Will guilt-free flying arrive at your terminal soon?
Velocys is a company that is riding a wave of good timing. The sustainable fuel company is planning to build a plant to make green jet fuels out of household waste in the United Kingdom, at precisely the time the British government is facing growing public pressure to crack down on aviation emissions.
Only last week the government's climate watchdog, the Committee on Climate Change, wrote to the Department for Transport recommending aviation and shipping be wrapped into the country's new 2050 net zero emissions target — a move that likely would all but rule out airport expansion and require cuts in flight numbers unless green technologies are rapidly commercialised.
Meanwhile the Swedish "flygskam" or "flight shame" movement in the United Kingdom is convincing growing numbers of people that flying is indefensible during a climate crisis. Aviation is increasingly a touchstone for protesters. When aviation executives gathered in Montreal in late September to discuss the industry's climate plan, Greta Thunberg led a protest march in the city that week to demand more action from the sector.
But it's not only the current political and social conditions that are favorable to Velocys' cause. If all goes to plan, the company's planned jet fuel plant is set to be up and running in 2024, just at the moment airlines will be clamoring for greener fuels. That's because a year later the first payments from airlines are due under the new CORSIA agreement, the aviation industry's global offsetting scheme to help halt global emissions growth from flying.
It's all down to serendipity rather than meticulous planning, insists Henrik Wareborn, Velocys CEO.
The "fortuitous timing" comes down to Velocys' decision a few years ago to accelerate the development of a jet fuel plant in the United Kingdom, and the conclusion of commercial-scale stress testing of the waste-to-fuels conversion process at a facility in the United States earlier this year.
The decision to drive forward the U.K. project was down to favorable conditions in the country, Wareborn explains. Firstly, the United Kingdom has a relatively green grid, bringing down the carbon intensity of the energy needed as part of the conversion process. Secondly, the United Kingdom has a landfill tax levied at $112.34 per tonne, incentivizing waste operators to find alternative disposal routes for their rubbish. With its high population density, the United Kingdom also generates a lot of waste, and is under pressure to find new ways to dispose of it. Third, and perhaps most crucially, as of April jet fuel qualifies for credits under the Renewable Transport Fuel Obligation (RTFO).
Velocys' first U.K. plant — dubbed Altalto — is slated for construction in Immingham, Lincolnshire, with backing from Shell and British Airways. Having spent the last 18 months working intensively on the project designs, transferring learnings over from their U.S. projects, Wareborn says his team has vastly accelerated the project timeline to bring those fortuitous circumstances into play. Two years ago neither the U.S. nor U.K. projects were commercially viable. Today, the U.K. site is awaiting the results of its formal planning application.
Finding a way to replace fossil-based jet fuel with a renewable alternative is seen as one of the most promising routes to curbing emissions from 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 enough feedstock to serve to global aviation industry, without having damaging knock-on impacts on land use.
At Altalto, the plant's commercial viability is reliant on the support structures of the RTFO and landfill tax, Wareborn acknowledges. Remove one of those and it becomes uninvestable, given Velocys would be forced to price its jet fuel at "well north" of $10 per gallon, the current spot price for non-fossil jet fuel.
Under current plans, only 13 percent of the plant's revenues will come from the sale of jet fuel, with more than half its income coming from the RTFO credits. That's because Wareborn has assumed Velocys may have to sell its fuel for the same price as fossil jet fuel.
That is in part because demand for large volumes of non-fossil jet fuel isn't there yet, Wareborn explains. "There are very few people who have to buy it regularly in meaningful volumes other than for a publicity stunt," he notes acerbically. But there are signs national governments are considering forcing demand to rise, he believes. "If you asked me a year ago or even six months ago … me and the whole industry would have said, 'No, airlines are never going to pay a penny, a cent a gallon, more than the fossil fuel parity' — [Now] I believe it's changing," he says, pointing out that Norway has introduced a mandatory requirement for planes to use a small proportion of non-fossil fuel and Sweden is poised to introduce a similar rule. "The minute you have a mandatory blending quota then the market price will be established, and whatever it is the supply and demand has to meet," Wareborn predicts.
"Any kind of tax — whether it's an air miles tax or a carbon tax, or anything like that, it is simply a penalty against a behavior," he continues. "And most likely you just have less of a certain behavior. And who knows what the optimal amount of aviation is for a country. Who's going to say that we've got to fly 20 percent less, or 10 percent less, without the country suffering economically? Nobody would be able to say that. So the minute you set the tax you've got to decide with the price elasticity how much you want to discourage flying. And so therefore are we going to ask our elected politicians to make that judgement? Let's ask the market to figure out how to solve the problem in the most efficient way."
Aviation currently accounts for around 7 percent of U.K. carbon emissions and about 2 percent of global emissions. But the sector's share of global emissions is set to grow substantially as other industries slash their carbon footprint and aviation continues to grow. Many will contest Wareborn's analysis, believing meeting national and international climate targets will require action to curb demand for flights alongside innovative new technologies to decarbonize the industry. From that view point, deciding how much to curb flight demand is exactly the kind of choice governments have to wrestle with, however politically unpalatable.
But Wareborn's view is born of optimism. Optimism that given the space and incentive to innovate, the market can quickly deliver and scale low carbon fuels that can slash emissions without the need for demand reduction. With Velocys' waste-to-fuel technology, he believes he's part of the way there. The aviation executives gathered in Montreal in September will be fervently hoping he's right.
Want to learn more about the aviation sector's efforts to lower its carbon emissions? The transportation track at VERGE 19 will include session all about electric aviation. The event takes place Oct. 22-24 in Oakland, California.
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