CEO says firms waste-to-jet fuel technology is now ready for commercial scale deployment
Green jet fuels company Velocys has raised £25m from institutional investors in a “significantly oversubscribed” founding round, the company announced yesterday.
The London-listed firm, which is aiming to build a major sustainable aviation fuel plant on the Humber, said it would spend the proceeds of the sale on boosting its manufacturing capability and building 12 new reactors capable of turning waste gas into jet fuel.
It said the funds would also go towards advancing its two refinery projects, the Immingham Altalto project in England’s North East and the Bayou Fuels plant planned in Mississippi in the US. Specifically, some of the funds would go towards a payment to secure control of the site for the Altalto project, the company said.
Velocys CEO Henrik Wareborn said the firm’s technology was now ready for full-scale deployment after being successfully demonstrated. “Velocys has a technology solution to accelerate the decarbonisation transition for global aviation clients which has been commercially demonstrated and is ready for commercial scale deployment,” he said. “As a capital-light, licensing company which benefits from recurring revenues from the full-service technology packages we provide to our clients, we have a strong platform for scalable growth.
“This placing and open offer, which has been significantly oversubscribed, will enable the investment required to advance our commercial traction and proceed towards our goals.”
Velocys said 132.5m shares had been conditionally placed at a price of 8p and noted that it had made an open offer to existing eligible shareholders that could add £2m to the placing price.
Following the successful fund raise, the company said it was on track to deliver positive cash flow by 2024.
The aviation industry is banking on sustainable aviation fuels to drive near-term emissions reductions, arguing the technology provides an effective solution for reducing the aviation sector’s emissions in the short- to medium term, while development of electric or hydrogen powered flight at scale remains in its infancy.
News of the fund raise comes just a few weeks after Velocys announced it had inked sustainable aviation fuel offtake agreements with a number of major US and European airlines, including International Consolidated Airlines Group (IAG), owner of British Airways, Aer Lingus, and Iberia among others and Southwest Airlines.
However, others have questioned the scale of the emissions savings on offer from such fuels and warned the industry could struggle to secure sufficient SAF feedstocks to fully displace fossil fuels. As such, campaigners have argued the sector’s embrace of new fuels is a distraction from the need to curb demand for flights and boost investment in fledgling zero emission technologies that can potentially deliver deeper emissions reductions.
But Velocys and others maintain that a wide range of waste feedstocks are available, ranging from agricultural and household waste to industrial gases, that will allow the industry to scale up and drive down costs. The company is now aiming to convert hundreds of thousands of everyday household and office waste otherwise destined for incineration into sustainable aviation fuel at the plant planned on the Humber, which has been backed by British Airways.