BA and Velocys planning to produce aviation fuels in Immingham
Velocys, a company keen to produce alternative aviation fuels, has extended its agreements with British Airways over plans for a fuel refinery on the South Humber Bank. Velocys and BA have signed up to further the joint development proposal for the £350 million Altalto Immingham project, as well as an option agreement for BA to buy 50% of it. Velocys has also entered into a contract with an un-named European renewable fuels developer to provide initial engineering services. The aim is to use “sustainable residues” (not adequately defined) into lower carbon fuels, using the energy intensive Fischer Tropsch process. BA says it has just started receiving “sustainable aviation fuel” from the nearby Phillips 66 Humber Refinery. BA originally, in 2020, joined up with Velocys and Shell, to produce “low carbon” jet fuel in Immingham, but Shell pulled out in January 2021 to develop on its own in Germany. Velocys is also developing aviation fuels with other companies, in the US.
Velocys also brought on board by European renewable fuels developer
By David Laister Business Editor (Humber)
19 APR 2022
Sustainable fuels technology company Velocys has extended its agreements with British Airways over plans for a green jet fuel refinery on the South Humber Bank.
The Oxford University spin-out and the national flag carrier have signed up to further the joint development proposal for the £350 million consented Altalto Immingham project, as well as an option agreement for BA to buy 50 per cent of it.
It is a second extension involving the Stallingborough site as key policy moves on sustainable aviation fuel are awaited, having originally signed in May 2020, extending in March 2021.
The agreements come as Velocys also enters into a contract with a European renewable fuels developer to provide initial engineering services.
It is not disclosing the identity of the company, but the step is described as one that “broadens the company’s customer base and demonstrates the ability to progress its pipeline of potential global customers towards commercial contracts”.
BA has just started receiving sustainable aviation fuel from nearby Phillips 66 Humber Refinery, having originally got on board with Velocys alongside Shell, who pulled out in January last year, opting to develop on its own in Germany.
Executives have described it as ‘a great opportunity for the Humber’ as it builds on existing refining expertise and the infrastructure being brought forward to help decarbonise heavy industry.
Green jet fuel legislation expectations set out by Velocys for UK and US governments
Refineries are being developed on both sides of the Atlantic
By David Laister Business Editor (Humber)
4 APR 2022
Velocys is moving into its new financial year with a clear focus, detailing the government support it anticipates, as it prepares for mass take off of sustainable aviation.
In an update to the City prior to filing its results next month, the sustainable technology company behind plans for a £350 million green jet fuel plant on the South Humber Bank, has spelled out what is thought to be emerging from legislators in both the US and UK.
The Oxford University spin-out, fused with a Stateside acquisition, is developing refineries on both sides of the Atlantic, with public policy support vital to realising huge strides made this past year.
It has off-take agreements in place for the Bayou Fuels base in MIssissippi with Southwest Airlines and International Airlines Group – parent of its British Airways UK partner – while it has just closed a huge land deal and investment option agreement for the Stallingborough site with Foresight Group.
They were key highlights within a run of important objectives achieved in 2021.
Henrik Wareborn, chief executive of the AIM-listed entity, said: “The Velocys group is well positioned at the nexus of energy security and the net zero transition.
“Through the deployment of our patented demonstrated FT [Fischer Tropsch] and catalyst technology, we provide decarbonisation solutions for hard-to-abate sectors such as commercial aviation, to supply negative carbon intensity fuels to airlines and others committed to net zero targets, while also reducing import dependency on fossil fuels.”
Turning to the political picture, Mr Wareborn said: “We are eagerly anticipating clarity on government policy support from both the US and UK governments to provide sufficient long term revenue stability for biorefineries converting sustainable residues into renewable fuels. This is a condition for successful capital formation for both projects.
“We are currently anticipating the US Congress to pass favourable legislation including the provision of a SAF Producer Tax Credit, indexed to the carbon intensity of the fuel, in the summer which will allow for the launch of the Series A fundraise for Bayou Fuels in the second half of this year. We expect the UK Government to need some additional time to provide matching competitive incentives, which would therefore enable Altalto to go into a Series A fundraise in the first half of 2023.
“In anticipation of such policy support, we have launched an RFP (request for proposal) process with a selection of US investment banks and advisers in relation to services including underwriting tax-exempt municipal bonds, mezzanine, and equity to finance the final development stage and subsequent construction of the Bayou Fuels biorefinery in Mississippi.”
It is aiming to firm up the agreements with the airlines too.
On Altalto Immingham, Mr Wareborn added: “Over the last few months, we have completed site engineering, geotechnical survey and integration of carbon sequestration of biogenic CO2 in preparation for the connection of the Altalto plant, when built, into the new East Coast Carbon Capture and Storage cluster, which is being developed by a consortium of major corporations including Drax, BP and Equinor.
“This leading CCS cluster, designed to sequester 40kt of CO2 per day, is scheduled to come on stream around the same time as the Altalto plant is expected to be commissioned, in 2027, subject to funding of both Altalto and the CCS cluster.”
Velocys is one of 25 projects that have met the eligibility criteria and passed through to Phase Two of the evaluation process to identify and sequence CCS cluster deployment in the mid-2020s.
He added that the £1.9 million Green Fuels Green Sky grant awarded by the DfT in August 2021 has largely covered costs for the essential site engineering and other site-related work through to the second quarter of this year.
The company has also secured a 15 year lease on a base in Columbus, Ohio, where it will be consolidating its catalysis services, microchannel reactor core assembly and technology licensing under one roof.
An investment of £6.3 million is anticipated for building enhancements and core assembly automation, with the plan to build 12 reactors a year. It dovetails with the expiry of a lease on current premises in the city.
A potential sale of an undeveloped site, Ashtabula, is also in the offing, having been acquired as part of the Ponto Energy acquisition in 2014.
A price has been agreed with the local port authority.
Shell pulls out of UK joint venture with BA and Velocys to produce “low carbon” jetfuel
Shell has pulled out of the joint Altalto venture with British Airways and Velocys to build a plant in Immingham, Humberside to make “sustainable” jet fuels from non-recyclable household waste. There has been a lot of hype about novel fuels for aviation, and how they will help reduce the CO2 emissions from flights slightly – even while the sector stays the same size or grows. Shell will instead join a more lucrative fuels project in Canada, which plans to produce fuel more efficiently (using a better source of waste – as they include wood “waste”). The Altalto projects hopes to be producing jet fuel within 5 years. The existence of the Humberside plant enabled Boris to claim Britain would be in the forefront of low carbon fuels etc (Britain always has to be on top …) Producing standard, high quality jet fuel from highly variable domestic waste is difficult. Other projects have not been a success. In 2017 the fuel project in Essex by Solena, to produce fuel for British Airways, was scrapped as Solena went bankrupt (presumably before producing any fuel). While the Canadian scheme plans to use over 200,000 tonnes of non-recyclable and wood waste annually to produce nearly 125m litres of fuel, the UK Altalto project would use 500,000 tonnes of waste to make 60m litres.
British Airways receives batch of SAF made from “waste oils” from Phillips 66
British Airways says it has received its first batch of “sustainable aviation fuel” (SAF) after it launched into a multi-year agreement with Phillips 66 Humber Refinery. Phillips 66 say the y can produce the fuel at “commercial scale.” BA is hoping to be able to get SAF at significant scale, to say it is cutting its carbon emissions – while continuing to fly ever more planes and flights. The parent company of BA, IAG, says it hoped to power 10% of flights with SAF by 2030. There is lots of hype about jobs etc. and that Phillips 66 has invested £20 million in the fuel production complex. Phillips 66 are (as usual for these fuels and ventures) coy about saying what the fuel is actually made from, except that it is from “waste oils”, but say they are “currently refining almost half a million litres of sustainable waste feedstocks a day, and this is just a start.” IAG is investing $400 million over the next 20 years into the development of SAF. As well as Phillips 66, IAG is hoping to get fuel from the planned Altalto Immingham refinery (using plastic waste) which is not yet even built. The concern is if the jet fuels produced contain any palm oil, or its derivatives, or other plant oils, that compete with food production and increase habitat destruction.
Hopes of “sustainable jet fuel” from waste are always just around the corner, for British Airways
British Airways (not much to do at present …) says it “will operate transatlantic flights partially powered by sustainable fuels as early as 2022”. BA says it will invest in a new US plant to be built in Georgia by LanzaJet producing commercial-scale volumes of “sustainable” aviation fuel (SAF), made from ethanol derived from agricultural and other waste. It claims this would “create 70% less carbon emissions than conventional jet fuel.” It will actually produce tiny amounts of fuel. IAG says it will invest almost £300m in SAF as part of its pledge to decarbonise by 2050 (while increasing numbers of passengers and flights!), and would investigate building a refinery with LanzaTech in the UK. BA is also involved in a domestic- waste-to-fuel plant in partnership with Velocys, in Immingham, Humberside, that Shell pulled out of in January. Sean Doyle, of BA, said (they always want public funds to help produce alternative fuels for planes) “We need government support” for this. BA and LanzaTech are part of the Jet Zero Council, launched to some fanfare by Boris Johnson in July 2020; it has not met since then.