REG - Velocys PLC - Update on climate legislation

VelocysAnnouncement

15/08/2022 07:00

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RNS Number : 9407V  Velocys PLC  15 August 2022

15 August 2022

News Release

 

Velocys plc

("the Company")

 

 

Update on Climate legislation

 

US Climate legislation will encourage sustainable fuels investment

 

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
continues to provide its clients with integrated extensive 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 CO(2) 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                                               +44 1865 800821

 Henrik Wareborn, CEO

 Philip Sanderson, CFO

 Lak Siriwardene, Director of Communications

 Panmure Gordon (UK) Limited (Nomad and Joint Broker)  +44 20 7886 2500

 Hugh Rich (Corporate Broking)

 Emma Earl (Corporate Finance)

 John Prior (Corporate Finance)

 Shore Capital Stockbrokers Limited (Joint Broker)     +44 20 7408 4090

 Henry Willcocks (Corporate Broking)

 Toby Gibbs (Corporate Advisory)

 James Thomas (Corporate Advisory)

 Radnor Capital (Investor Relations)                   +44 20 3897 1830

 Joshua Cryer

 Iain Daly

 Buchanan (Financial PR)                               +44 20 7466 5000

 Helen Tarbet

 Simon Compton

 

--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.

www.velocys.com (http://www.velocys.com)

 

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