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Velocys Limited

VLS

Velocys is an international UK-based sustainable fuels technology company.

Lobbying Activity

Response to ReFuelEU Aviation - Sustainable Aviation Fuels

20 Apr 2020

Velocys, the sustainable fuels technology company, enables the production of sustainable aviation fuels (SAF) from municipal solid waste and waste woody biomass using the Fischer-Tropsch (FT) route. Our planned Altalto project in the UK is expected to be the first commercial solid-waste-to-fuels plant in Europe. Once completed, we expect it to enable rapid growth in investment to build SAF production capacity in the region. We welcome the Inception Impact Assessment and offer the following comments. A. Problem On feedstock, it is important to distinguish between the feedstocks for different routes to SAF. Currently the only plants producing SAF use the HEFA (hydrogenated esters and fatty acids) process, which requires natural oils as feedstock. These oils are a limited resource; the Energy Transitions Commission (ETC) estimates total EU availability of only 2-4 million tonnes (MT) per year, and 18 MT worldwide. The FT and alcohol-to-jet (ATJ) routes to SAF offer access to a much broader feedstock base. FT allows use of Municipal Solid Waste (MSW) (1,575 MT), woody biomass (1,225 MT) and agricultural residues (2,115 MT) – all ETC 2030 volume estimates. These resources have low or no land use change impact, and could be enough to meet more than half of global jet fuel demand. Currently, the key barrier for rollout of these routes to SAF is not feedstock, but the financing of first-of-a-kind projects. Once these early plants are in operation, much more capital can be deployed. Whilst feedstock will be constrained in the long term, it is not the primary barrier at present for FT and ATJ, as it is for HEFA. The fuel approval process is not currently a major barrier to the growth of SAF supply. Six routes have already been approved, and those give access to the full range of feedstocks, including electro-fuels. Fuel approval is a barrier that any new technology needs to pass, but the evidence of the last decade is that it is not the limiting factor. B. Objectives and Policy options A SAF blending mandate could provide certainty of demand and thereby support investment. However, a simple mandate will be fulfilled at the lowest cost for the volume of the day. This is a disincentive for investment in plants based on next-generation technologies, which will be needed once supply reaches the feedstock limits associated with HEFA, the only route currently producing fuel. This risk could be avoided by setting mandates for second-generation fuels or Annex IX A feedstocks. Revision of the multiplier makes sense, but requires Member States to translate it into incentives for industry. A central auction mechanism is not recommended; we do not believe it would have the desired effect, because at any one time the list of bidders would be too small to support an effective process. A SAF plant is much more complicated and expensive than a renewable power plant of similar throughput, and projects take years of development before a final investment decision. Developers cannot afford to undertake this work at risk pending the outcome of an auction, thus development would stagnate, and unnecessarily expensive projects might win due to a lack of competitive bids. A funding mechanism would be a good complement to mandates and/or revision of the multiplier. Prioritisation could become necessary in the long term but is difficult to get right due to uncertainties of future developments in technology, demand and resource supply. Voluntary agreements: we do not see the need for the collaborative platform. There is keen interest in SAF from airlines, and a well-developed products market which could readily be adapted to SAF. Technical facilitation is of minor importance; the path to approval of SAF routes is now well-trodden and others should be able to follow. We support a co-ordination platform to help bring together aviation stakeholders, SAF producers and regulators. Monitoring is a necessary complement to all the other initiatives.
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