Preparing for takeoff? Shell and BA step up backing for waste-based jet fuel plant
Plans to build a U.K. refinery plant to make green jet fuels out of household waste took a step forward with new funding commitments totaling $3.5 million from Shell and British Airways.
The cash will be used by renewable fuel company Velocys to complete preliminary design and engineering work for the planned site in Immingham, which could produce 20 million gallons a year of sustainable jet fuel once up and running.
Separately, Velocys also announced it has raised $8.7 million in a new share placement, subject to confirmation at an Annual General Meeting at the end of this month, which will be used for testing its technology, developing a U.S. project, and to provide working capital.
Velocys is a renewable fuels firm which claims to have developed a method of transforming household waste destined for landfill into sustainable transport fuels for use in airplanes and heavy goods vehicles.
It hopes its planned Immingham site in Lincolnshire, which could be up and running by the mid-2020s, could offer a route to slashing emissions from the aviation industry.
Velocys, Shell and British Airways are the commercial partners in the project, with all three parties committing a joint total of almost $6.2 million in 2018 for initial feasibility studies. Thanks to the additional cash injection into the project, the scheme will enter the next phase of development and planning permission for the site will be submitted within days, with a decision expected in late autumn, CEO Henrik Wareborn confirmed to BusinessGreen.
Wareborn claimed Velocys' solution helps solve two environmental problems at once. "The most high profile products we produce of course is jet fuel, but equally important is the processing of waste and the allowing for fossil oil to stay in the ground," he explained. "Every gallon of oil that gets sent into the aviation industry from our plants allows a gallon of fossil oil to stay underground and be left there forever."
In particular, he stressed the plant's potential to curtail the volume of waste being sent for incineration in the United Kingdom, which currently outstrips the volume being sent for recycling.
"To use waste to try to generate heat or power is today the dirtiest way you can produce power," said Wareborn. "And it's not particularly economical because power prices are sometimes negative. You can't store them and you can produce power much cheaper and cleaner from wind and solar. So we can draw on all the waste in this country that goes to both incineration and landfill and create a much-improved value add from that carbon source."
Aviation currently accounts for around 7 percent of U.K. carbon emissions, and about 2 percent of global emissions. However, the sector's share of global emissions is set to grow substantially as other industries slash their carbon footprint and aviation continues to grow. In controversial comments, Lufthansa's boss Carsten Spohr told the NZZ am Sonntag newspaper that there were no signs that concerns over climate change — a so-called "Greta effect" in reference to climate campaigner Greta Thunberg — were leading to curbed demand.
"At this time we don't see restraint — in fact, the opposite," he said. "In comparison to last year, already a record year, we're expecting passenger growth of about 4 percent. (Lufthansa unit) Swiss International Air Lines is also showing growth. The discussion of climate change is not leading to restraint with bookings. People want to fly."
However, policymakers are taking steps to try to curb emissions from across the sector. In 2016 nations around the world agreed a carbon offsetting scheme that aims to cap aviation emissions at 2020 levels. But some campaigners are concerned offsetting is an unreliable and unsustainable method for eliminating emissions, particularly given its vulnerability to double-counting and difficulties policing long term emissions savings.
Finding a way to replace fossil-based jet fuel with a renewable alternative is seen as one of the most promising routes to decarbonizing the airline industry, and a host of companies are exploring how to turn waste or organic feedstocks into low carbon fuels. But potential solutions have struggled to compete with traditional airline fuels on cost and scale, while concerns remain about the ability of the fledgling sector to source feedstocks at the scale required to serve to global aviation industry.
However, Wareborn argued that Velocys' "heavy-handed" thermochemical process produces cleaner renewable fuel than other biofuel alternatives, which are not treated at such a close molecular level. He insisted it also does not come with the same feedstock supply issues as biofuels, which can either compete with food production for land use or suffer from a shortage of waste-based supplies.
However, he admitted that there is still uncertainty over whether commercial airlines will be willing to pay a premium for clean jet fuel, with revenues from the sale of jet fuel from the Immingham project expected to account for just 13 percent of total income. In contrast, more than half of the site's revenues is expected to come from government subsidies such as the Renewable Transport Fuel Obligation, opened to sustainable aviation fuel in April 2018.
"We are super conservative in the economic assumptions," Wareborn told BusinessGreen. "Today we can't unambiguously prove that we are going to be able to sell the fossil-free, crystal clear particle-free jet fuel at a higher price than what airlines are paying for the fossil equivalent."
A final investment decision on the Immingham plant will not be taken until 2021, but a growing number of firms — including Shell and BA, evidently — are hoping companies like Velocys can provide a lifeline for the aviation industry in a decarbonizing world. Time will tell if the technology is soon cleared for takeoff.