REG - Velocys PLC - Velocys Reference Project Improved Decarbonisation

VelocysAnnouncement

27/10/2022 07:01

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RNS Number : 2523E  Velocys PLC  27 October 2022

27 October 2022

News Release

 

Velocys plc

("the Company")

Improved Decarbonisation of Velocys US Reference Project

 

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                                               +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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