Dr Neville Hargreaves, Velocys VP Waste to Fuels, was invited to give evidence to the UK Parliament’s Transport Select Committee inquiry on ‘Fuelling the Future: motive power and connectivity’. Dr Hargreaves gave evidence alongside other industry experts and discussed Velocys’ technology as an enabler of sustainable fuels in the UK, the industrial opportunity for commercialising SAF in the UK, and the policy required to support a UK SAF industry.
The Transport Select Committee is a group of Members of Parliament nominated by the House of Commons to scrutinise the Department for Transport. Its formal remit is to hold Ministers and the Department for Transport to account, and to investigate matters of public concern where there is a need for accountability to the public through Parliament.
Velocys has joined Zero Carbon Humber (ZCH), a partnership to build the world’s first net zero industrial cluster and decarbonise the North of England. ZCH will establish critical infrastucture to capture CO2 emissions and supply negative carbon power across the Humber.
The Altalto project in Immingham, in collaboration with British Airways, is located on the Humber estuary. It is expected to be Europe’s first commercial waste-to-jet-fuel facility processing household and commercial waste destined for landfill or incineration to produce sustainable aviation fuel (SAF). Carbon capture and storage can enable the production of fuels with net negative carbon intensity. Velocys has the technology solution to enable the production of SAF to help decarbonise aviation and help meet net zero targets.
Dr Neville Hargreaves, Velocys VP Waste to Fuels, said:
“Velocys is delighted to be joining the impressive group of companies that make up Zero Carbon Humber. The Altalto project, in collaboration with British Airways, can deliver zero carbon flight this decade and is an example of the new industries enabled by carbon capture and storage, bringing skilled green jobs to the region.”
Notes to editors:
The Zero Carbon Humber (ZCH) Partnership aims to decarbonise the UK’s largest and most carbon-intensive industrial cluster, supporting the UK net zero target. With its first project aiming to start up in 2026, ZCH will establish critical infrastructure to capture at least 17 million tonnes of CO2 emissions per year and supply up to 10 gigawatts of hydrogen in industry and power projects across the Humber by the mid-2030s. ZCH will contribute significantly to UK ambitions for 10 million tonnes of CO2 capture and 5GW of low carbon hydrogen production by 2030, and provide carbon negative power from biomass with carbon capture technology (BECCS).
The ZCH Partnership now includes Associated British Ports, British Steel, Centrica Storage Ltd, Drax Group, Equinor, INEOS Acetyls, Mitsubishi Power, National Grid Ventures, px Group, SSE Thermal, Saltend Cogeneration Company Limited, Uniper, the University of Sheffield Advanced Manufacturing Research Centre (AMRC), and Velocys. To learn more, please visit www.zerocarbonhumber.co.uk
Velocys plc (AIM: VLS), the sustainable fuels technology company, today announces that further to the announcement of 25 November 2021 and following completion of the fundraising, Altalto Immingham Ltd (“Altalto”) (a subsidiary of Velocys) has exercised an option agreement to acquire Rula Developments (Immingham) Limited (“RDIL”) with an initial part-payment of £2.5 million. RDIL owns the site of the proposed Altalto project, near Immingham in North East Lincolnshire, which is being jointly developed by British Airways PLC (“BA”) and Velocys.
Pursuant to the agreement, the total consideration to acquire the site is being satisfied by a £2.5 million part-payment, funded through an inter-company loan from Velocys to Altalto. A further deferred consideration amount of up to £8.5 million is payable by 30 September 2022. As previously announced, Velocys is discussing the onward purchase of RDIL (and subsequent grant back to Altalto of a future option to purchase RDIL within 3 years) with a third party with the intention that the purchase price for RDIL paid by the third party will cover the remaining consideration payable by Altalto in 2022.
Detailed engineering for the Altalto project is expected to commence in 2023. Financial close is expected in 2024, with construction of the plant being targeted to commence in 2024 and to be completed by mid-2026, following which commissioning and start-up will commence, with full scale commercial operation expected in 2027.
This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation 596/2014/EU (MAR).
Enquiries:
Velocys
Henrik Wareborn, CEO
Andrew Morris, CFO
Lak Siriwardene, Director of Communications & Sustainability
+44 1865 800821
Panmure Gordon (UK) Limited (Nomad and Joint Broker)
Emma Earl (Corporate Finance)
John Prior (Corporate Finance)
Hugh Rich (Corporate Broking)
+44 20 7886 2500
Shore Capital Stockbrokers Limited (Joint Broker)
Henry Willcocks (Corporate Broking)
Toby Gibbs (Corporate Advisory)
James Thomas (Corporate Advisory)
Liam Zabludowicz (Corporate Advisory)
+44 20 7408 4090
Buchanan (Financial PR)
Helen Tarbet
Simon Compton
+44 20 7466 5000
Radnor Capital (Investor Relations)
Joshua Cryer
Iain Daly
+44 20 3897 1830
Notes to Editors
Velocys is an LSE-listed, international sustainable fuels technology company, traded on the AIM, providing clients with a technology solution to enable the production of negative Carbon Intensity synthetic, drop-in fuels from a variety of waste materials. SAF (‘Sustainable Aviation Fuel’) is the only commercially available, permanent alternative to fossil aviation fuels.
The technology is IP-protected in all major jurisdictions.
Two reference projects in the US and UK (Bayou Fuels and Altalto) 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 SAF production in response to the clean energy transition.
Velocys technology pathway is enabling the next generation of low carbon sustainable fuels with significant additional positive air quality impacts.
Result-of-GM-and-Open-Offer-15-Dec-2021
Results of Placing 26 November 2021
Proposed Placing and Open Offer announcement 25-Nov-2021
Velocys has joined the SME Climate Hub, a global initiative launched to help small and medium-sized companies to adopt sustainable measures as part of their activities to achieve the most ambitious target set in the Paris Agreement: net zero greenhouse gas emissions by 2050.
The SME Climate Hub is founded by the We Mean Business Coalition, Exponential Roadmap Initiative, the International Chamber of Commerce and the United Nations – through the ‘Race to Zero’ campaign – in collaboration with the University of Oxford and Normative. The Campaign is a global UN sponsored initiative that mobilises and urges businesses, cities, regions, investors and civil society to adopt crucial measures to significantly impact global emissions by 2030, as a first step to achieve carbon neutrality in the future.
Velocys views its commitment as a natural extension of its own suite of technology offerings and services which enable the production of sustainable fuels to decarbonise the aviation sector. This decarbonisation has a significant and urgent role to play in reaching net zero targets agreed by world leaders at COP26. In becoming part of the SME Climate Hub, Velocys is seeking to strengthen this network of companies adopting and espousing sustainable measures in order to hasten the collective path to net zero.
Alongside offtake agreement with Southwest Airlines, offtake in place for 100% of Bayou Fuels SAF
Velocys plc (VLS. L), the sustainable fuels technology company, is pleased to announce that its wholly owned subsidiary, Velocys Renewables LLC, has entered into a Memorandum of Understanding (“MoU”) for the offtake of Sustainable Aviation Fuel (“SAF”) to be produced at the Bayou Fuels project in Mississippi, USA (“Project”), with International Consolidated Airlines Group S.A. (“IAG”).
The MoU covers the purchase by IAG’s constituent airlines, which includes British Airways, Aer Lingus and Iberia amongst others, of an expected 73 million gallons of SAF, in aggregate, at a fixed price. After blending, this will produce the equivalent, under US regulations, of 192 million gallons of net zero SAF (blended basis) during the term of the purchase contract, which will last for ten years from 2026, which is when the Project’s biorefinery is expected to begin delivering SAF. It represents one third of the facility’s planned annual output and complements the binding offtake agreement for the remaining two thirds annual output announced today with Southwest Airlines.
The intention of the parties is to convert the non-binding MoU, which includes all material terms for the offtake, into a definitive offtake agreement as soon as possible within the next six months; the MOU also includes an option for IAG to invest in the Project development phases.
The fixed price fuel purchase agreement includes a price support mechanism by IAG for the greenhouse gas credits associated with the SAF production. As a result, the agreement is expected to generate revenues of over $800M to the Project and achieve, under US regulations, an estimated total of 2.2 million tonnes of avoided CO2 over the term of the offtake.
The Velocys carbon mitigation technology will enable the commercial-scale production of a deeply negative SAF at the Bayou Fuels plant through the combination of biogenic feedstock, renewable power and carbon capture and storage.
Henrik Wareborn, CEO of Velocys, said:
“We are delighted that IAG, our partner for many years through our work with British Airways, intend to purchase a large volume of SAF from the Bayou Fuels project. This long-dated offtake, encompassing support for environmental credits, will provide certainty of revenue for the Project which should enable construction capital financing. We have now secured long term offtake clients for 100% of the expected SAF production and associated environmental credits for the Bayou Fuels facility.
“Velocys’ focus is now on accelerating technology delivery with our partners to allow client facilities, including Bayou Fuels, to reach Final Investment Decision and then go into construction. Our capital-light, technology-licensing model will enable many more aviation clients to transition to Sustainable Aviation Fuel as required by the race to Net Zero.”
Luis Gallego, CEO of IAG, said:
“IAG is investing US$400 million in the development of sustainable aviation fuel in the next 20 years. This new agreement is another important step towards achieving our goal of 10 per cent sustainable aviation fuel use by 2030.
“Sustainable aviation fuel is a critical element for the decarbonisation of the aviation industry. Clear policy support is needed to attract investment to construct the necessary plants to deliver enough supply for the airline industry. This project has benefitted from strong policy support from the US, creating highly valued green jobs and economic growth. We would encourage the UK and the EU to follow suit in supporting the development and deployment of green technologies including carbon capture.”
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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, 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)
Liam Zabludowicz (Corporate Advisory)
+44 20 7408 4090
Buchanan (Financial PR)
Helen Tarbet
Simon Compton
+44 20 7466 5000
Radnor Capital (Investor Relations)
Joshua Cryer
Iain Daly
+44 20 3897 1830
Notes to Editors
Velocys is an LSE-listed, international sustainable fuels technology company, traded on the AIM, providing clients with a technology solution to enable the production of negative Carbon Intensity synthetic, drop-in fuels from a variety of waste materials. SAF (‘Sustainable Aviation Fuel’) is the only commercially available, permanent alternative to fossil aviation fuels.
The technology is IP-protected in all major jurisdictions.
Two reference projects in the US and UK (Bayou Fuels and Altalto) 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 capture and storage. Velocys is enabling commercial scale SAF production in response to the clean energy transition.
Velocys technology pathway is enabling the next generation of low carbon sustainable fuels with significant additional positive air quality impacts.
Bayou Fuels project
The Bayou Fuels project in Natchez, Mississippi, US will take waste woody biomass and convert it into sustainable aviation fuel and naphtha using Velocys’ proprietary micro-channel FT reactors. The project will incorporate carbon capture and storage (CCS) to enable the commercial-scale production of SAF with an extremely negative carbon intensity. Integrating CCS and renewable power into the Bayou Fuels biorefinery maximises certain targeted revenue streams, such as those incentives derived from the California Low Carbon Fuels Standard, and U.S. 45Q tax credits. This is expected to have a meaningful positive impact on project returns.
Project financing for the final engineering phase of the Bayou Fuels project is targeted to occur in HY1 2022. The plant is designed to produce approximately 22 million US gallons per annum of SAF, which in turn after blending will produce approximately 57 million US gallons per annum of net zero SAF under US regulations.
Alongside offtake MoU with IAG, commitment for 100% of Bayou Fuels SAF
Velocys plc (VLS. L), the sustainable fuels technology company, is pleased to announce that its wholly owned subsidiary, Velocys Renewables LLC, has entered into its first offtake agreement for the sustainable aviation fuel (“SAF”) to be produced at the planned Bayou Fuels biorefinery project in Mississippi, USA (“Project”), with Southwest Airlines Co.® (“Southwest”).
The agreement covers the purchase by Southwest of an expected 219 million gallons of SAF at a fixed price, over a fifteen-year term starting as early as 2026, when the biorefinery is scheduled to begin commercial delivery of fuel. After blending, this will enable approximately 575 million gallons of net zero SAF. (Net zero is determined as a fuel with a carbon intensity of zero (0) gCO2e/MJ or lower on a lifecycle basis.)
The offtake agreement covers two thirds of the Project facility’s planned output and has the potential to generate multi-billion revenues over the life of the contract. Each gallon of SAF generated by the Project is expected to generate tradable greenhouse gas credits for which Southwest guarantees a minimum price payable to the Project (included in the fuel fixed price), de-risking a significant proportion of the revenue stream to the Project. The Project may additionally benefit from the value of greenhouse gas credits if sold above the minimum price by Southwest.
In addition, Southwest and Velocys have established a long-term strategic relationship as a part of the offtake agreement – potentially advancing future Velocys SAF-producing facilities and allowing Southwest first offer rights to purchase significant volumes of SAF from such facilities.
Through the combination of biogenic feedstock, renewable power and carbon capture and storage, Velocys’ carbon mitigation technology will enable the commercial-scale production of SAF at the Bayou Fuels plant with a strongly negative carbon intensity of up to -144g CO2e/MJ, which is expected to achieve a total of 6.5 million tonnes of avoided CO2 over the term of the contract.
Henrik Wareborn, CEO of Velocys, said:
“Today’s announcement is a major milestone for the Bayou Fuels reference project and further strengthens our conviction in the important role sustainable fuel will play in the future of the aviation industry.
“It is very encouraging to see Southwest make such a strong commitment to using fossil free fuel as part of its environmental sustainability plan and to see Velocys technology performing a central role in making this possible.
“This unique long dated offtake, encompassing fuel purchases and sales of greenhouse gas credits, underpins the financing of the construction capital for the Project.
“This agreement shows that commercial scale demand for SAF can be satisfied already by the middle of this decade and that Velocys plays a pivotal role in enabling this.”
Stacy Malphurs, Vice President of Supply Chain Management & Environmental Sustainability for Southwest Airlines, said:
“We’re excited to enter into a 15-year offtake agreement with Velocys, enabling Southwest to utilise negative carbon intensity SAF to produce significant quantities of net zero fuel after blending with conventional jet fuel.
“As we work toward our ultimate goal of carbon neutrality by 2050, this offtake agreement will play an important role in our strategy to reduce our carbon emissions intensity and incorporate SAF into our operations on our journey improve our environmental stewardship.”
Further terms of the Offtake Agreement
The agreement is subject to certain customary conditions precedent including completion of satisfactory financing for the final engineering phase and certain construction milestones, eligibility for greenhouse gas credits as well as the enactment of the proposed SAF tax credit legislation.
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.
Velocys VP Waste to Fuels, Neville Hargreaves, was interviewed on the BBC Radio Lincolnshire breakfast programme who were running a theme related to COP26 and the local area. He spoke to host Sean Dunderdale on the proposed Altalto project that will turn municipal solid waste into sustainable aviation fuel (SAF) at a biorefinery plant in North East Lincolnshire. The proposed plant will utilise Velocys technology to enable the production of SAF. He gave an update on progress with planning permission obtained and much of the design and engineering work completed. He noted that further clarity on policy from the UK Government would be a next step, which he hoped would be similar to the support already given to the renewable electricity industry to share the costs of new technology fairly. He emphasised the recent sustainable aviation fuel mandate was a good start.
Neville Hargreaves noted that Lincolnshire is an ideal location for the proposed plant with the presence of skilled people and advanced infrastructure, particularly the forthcoming East Coast carbon capture & storage pipeline that could give the sustainable aviation fuel produced a negative carbon intensity. With the Humber becoming the energy estuary of the UK, basing Altalto there was an ideal fit. “We’ve really felt welcome there”, he said.Audio Player
Listen to the interview on BBC Sounds