Velocys

Introduction

Velocys is a sustainable fuels technology company founded in February 2006 and is headquartered in Oxford. The firm engages in the engineering, manufacturing, development, and financing of sustainable fuel projects. It also designs and licenses proprietary Fischer-Tropsch technology for the generation of clean, low carbon, synthetic drop-in aviation and transport fuel from solid waste and waste woody biomass. The company’s projects include Altalto in Inningham and Bayou Fuels in Natchez, USA. In the current climate with the reduction of carbon emissions being at the for front of everyones minds it would seen this firm has the technology to make a big impact.

The firms revenue is generally derived from licensing the technology and supplying their reactors and catalysts with technical and project services. The company is focussed on deploying end-to-end technology solutions through partners, site owners and third-party developers worldwide.

TECHNOLOGY

The company offer the world’s most compact, commercially-ready, patented Fischer-Tropsch reactor for the synthesis of hydrocarbons. Developed in their own in house laboratory and demonstrated at full scale in the real world. The companies reactor’s allows the production of advanced biofuels from large, sustainable carbon sources such as household waste and forest residues.

“Velocys’ high performance catalyst and reactor technology can generate negative-carbon-emissions SAF with the integration of carbon capture technologies, essential for any Net Zero strategy.” Henrik Wareborn, CEO.

The Velocys process

A process to transform waste to fuel, built around their proprietary catalyst and reactor.

The Fischer-Tropsch (FT) process is a catalytic chemical reaction that turns synthesis gas (carbon monoxide and hydrogen) into fuels (liquid hydrocarbons, such as diesel or jet fuel). By combining the reactor with gasification, purification and hydrocracking technologies that have been demonstrated at commercial scale, the firm can provide an integrated end-to-end process that converts solid wastes, first to synthesis gas and then to liquid transport fuels.

Applications

The end products are high-quality versions of existing fuels. The key is they require no changes to engines or infrastructure, they meet all specifications and burn cleaner, cutting exhaust pollutants such as particulate matter (soot).

Depending on the feedstock, fuels made using Velocys reactors create significant greenhouse gas reductions, qualify for the highest levels of renewable fuel credits, and are certified by the Roundtable for Sustainable Biomaterials.

The Oklahoma demonstration plant reached commercial scale and qualified for renewable fuel credits, running for over 6,000 hours of cumulative operation across two FT reactors. Additional demonstrations have tested the technology in Japan and, at pilot scale, in North and South America, Europe and Australia. The firm have also run an integrated demonstration coupling the reactor with a gasifier to convert wood waste to hydrocarbons.

Projects

Velocys is positioning itself as the partner of choice for industry leaders looking to produce sustainable aviation fuel. Blended with conventional fuels, the product can be used in existing engines and transport pipelines. The firm provide the technical, operational and development capabilities to make projects happen.

They are currently engaged in two main projects: Altalto in Immingham, UK and Bayou Fuels in Natchez, Mississippi, USA.

Altalto

They are currently developing a commercial plant in Immingham, U.K. with the objectives of producing a sustainable jet fuel in collaboration with British Airways. Altalto is expected to be Europe’s first commercial scale waste-to-jet-fuel facility. It will process household and commercial waste destined for landfill or incineration.

  • Feedstock: Municipal Solid Waste
  • Nameplate Capacity: 20 million gallons / year of jet fuel and naphtha
  • Co-investors: British Airways / Department for Transport
  • Status: NELC have granted planning permission (June 2020)
  • Target Financial Close: 2024

With the aim of:-

  • 70% reduction in greenhouse gases compared to conventional jet fuel
  • 90% reduction in particulate matter from engine exhausts
  • 500k tonnes of waste diverted from landfill or incineration

Bayou Fuels

The firm is currently developing a plant in Mississippi that will create sustainable aviation fuel for airline transportation in the U.S. It will process waste from the paper and lumber industries – woody biomass forest residue that would otherwise rot on the forest floor or contribute to forest fires.

The facility will be first of its kind and Velocys’ agreement with Oxy Low Carbon Ventures, LLC (OLCV) will aim to take these environmental benefits a step further through CCS; whereby Bayou Fuels CO2 will be captured before it enters the atmosphere. This combination of CCS-ready technology and OLCV’s expertise in storing CO2 will enable the Velocys’ facility to produce net negative carbon intensity fuels.

  • Feedstock: Woody biomass
  • Nameplate capacity: 35 million gallons / year
  • Partners: In negotiation
  • Status: Pre-FEED and federal permitting completed
  • Federal Loan Guarantee application: In process

With the Aim of:-

  • 25m gallons of sustainable aviation fuel (SAF) per year
  • Zero CO2, negative emission fuels using renewable energy and carbon storage

Summary

I must admit the concept sounds a bit too good to be true, after all if you could really convert waste into fuel then surely this would be more prominent and at the fore front of the push for us to enter a carbon neutral world.  For those of us old enough to remember the “back to the future” movies it has more than an air of the “Mr Fusion” about it. However, this firm seems to be making great strides forward with the development of the technology. It’s benefits are also a two-fold win for the environmentalists, Not only does Velocys  help reduce harmful emissions entering the atmosphere, but it also uses rubbish that would otherwise be dumped in landfill sites.

Encouragingly, Velocys has also signed some significant contracts in recent months which helps give credibility to the commercial potential of its technology. Recently they have signed multi-year agreements with British Airways owner IAG and Southwest Airlines to supply blended sustainable aviation fuel.

However, this is an AIM’s market stock and with that comes the associated risk, most notably first and foremost the Bayou Fuels biorefinery project in Mississippi, USA, is yet to be built. Any development issues here could threaten planned first production in 2026 and impact earnings forecasts. Any disruption to this project could see the firm trying to raise cash from shareholders or take on more debt.  As with all stocks in the AIM market potential is huge and so is the risk. It’s also a stock that is going to need time to develop its technology, but that being said the prospects and potential for this firm and its tech could be huge. Its certainly one to have some exposure to, especially in the speculative long term section of your portfolio but not one to have the family silver invested in.

 

 

 

 

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