Q&A: Velocys on UK waste-to-fuel plant, SAF prospects

Sustainable fuels technology company Velocys has partnered with British Airways and Shell to propose commercial production of sustainable aviation fuel (SAF) from waste at a new facility in Immingham. This would be the first such commercial-scale project in Europe.

Velocys vice president waste to fuels Neville Hargreaves tells Argus Biofuels that he believes SAF will be a game-changing industrial, economic and environmental opportunity. He spoke to Giulia Squadrin about the Altalto facility in Immingham and its waste-to-SAF process, as well as the broader efforts to decarbonise aviation.

Velocys has said it expects its Immingham waste-to-fuel plant in Immingham to be operational by the middle of this decade. How is the project progressing and how would you describe the prospects of waste-based SAF in the UK and Europe towards 2030?

We're currently awaiting a planning decision for our proposed Altalto facility in Immingham, Lincolnshire, which is expected by next quarter. Subject to this decision and securing additional financing, we aim to make a final investment decision around the end of next year and be producing fuel from 2024. We are on track to develop what will be Europe's first ever commercial scale waste-to-SAF facility.

Following the UK government's commitment to achieve net zero emissions by 2050, and the UK aviation sector's own net zero commitment made only a few weeks ago, this cannot come soon enough. Aviation is one of the most challenging transport sectors to decarbonise — the energy density and performance of battery and fuel cell technologies is unlikely to match liquid hydrocarbon fuel, particularly over longer distances, at least for several decades. SAF will therefore play an integral role if we are to continue flying and cut emissions.

Therefore, in order to have any hope of meeting these targets the supply of SAF will have to grow rapidly in the 2020s. The industry coalition Sustainable Aviation predicts that 32pc of the UK demand for kerosine could be met by domestically produced SAF by 2050.

We have developed a process which converts everyday household and commercial waste into SAF and other sustainable transport fuels. These products are not only cleaner burning but also result in a net greenhouse gas emissions reduction of around 70pc across the lifecycle, for the fuel that comes from the biogenic part of the feedstock.

What share of production capacity at the Altalto facility will be SAF, compared with waste-based road fuel, and what novel technologies/processes does production entail? Are there plans to replicate Velocys' waste-based SAF technology on a larger scale?

The principal product will be Synthetic Paraffinic Kerosene (SPK), which is approved worldwide for commercial aviation [as a blend into Jet A1 at up to 50pc]. The other product will be naphtha, a constituent of petrol. We expect around 70pc of the output to be SPK.

The waste is gasified into syngas, composed of hydrogen and carbon monoxide, which is then used to synthesise liquid hydrocarbons using our proprietary, demonstrated Fischer Tropsch reactor and catalyst. These hydrocarbons are then upgraded into SPK and naphtha. By combining our technology with gasification, purification and hydrocracking technologies (all of which have also been demonstrated at commercial scale), we can provide an integrated end-to-end process, from waste to wing or waste to wheel.

Given the aviation sector's need to decarbonise and the ongoing requirement for liquid hydrocarbon solutions, we expect that Altalto Immingham will be the first of many SAF facilities nationally and globally. As with any project of this kind, once we have set the blueprint it will become easier to follow. Sustainable Aviation estimates that up to 14 SAF plants could be producing a range of transport fuels and other chemicals in the UK by 2035, supporting up to 5,200 jobs, so there are significant growth prospects for the sector.

How do you view the broader outlook for SAF feedstock availability and what steps has Velocys taken to ensure the Altalto facility is able to source 500,000 t/yr of non-recyclable household and commercial solid waste? Is the company considering other waste feedstocks and are there legislative restrictions in the UK that may hinder this?

Our feedstock will consist of everyday household waste and commercial waste — what doesn't get reused, recycled or composted — that would have otherwise gone to landfill or incineration.

There is an abundancy of this feedstock available in the UK, even accounting for the growth in SAF demand and the expected increase in recycling rates over the coming decades. The mixture of materials that ends up in the residual waste stream is difficult, energy-consuming and very costly to separate.

The UK is a net exporter of waste, and has a shortage of treatment capacity, with 11mn t/yr going to landfill. We are in discussions with a number of major waste companies in the market who could supply the required volume. We are not considering other feedstocks in the UK at the moment, although we do have a similar project in the US based on waste woody biomass residues from forestry.

According to a roadmap released by industry group UK Sustainable Aviation, net zero CO2 emissions can be achieved by 2050 if 4.5mn t/yr of SAF is produced. How would you describe the progress towards this goal in the UK and what further steps can be taken to encourage uptake?

We very much welcome Sustainable Aviation's SAF roadmap, which shows how commercialising SAF production will be a game-changing industrial, economic and environmental opportunity for the UK.

Projects like ours demonstrate the growing demand for SAF, with the aviation industry looking for partnerships which will make widespread use of SAF a reality. This is also an investment opportunity which has an excellent fit with many funds' sustainability mandates, to make fuel for a sector that is very hard to decarbonise, from a waste feedstock that would otherwise go to landfill or incineration.

However, financing complex and innovative projects like this is always a challenge and requires a strong partnership between private investors and government. The regulatory support mechanism for sustainable fuels in the UK — the Renewable Transport Fuel Obligation or RTFO — includes SAF, and with some relatively limited changes could provide the support necessary to make the first few projects a success and build an SAF industry in the UK.

Do you expect many EU member states to introduce an aviation emissions reduction quota in the coming years and what would UK-EU co-operation in this field entail? More broadly, how co-ordinated are legislation and associated incentives in encouraging emissions savings in aviation?

It seems highly likely that EU member states, and other nations, will introduce either quotas or incentives to support the introduction of SAF. Co-ordinated action on aviation is essential, due to the international nature of the business, and will become more so as SAF volume grows. The UK Department for Transport is taking steps to ensure that the RTFO remains aligned with the recast EU Renewable Energy Directive (RED II), but the UK offers one of the best regulatory regimes for SAF, notwithstanding the need for some further support, and as a result is likely to be a preferred location for investment.

Are airlines more likely to use SAF to cut emissions in aviation or might they instead turn to other carbon offsetting schemes given the associated expenses?

Though carbon offsetting is an important first step in heading towards net zero carbon emissions, there will not be enough offsets available to deliver net zero, so there must be a multifaceted response of which SAF will have to play a central role. Airlines recognise this, which is why there have been many announcements of initiatives to introduce SAF.

The fuel produced at Altalto will offer net greenhouse gas savings of around 70pc for each tonne of conventional fuel it displaces. It can also improve air quality, with up to 90pc reduction in particulate matter from aircraft engine exhausts and almost 100pc reduction in sulphur oxides.

Do you foresee the establishment of an SAF spot market and how important will a transparent pricing basis for sustainable aviation fuel be in the development of market trade?

At present, an SAF spot market is irrelevant. Given the challenge of financing projects, a deep collaboration between producers and users is essential, including offtake contracts which support investment decisions.

Financial support such as the RTFO, which is designed to enable sustainable fuels to be sold at market competitive prices while also giving an adequate return to investors, is also necessary at this stage. In the longer term a spot market may evolve but it is unlikely to be an important dynamic for several years.

By Giulia Squadrin

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