelerate the adoption and standardise the Velocys proprietary Fischer Tropsch (FT) technology with an integrated end to end solution, including renewable power and carbon sequestration.

Velocys is enabling commercial scale synthetic fuel production in response to the clean energy transition, with significant additional positive air quality impacts.

Velocys plc (AIM: VLS), the sustainable fuels technology company, is pleased to provide the following business and post close update for the 12 months ending 31 December 2022 (“FY22”).

Based on unaudited accounts for FY22, the financial performance of the Company was in line with market expectations. As of 31 December 2022, Velocys had a cash balance of £13.4 million (2021: £25.5 million). The Company expects to report its results for the year to 31 December 2022 in May 2023.

During 2022, Velocys saw the achievement of a number of key milestones and objectives which put the Company in a strong position to progress its reference projects through to key valuation inflection points and build its commercial pipeline.

Business Scale-up and Delivery

Bayou Fuels Project (US)

Altalto and e-Alto Projects (UK)

Post year-end, Velocys has entered into a Master Relationship Agreement (“MRA”) with Bechtel Limited, one of the world’s most respected engineering companies. The MRA, which will be instrumental in delivering the next important milestones for the reference projects and future commercialisation, sets out a framework and roadmap for the parties to collaborate with each other with the objective of developing an EPC execution model for sustainable fuel plants.

The Company is also in the final stages of appointing a global investment bank as Financial Adviser to assist with, and advise on, the delivery of development capital into the Bayou Fuels (US) and Altalto (UK) projects. As this activity accelerates, we have commenced a broader recruitment programme with a focus on increasing our project engineering and business development capability.

2023 Outlook

Operations and Business Development

Bayou Fuels Project 

With the support of the Financial Adviser, the Company expects the Series A funding for the development capital for the Bayou Fuels project to be launched in Q2 2023, with an aim to enter in to FEED by Q4 2023, delivering a pathway to Financial Investment Decision (“FID”) in Q1 2025. Once the project enters FEED, the Company expects to generate revenues for its technology license and engineering service. Velocys expects to retain a reduced equity position in the Bayou project post the Series A fundraising.

Following FID in early 2025, the Company expects to enter into construction with commissioning and start up anticipated in 2028, at which point Velocys expects to be generating revenue from reactor and catalyst sales, engineering services and technology licensing.

The 15-year, fixed price, offtake agreement remains in place with Southwest Airlines, amended recently to reflect the updated project schedule, as well as a Memorandum of Understanding with IAG for a 10-year fixed price offtake for 100% of the SAF produced at the biorefinery.

As previously announced, the project has significantly improved its carbon intensity score from -144g CO2e/MJ to -375g CO2e/MJ through the provision of a biomass boiler renewable power solution with CCS integration. This improvement has the potential to increase future revenue for Bayou Fuels and further support third party project funding. The Inflation Reduction Act of 2022 supports the project greatly as the 45Z tax credits incentivises the total amount of avoided carbon rather than the volume of sustainable fuel supplied, therefore prioritises our technology which offers a direct route to negative carbon intensity fuels.

Altalto Project

A grant award of £27 million was received for this project from the DfT’s Advanced Fuels Fund, the highest such award from the DfT to any party involved in the competition. This award, along with private sector matched funding, will be used for the completion of the project FEED and places Altalto on a clear pathway to FID by the end of 2024 and recognises the progress that has been made in advancing the project. Altalto expects to enter into construction in 2025 with commissioning and start up anticipated in 2027, at which point Velocys expects to generate revenue from reactor and catalyst sales, engineering services and technology licensing.

Licensor and engineering service agreements are being finalised and, subject to contract, it is expected that Bechtel will commence FEED in Q2 2023. With the support of our Financial Adviser, matched funding will be sought in Q2 2023. This will provide an opportunity for new partners to participate in the early development capital ahead of FID, as well as the development of offtake arrangements. Velocys expects to retain a reduced equity position in the Altalto project post the funding. The project is being jointly developed with British Airways.

Henrik Wareborn, CEO, said:
“The progress and partnerships outlined in this business update reflect the significant achievements made in 2022 and Velocys’ position of strength in a rapidly evolving global market for advanced synthetic fuels technology.

“We have the here-and-now technology to enable SAF production close to sustainable feedstock sources to decarbonise the aviation industry at scale. In order for SAF production plants to be successful, several threads need to be in place, such as government regulatory support, abundant and sustainable feedstock, carbon capture and sequestration, supply of renewable power, and most of all, a technology that works. Velocys provides a uniquely integrated package with its IP-protected technology at its core.

“The progress we continue to make, supported by these new developments and the policy tailwinds, means we have a solid platform to deliver. Consequently, we are confident about the years ahead and our commercialisation strategy.”

This announcement contains inside information for the purposes of the UK Market Abuse Regulation.


For further information, please contact:

Velocys
Henrik Wareborn, CEO
Philip Sanderson, CFO
Lak Siriwardene, Director of Communications & Sustainability
+44 1865 800821

Panmure Gordon (UK) Limited (Nomad and Joint Broker)
Hugh Rich (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)
James Thomas (Corporate Advisory)
+44 20 7408 4090

Radnor Capital (Investor Relations)
Joshua Cryer
Iain Daly
+44 20 3897 1830

Buchanan (Financial PR)
Helen Tarbet
Simon Compton
+44 20 7466 5000


Notes to Editors

Velocys is an LSE-listed, international sustainable fuels technology company, traded on the AIM, providing customers with a technology solution to enable the production of negative Carbon Intensity synthetic, drop-in fuels from a variety of waste materials. Synthetic fuel is the only commercially available, permanent alternative to fossil aviation fuels. The Velocys technology is IP-protected in all major jurisdictions.

Two reference projects (Bayou Fuels, US, and Altalto, UK) are designed to accelerate the adoption and standardise the Velocys proprietary Fischer Tropsch (FT) technology with an integrated end to end solution, including renewable power and carbon sequestration.

Velocys is enabling commercial scale synthetic fuel production in response to the clean energy transition, with significant additional positive air quality impacts.

Velocys plc (VLS.L), the sustainable fuels technology company, is pleased to announce the execution of a master relationship agreement (“MRA”) with Bechtel Limited (“Bechtel”), one of the world’s most respected engineering companies. The MRA sets out a route map for the parties to collaborate with each other with the objective of developing an EPC execution model for the Company’s sustainable fuels projects.

This collaboration will initially focus on Velocys’ two main reference projects – Altalto Project in Immingham, UK and Bayou Fuels Project in the US – and the recently announced e-Alto power-to-liquids project in the UK, all subject to the terms of future contracts. However, the MRA also covers other third-party projects that may be introduced by either Bechtel or Velocys.

Under a separate continuing technical services agreement, Bechtel is providing front end project engineering and other technical services to support the development of Velocys’ Sustainable Aviation Fuel (“SAF”) project portfolio. In particular Bechtel is preparing to commence work on delivery of the Altalto Project Front-End Engineering and Design phase (“FEED”) following the recent UK government grant funding of up to £27 million awarded to Velocys.

Henrik Wareborn, CEO of Velocys, said:
“The master relationship agreement with Bechtel is an important step towards the provision of world class EPC capability and capacity to the expanding Velocys project portfolio. Bechtel is one of the world’s most respected engineering companies. Working with Bechtel will give added value to current and future clients with respect to successful project delivery.”

Paul Marsden, President, Bechtel Energy, said:
“We are committed to supporting revolutionary energy transition projects designed to reduce global carbon emissions. As part of Bechtel’s portfolio in sustainable fuels, we are excited to collaborate with Velocys and look forward to realising the potential of these facilities to introduce sustainable fuel options for global markets.”

Certain information contained in this announcement may constitute 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 refer to the Notes to Editors or please contact:

Velocys
Henrik Wareborn, CEO
Philip Sanderson, CFO
Lak Siriwardene, Director of Communications & Sustainability
+44 1865 800821

Panmure Gordon (UK) Limited (Nomad and Joint Broker)
Hugh Rich (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)
James Thomas (Corporate Advisory)
+44 20 7408 4090

Radnor Capital (Investor Relations)
Joshua Cryer
Iain Daly
+44 20 3897 1830

Buchanan (Financial PR)
Helen Tarbet
Simon Compton
+44 20 7466 5000


Notes to Editors

Velocys is an LSE-listed, international sustainable fuels technology company, traded on the AIM, providing customers with a technology solution to enable the production of negative Carbon Intensity synthetic, drop-in fuels from a variety of waste materials. Synthetic fuel is the only commercially available, permanent alternative to fossil aviation fuels. The Velocys technology is IP-protected in all major jurisdictions.

Two reference projects (Bayou Fuels, US, and Altalto, UK) are designed to accelerate the adoption and standardise the Velocys proprietary Fischer Tropsch (FT) technology with an integrated end to end solution, including renewable power and carbon sequestration.

Velocys is enabling commercial scale synthetic fuel production in response to the clean energy transition, with significant additional positive air quality impacts.

Altalto Project, Immingham, UK

The Altalto Immingham Project is a joint development between Velocys and British Airways. The plant will have a nameplate capacity of approximately 80 million litres/year of SAF and naphtha, with negative Carbon Intensity, made from residual commercial and municipal solid waste. Altalto Immingham will also produce a concentrated stream of carbon dioxide ready for sequestration. In December 2022, Altalto was awarded a grant of up to £27 million by the UK Department for Transport (“DfT”), subject to matched funding, to deliver the Front End Engineering Design stage of the project, ahead of construction to begin in 2025.

Bayou Fuels Project, Natchez, Mississippi, US

This plant is expected to produce approximately 125 million litres/year of sustainable aviation fuel (SAF) and naphtha, with negative Carbon Intensity, made from woody biomass residues from the pine plantations in the counties surrounding Natchez, Mississippi. The project includes the use of renewable power and sequestration of the plant’s by-product carbon dioxide. The sustainable fuels produced from the facility will meet all requirements and regulations to be sold in the US generating Federal and State credits under RFS-2 and the relevant State Low Carbon Fuel Standards.

The Bayou Fuels project has a 15-year fixed price offtake agreement with Southwest Airlines, which, together with a further MOU for a 10-year fixed price offtake, account for in aggregate 100 per cent of the SAF produced and underwrites a floor on certain credits.

e-Alto Project, UK

Velocys was also awarded a grant of up to £2.5 million by the DfT for the e-Alto project in December 2022. This allows Velocys and its partners to conduct feasibility, technical validation, site selection and pre-FEED engineering for a plant to produce SAF from carbon dioxide and hydrogen made using renewable (decarbonised) electricity, in the UK.

About Bechtel

Bechtel is a trusted engineering, construction and project management partner to industry and government. Differentiated by the quality of our people and our relentless drive to deliver the most successful outcomes, we align our capabilities to our customers’ objectives to create a lasting positive impact. Since 1898, we have helped customers complete more than 25,000 projects in 160 countries on all seven continents that have created jobs, grown economies, improved the resiliency of the world’s infrastructure, increased access to energy, resources, and vital services, and made the world a safer, cleaner place.

Bechtel serves the Energy; Infrastructure; Manufacturing & Technology; Mining & Metals; and Nuclear, Security & Environmental markets. Our services span from initial planning and investment, through start-up and operations.

www.bechtel.com

Velocys, the sustainable fuels technology company, announced on 12 December 2022 that it had received a grant of £27m from the Department for Transport (“DfT”) Advanced Fuels Fund competition for the Altalto Sustainable Aviation Fuel (“SAF”) project, which is being developed under an existing Joint Development Agreement between Velocys and British Airways to deliver a commercial waste-to-SAF plant in Immingham, UK. Velocys also announced that it had received a separate DfT grant of £2.5m to contribute its technology to an e-fuels project in the UK in collaboration with a number of new and existing partners.

This morning’s announcement by DfT confirms the strategic importance of this award as part of UK Government’s drive to have five SAF plants in construction by 2025.

The £165 million Advanced Fuels Fund provides grants to support the development of commercial-scale SAF plants that are at an advanced stage, enabling them to become ready for investment and construction. The key objective of the Advanced Fuels Fund is to kick-start the UK advanced fuels sector with the commercial deployment of innovative fuel production technologies, such as Velocys’ IP-protected technology, that are capable of significantly reducing lifecycle carbon emissions in the aviation industry.

Transport Secretary Mark Harper said:
“Using waste or by-products to refuel airliners sounds like a flight of fancy, but thanks to £165 million of Government funding it’s going to help us make guilt-free flying a reality.

“It’s exactly this kind of innovation that will help us create thousands of green jobs across the country and slash our carbon emissions.”

Jonathon Counsell, IAG’s Group Head of Sustainability, said:
“Investing in sustainable aviation fuels (SAF) is one of the best opportunities our industry has to decarbonise. We’re delighted that Velocys has received crucial financial support in the UK from the Department for Transport Advanced Fuels Fund.

“IAG has committed US$865 million in SAF purchases and investments to date. With the right policy support to incentivise further investment, the UK could see many SAF plants built over the next decade, creating 6,500 jobs, and saving over three million tonnes of CO2 per year as well as improving the UK’s energy security.”

Cllr Philip Jackson, leader of North East Lincolnshire Council, said:
“I’m really pleased to see this announcement for the project. We have been working with Velocys for several years now – investment on this scale will always take a significant length of time, but this will allow the plans to progress to the next stage.

“We have been working to make North East Lincolnshire a top competitor for green energy investment decisions, and we have grown our credentials, both onshore and offshore, greatly in the last few years.

“We will continue to work with Velocys to land this important project, and help create local jobs for local people.”

Henrik Wareborn, Velocys CEO, said:
“We are encouraged to see that the UK Government is taking seriously the urgent need to transition to lower carbon travel and transport, with its stated ambition of having at least five commercial scale SAF plants under construction in the UK by 2025. Velocys’ IP protected technology provides a pathway to large-scale production of SAF, which is an essential element for achieving net-zero-carbon air travel.”


For further information, please contact:

Velocys
Henrik Wareborn, CEO
Philip Sanderson, CFO
Lak Siriwardene, Director of Communications
+44 1865 800821

Buchanan (Financial PR)
Helen Tarbet
Simon Compton
+44 20 7466 5000


Notes to Editors

Velocys is an LSE-listed, international sustainable fuels technology company, traded on the AIM, providing customers with a technology solution to enable the production of negative Carbon Intensity synthetic, drop-in fuels from a variety of waste materials. Synthetic fuel is the only commercially available, permanent alternative to fossil aviation fuels. The Velocys technology is IP-protected in all major jurisdictions.

British Airways has an option to acquire a share of Altalto Limited, the 100% owner of Altalto Immingham Limited, from Velocys.

Two reference projects (Bayou Fuels, US, and Altalto, UK) are designed to accelerate the adoption and standardise the Velocys proprietary Fischer Tropsch (FT) technology with an integrated end to end solution, including renewable power and carbon sequestration.

Velocys is enabling commercial scale synthetic fuel production in response to the clean energy transition, with significant additional positive air quality impacts.

Velocys was featured in The Daily Telegraph in an article about the future of sustainable aviation fuel: “How the biggest ever jet engine built by Rolls-Royce is paving the way for an era of low-cost green flying”.

The article explored Rolls Royce’s new UltraFan engine and its potential to narrow the cost of sustainable aviation fuel. The article shows that SAF, which requires minimal modification to existing jet engines and significantly reduces lifecycle carbon emissions, is the best answer to long haul air travel.

Velocys CEO Henrik Wareborn is quoted at length, explaining that whilst that SAF is more expensive than fossil jet fuel today, higher tax on fossil fuels and low tax on green fuels will change this: “You need to ask yourself what price should those burning fossil fuels that release a huge amount of CO2 into the atmosphere pay?”

SAF is becoming increasingly attractive to the airline industry as favourable policy-making in the US (Inflation Reduction Act of 2022) and EU (new EU deal on carbon border tax) incentivises SAF over polluting fossil fuels.

Velocys plc (VLS.L), the sustainable fuels technology company, announces that in addition to the £27m grant from the UK Department for Transport’s (“DfT”) Advanced Fuels Fund for the Altalto waste-to-SAF project, announced separately today, it has also been awarded a grant of £2.5 million from the same fund, to contribute its technology to an e-fuels project in the UK in collaboration with a number of new and existing partners (“E-Fuels Project”).

The Advanced Fuels Fund provides grants to support the development of commercial-scale SAF plants and has a specific total allocation of £22 million for the development of e-fuels projects. These are fuels produced using renewable (decarbonised) electricity rather than vegetable oils or waste.

The £2.5 million grant awarded to Velocys under this e-fuels allocation will be used in conjunction with the E-Fuels Project’s partners to conduct feasibility, technical validation, site selection and pre-FEED engineering for such a project, to make SAF from carbon dioxide and hydrogen, in the UK.

The E-Fuels Project, to be known as “e-Alto”, will be managed by Velocys, partners include Clariant Catalysts (“Clariant”), Technip Energies (“T.EN”) and British Airways.

The key objective of the Advanced Fuels Fund is to kick-start the UK advanced fuels sector with the commercial deployment of innovative fuel production technologies that are capable of significantly reducing UK aviation carbon dioxide emissions.

Henrik Wareborn, CEO, said:
“We are very pleased to have been awarded this grant as it reflects the capability of the Velocys technology use of different feedstocks, ability to attract world class partners, and access to a new project portfolio. Our IP-protected technology enables the production of synthetic liquid fuels such as SAF for the airline industry, from renewable power and CO2, as well as from sustainable waste and biomass. This award also shows strong commitment from the UK Government to accelerate the Department for Transport’s Jet Zero strategy for achieving net zero aviation by 2050.”


For further information, please contact:

Velocys
Henrik Wareborn, CEO
Philip Sanderson, CFO
Lak Siriwardene, Director of Communications
+44 1865 800821

Panmure Gordon (UK) Limited (Nomad and Joint Broker)
Hugh Rich (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)
James Thomas (Corporate Advisory)
+44 20 7408 4090

Radnor Capital (Investor Relations)
Joshua Cryer
Iain Daly
+44 20 3897 1830

Buchanan (Financial PR)
Helen Tarbet
Simon Compton
+44 20 7466 5000


Notes to Editors

Velocys is an LSE-listed, international sustainable fuels technology company, traded on the AIM, providing customers with a technology solution to enable the production of negative Carbon Intensity synthetic, drop-in fuels from a variety of waste materials. Synthetic fuel is the only commercially available, permanent alternative to fossil aviation fuels. The Velocys technology is IP-protected in all major jurisdictions.

Two reference projects (Bayou Fuels, US, and Altalto, UK) are designed to accelerate the adoption and standardise the Velocys proprietary Fischer Tropsch (FT) technology with an integrated end to end solution, including renewable power and carbon sequestration.

Velocys is enabling commercial scale synthetic fuel production in response to the clean energy transition, with significant additional positive air quality impacts.

Significant non-dilutive project funding from UK Government Advanced Fuels Fund to advance UK Altalto Immingham reference project

Velocys plc (VLS.L), the sustainable fuels technology company, announces that its wholly owned subsidiary, Altalto Immingham Ltd., has been awarded a grant of up to £27 million from the UK Department for Transport’s (“DfT”) Advanced Fuels Fund for the Altalto Immingham Sustainable Aviation Fuel (“SAF”) project. The purpose of this project, which is being developed under an existing Joint Development Agreement between Velocys and British Airways PLC (“British Airways”) is to deliver a commercial waste-to-SAF plant in Immingham, UK. The grant will allow Altalto Immingham to deliver the Front-End Engineering Design (“FEED”) stage of the project.

The grant funding will be distributed over the grant period from December 2022 to March 2025 and is conditional upon receipt of private sector matched funding. Altalto Immingham has obtained Letters of Intent from a number of existing and new potential partners for the private-sector matched funding requirement with the first tranche of private funding due to be in place by April 2023.

Velocys’ cash contribution into the Altalto Immingham project over the two years from April 2023 is not expected to exceed £8 million, and this sum may be reduced by bringing in additional investors into the project.

The grant funding will be used for the completion of the project FEED, which will incorporate the technology packages of the licensors (including Velocys) and develop the basis for the Engineering, Procurement and Construction (“EPC”) contract. In parallel, the commercial agreements required to support the plant will be put in place. All of these will support the Final Investment Decision ahead of commencement of construction, which is targeted to occur in 2025, consistent with the UK Government’s ambition. In line with its commercial strategy, Velocys will charge license fees for the utilisation of its proprietary technology at commencement of construction. Based on this timing, commissioning of the Altalto Immingham project is expected to begin in 2027.

Velocys has previously received grants for the Altalto Immingham project of £1.7 million from the DfT’s Green Fuels, Green Skies competition and a series of grants totaling £934,000 from the Future Fuels for Flight and Freight competition, the predecessor to Green Fuels, Green Skies.

The £165 million Advanced Fuels Fund provides grants to support the development of commercial-scale SAF plants that are at an advanced stage, enabling them to become ready for investment and construction. The funding is aimed at achieving the UK Government’s stated ambition of having at least five commercial scale SAF plants under construction in the UK by 2025. The key objective of the Advanced Fuels Fund is to kick-start the UK advanced fuels sector with the commercial deployment of innovative fuel production technologies that are capable of significantly reducing near-term UK aviation carbon dioxide emissions.

Henrik Wareborn, CEO, said:

“We are extremely pleased the UK Government has awarded Velocys this important grant which will deliver the FEED stage for our Altalto Immingham reference project accelerating the commercial deployment of Velocys’ technology and delivering cashflow. We welcome this clear commitment from Government to having commercial SAF plants built in the UK. We are delighted that a number of large commercial companies have indicated their support for the project through indications of matched funding contribution and the provision of services to progress the project.”

For further information, please contact:
Velocys

Henrik Wareborn, CEO
Philip Sanderson, CFO
Lak Siriwardene, Director of Communications
+44 1865 800821

Panmure Gordon (UK) Limited (Nomad and Joint Broker)

Hugh Rich (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)
James Thomas (Corporate Advisory)
+44 20 7408 4090

Radnor Capital (Investor Relations)

Joshua Cryer
Iain Daly
+44 20 3897 1830

Buchanan (Financial PR)

Helen Tarbet
Simon Compton
+44 20 7466 5000

Notes to Editors

Velocys is an LSE-listed, international sustainable fuels technology company, traded on the AIM, providing customers with a technology solution to enable the production of negative Carbon Intensity synthetic, drop-in fuels from a variety of waste materials. Synthetic fuel is the only commercially available, permanent alternative to fossil aviation fuels. The Velocys technology is IP-protected in all major jurisdictions.

British Airways has an option to acquire a share of Altalto Limited, the 100% owner of Altalto Immingham Limited, from Velocys.

Two reference projects (Bayou Fuels, US, and Altalto, UK) are designed to accelerate the adoption and standardise the Velocys proprietary Fischer Tropsch (FT) technology with an integrated end to end solution, including renewable power and carbon sequestration.

Velocys is enabling commercial scale synthetic fuel production in response to the clean energy transition, with significant additional positive air quality impacts.