Velocys PLC Velocys Reference Project Improved Decarbonisation (2523E)
October 27 2022 - 1:00AM
UK Regulatory
TIDMVLS
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
Henrik Wareborn, CEO
Philip Sanderson, CFO
Lak Siriwardene, Director of Communications +44 1865 800821
Panmure Gordon (UK) Limited (Nomad and
Joint Broker)
Hugh Rich (Corporate Broking)
Emma Earl (Corporate Finance)
John Prior (Corporate Finance) +44 20 7886 2500
Shore Capital Stockbrokers Limited (Joint
Broker)
Henry Willcocks (Corporate Broking)
Toby Gibbs (Corporate Advisory)
James Thomas (Corporate Advisory) +44 20 7408 4090
Radnor Capital (Investor Relations)
Joshua Cryer
Iain Daly +44 20 3897 1830
Buchanan (Financial PR)
Helen Tarbet
Simon Compton +44 20 7466 5000
--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
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