Cecilia Keating BUSINESS GREEN
Velocys extends deal with British Airways to deliver sustainable aviation fuel refinery
April 20, 2022
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  • Partners confirm they have rolled over agreements to build major waste-to-fuel plant in East Linconshire

    UK sustainable fuels company Velocys yesterday announced it has extended its agreement with British Airways (BA) to develop a refinery on the Humber that would convert commercial, household, and forestry waste into a low carbon jet fuel.

    The company and airline initially signed a joint development agreement for the Altalto Immingham plant in May 2020, alongside an option agreement for BA to acquire 50 per cent of the facility.

    Both agreements, which have already been extended once, have now been rolled over by another year to 31 March 2023, according to this week’s update.

    After raising £25m in an oversubscribed funding round last Autumn, Velocys secured control of the site for the Altalto project and confirmed that detailed engineering for the project would commence in 2023, with financial close expected in the same year. It said that construction of the plant was now expected to start in 2024 and finish by mid-2026, in order for full scale commercial operation to start in 2027.

    The sustainable aviation fuel company has also announced it had inked a deal with an unnamed European renewable fuels developer to provide initial engineering services for a project in planning stages.

    While conceding that the revenue from the initial stage of the project was “de minimis”, Velocys said the agreement demonstrated its “ability to progress its pipeline of potential global customers towards commercial contracts”.

    Velocys’ announcements come just days after US President Joe Biden doubled down on his administration’s commitment to scaling up the market for sustainable aviation fuels on a trip to a biofuel processing plant in Iowa.

    The White House has committed to ramp up US supply of sustainable aviation fuels to three billion gallons by 2030 and has pledged to introduce new ‘blender’ tax credits for cleaner jet fuels which can be mixed into traditional fuel to lower the emissions of flights.

    At the event last week, Biden said that growing the sustainable aviation fuel sector would unlock new jobs and help the US government meet its aim to deliver a zero carbon aviation sector by 2050.  “It’s going to require billions of gallons of sustainable aviation fuel, and you simply can’t get to net zero by 2050 without biofuels,” he said.

    However, the technology remains controversial in some quarters, with campaigners warning that delivering sustainable aviation fuels at scale will require huge levels of feedstock that could have knock on impacts on land use, while the emergence of the technology could also distract from the need to curb aviation emissions in the near term through reduced numbers of flights.

    Velocys, which has inked deals to supply sustainable jet fuel to International Consolidated Airlines Group (IAG) – owner of British Airways, Aer Lingus, and Iberia – and Southweast Airlines, is also plotting a clean jet fuel refinery in Mississippi.

    A company spokesperson told BusinessGreen that the company’s technology relies on either municipal solid waste which would otherwise be destined for landfill, or forestry residue. They said both feedstocks were “in plentiful supply”.