Velocys PLC turns waste into low-carbon aviation fuel is ‘scrambling to raise cash’ according to reports in the UK press. British Airways was among its partners
The UK company behind plans for a dedicated green jet fuel plant on the South Humber Bank has hit a significant funding hurdle, according to The Times and Telegraph newspapers in the UK.
Velocys Plc is reported to have lost a £12 million investment in the USA, having not met various conditions attached to the pledge. The announcement sent the company’s share price to a new low this week, dropping 71 per cent, as it revealed funding will still be required in the current year to meet its objectives – with significant public funds also attached to its ambitious plans.
Carbon Direct Capital was named in May this year as a major element in a £32 million fundraiser. The New York-based investment firm was focused on climate impact initiatives, and a $15 million commitment via convertible loan notes had been made. It would allow it to turn the investment into equity in the company when trading.
According to The Daily Telegraph, Velocys, which previously partnered with British Airways, revealed on Tuesday that a planned $15m (£12.4m) investment from New York-brd Carbon Direct Capital will no longer go ahead after the company failed to meet a target of raising $40m from other backers by the end of October.
In a stock market announcement, Velocys said: “It has become clear that any investment into the company resulting from these discussions is unlikely to be on the same terms.”
Velocys is currently developing a test site in partnership with British Airways to turn commercial and household waste into 20 million gallons of sustainable aviation fuel.
This would be enough to power 1,000 flights from London to New York every year.
The company’s site at Immingham, Lincolnshire, received £27m from the Department for Transport’s Advanced Fuels Fund late last year.
Velocys’ process for creating sustainable aviation fuel, or SAF, uses urban waste run through several chemical processes to make hydrogen and carbon monoxide.
These are then proceeded through the company’s reactor and catalyst to make jet fuel, diesel, and other hydrocarbons.
SAF can be used in existing jet engines with minor modifications but it is yet to be used comprehensively across the sector.
Using waste in this way means fewer methane emissions from landfills, although the process does produce carbon dioxide. Methane is considered a worse greenhouse gas than CO2.
Airlines including Virgin Atlantic have already used small amounts of biofuel mixed with regular jet fuel in testing and the airline is planning its first-ever transatlantic flight using only SAF in November.
About 3.4pc of Velocys is owned by Ervington Investments, which was previously controlled by Russian oligarch Roman Abramovich.
In Tuesday’s announcement, Velocys said it will need to reach a deal by the end of the year: “Velocys still anticipates that funding will be required before the end of this calendar year and therefore the board is prudently exploring near-term funding options as discussions with the strategic investors continue.”
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