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.
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.
“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.”
Henrik Wareborn, CEO
Philip Sanderson, CFO
Lak Siriwardene, Director of Communications
+44 1865 800821
Hugh Rich (Corporate Broking)
Emma Earl (Corporate Finance)
John Prior (Corporate Finance)
+44 20 7886 2500
Henry Willcocks (Corporate Broking)
Toby Gibbs (Corporate Advisory)
James Thomas (Corporate Advisory)
+44 20 7408 4090
Joshua Cryer
Iain Daly
+44 20 3897 1830
Helen Tarbet
Simon Compton
+44 20 7466 5000
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.
Bayou Fuels project will set new benchmark for carbon savings
Significantly improved negative carbon-intensity expected to be beneficial for planned project revenues and project financing.
Velocys plc (VLS.L), the sustainable fuels technology company, announces that its proposed facility Bayou Fuels in Natchez, Mississippi, US has been re-optimised for maximum decarbonisation to a negative carbon intensity of -375g CO2e/MJ (previously -144g CO2e/MJ); abating the carbon emissions from the equivalent of 1.1 million return economy trips from San Francisco to London per annum.
The significant improvement in negative carbon intensity has the potential to increase future revenue for Bayou Fuels and enhance the attractiveness of the project for third party project funding. In particular it will allow the Bayou Fuels project to derive maximum benefit from the 45Z tax credits under the Inflation Reduction Act of 2022, which incentivises the total amount of avoided carbon instead of the volume of sustainable fuel supplied, thus prioritising those technologies which offer routes to negative carbon-intensity fuels. 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. Pursuant to the existing Southwest offtake agreement, each gallon of SAF generated by the project is expected to generate tradable greenhouse gas credits for which Southwest guarantees, with respect to the SAF sold to it, a minimum price payable to the project. The enhanced negative carbon intensity will increase the credits generated under the Inflation Reduction Act (“IRA”) and the California Low Carbon Fuel Standard, improving the revenue and economic profile of the project.
The Bayou Fuels project, when it enters production in 2026, will now use renewable energy derived from sustainable biomass power instead of solar power which will approximately double the carbon savings for its aviation customers, thereby enabling maximum carbon abatement from the Velocys conversion pathway. The Bayou Fuels SAF prospective carbon intensity of -375 g CO2e / MJ avoids more than 15 times as much CO2 as a typical HEFA SAF gallon from soybean oil.
Velocys carried out preliminary boiler engineering evaluations, identified the most appropriate carbon capture system, confirmed the availability of sustainable biomass and re-evaluated the layout of the overall facility in order to validate the use of biomass power at the plant.
Henrik Wareborn, CEO, said:
“The Inflation Reduction Act means that future SAF production must focus on the number of tonnes of avoided carbon and not gallons of fuel produced. The use of biogenic feedstock, biomass power and CCS at our project in Mississippi equates to a yearly reduction of 1.8 million tonnes of carbon and means our technology is ideally positioned to benefit from the SAF tax credits of the IRA.”
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.
SAF focus day explores technology pathways for the decarbonisation of the aviation industry
Velocys VP Waste to fuels, Neville Hargreaves, will today speak at the Sustainable Aviation Fuel Focus Day of the Argus Biofuels Europe Conference. He joins other industry leaders in a debate, moderated by KPMG’s Rachel Solomon Williams, to explore key developments over the past year on regulation, supply and demand and alternative technology pathways for SAF. The event brings together key SAF producers, project developers, airlines, regulators and others involved in the decarbonisation of the aviation industry.
The session is expected to cover:
The three day conference explores recent changes in the European landscape from geopolitical tensions, the evolving policy in the EU and how biofuels will continue to play a role in energy transition.
Half-year report
Velocys plc (VLS. L), the sustainable fuels technology company, announces its interim results for the six months ended 30 June 2022.
Interim results for the six months ended 30 June 2022 (21-Sep-2022)
Velocys plc (VLS.L), the sustainable fuels technology company, announces that CEO Henrik Wareborn, will today be attending the 2022 Barclays CEO Energy-Power Conference in New York. He will be participating as a panellist on Sustainable Aviation Fuel (“SAF”) with Gerard Ostheimer, Co-Manager of the Clean Energy Ministerial Biofuture Campaign, a global forum to promote policies and programmes that advance clean energy technology.
The panel will be hosted by Will Thompson, Senior Research Analyst, Industrials and Energy sectors, Barclay’s Sustainable and Thematic Research Team, who recently published a report on the emerging need for SAF to decarbonise the hard-to-abate aviation industry.
Velocys’ IP-protected technology utilises abundant waste feedstocks, which includes forestry, residential and commercial, to enable the production of ultra-low carbon intensity synthetic aviation fuel. In November 2021, Velocys signed agreements for 100% of the SAF output expected from the Bayou Fuels facility with Southwest Airlines (a 15-year offtake agreement) and IAG/British Airways (MOU for a 10-year offtake agreement). Bayou Fuels is a planned cellulosic biofuels plant enabling the production of carbon negative fuel through the use of biogenic feedstock, renewable power, and carbon sequestration. The biorefinery will convert 3,000 tons/day of woody biomass forestry residues into 36 million gallons/year (nameplate) of renewable transportation fuels, predominantly SAF, with a negative carbon intensity.
The Barclays CEO Energy-Power Conference is one of the world’s premier equity research conferences, attended by many of the world’s leading energy companies and over 1,000 investors.
» More information on the conference
» Velocys’ most recent investor materials can be accessed here
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.
Legislation expected to underpin the financing of Velocys’ US sustainable aviation fuel reference project
Velocys plc (VLS.L), the sustainable fuels technology company, welcomes the passing of the “Inflation Reduction Act of 2022” by the US Congress in relation to key legislation tackling climate change. Velocys notes that the legislation is expected to be signed into law by President Biden shortly.
Subject to becoming law, this landmark piece of legislation allocates approximately $369 billion to reducing greenhouse gas emissions and incentivises expanded production and use of domestic clean energy. Sustainable Aviation Fuel (“SAF”) tax credits are an integral part of the Act, together with other incentives and mechanisms to accelerate the deployment of advanced fuel technologies, generating non-fossil fuels with a significantly reduced carbon intensity.
SAF is the only current commercially scalable decarbonisation route for the aviation sector. Multiple pathways to SAF production are needed to satisfy the aviation industry’s decarbonisation targets towards “net zero”. Velocys provides its clients with integrated IP-protected technology enabling the production of synthetic aviation fuel from a variety of sustainable feedstocks with ultra-low to negative carbon intensity.
The SAF tax credits and associated incentives are expected to underpin the financing of Bayou Fuels, Velocys’ advanced SAF reference project in Natchez, Mississippi, US. Bayou Fuels is a planned cellulosic biofuels plant enabling the production of carbon negative fuel through the use of biogenic feedstock, renewable power, and carbon sequestration. The biorefinery will convert 3,000 tons/day of woody biomass forestry residues into 36 million gallons/year (nameplate) of renewable transportation fuels, predominantly SAF, with a negative carbon intensity. The biofuels produced will adhere to both the US Renewable Fuel Standard (“RFS”) and the Low Carbon Fuels Standard (“LCFS”) and earn additional incentives via the associated Renewable Identification Number (“RIN”) and LCFS credits.
As announced in November 2021, Velocys has already secured long-term offtake arrangements for 100% of the SAF output expected from the Bayou Fuels facility with Southwest Airlines (a 15-year agreement) and IAG/British Airways (MOU for a 10-year agreement) avoiding 8.8 million tonnes of CO2 over the term of the off-takes. This new climate legislation is expected to allow finalisation of conversion of the MOU to a full offtake agreement.
This critical legislative development in the US follows last month’s launch by the UK Government’s Department for Transport of its Jet Zero Strategy, setting out the Government’s approach for achieving net zero aviation by 2050. This includes an ambition for a minimum of five commercial-scale SAF plants to be under construction in the UK by 2025, and a mandate for the equivalent of at least 10% SAF to be blended into conventional aviation fuel by 2030. Velocys and British Airways are jointly developing the Altalto project, which is to build a full scale plant in Immingham, UK, to make SAF from commercial and residential residual waste, in anticipation of UK policy incentives competitive with those announced by the US. Importantly, the UK mandate is to be expressed in terms of greenhouse gas reductions, rather than simple volume, which will benefit Altalto due to its ultra-low carbon intensity.
Henrik Wareborn, CEO, said:
“The legislation passed in the US is of historic significance, putting the United States on a path to lower its emissions significantly by 2030, and beyond. We believe this landmark legislation represents a compelling model which other governments will seek to follow, in particular in its focus on total amount of avoided carbon instead of volume of sustainable fuel supplied, thus prioritising those technologies which offer routes to negative carbon intensity fuels.
“This development, coupled with the UK’s launch of its Jet Zero strategy, represents a major endorsement of Sustainable Aviation Fuel, and Velocys’ proprietary technology to produce it.”
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.