These reductions are taking place against a backdrop of underlying demand growth in aviation, marine and heavy road freight – all areas in which reducing emissions is difficult.
For example, passenger air traffic is expected to grow between 3% and 6% annually over the next 15 years. The airline industry (ICAO) has committed to carbon-neutral growth by 2020 and 50% reduction in emissions by 2050. Incremental operational efficiencies will go a small way towards meeting these targets but a hugely increased supply of renewable jet fuel will be needed. By 2022, carbon neutral growth would require two billion gallons per year of renewable jet fuel – more than 700 million gallons of it in North America.
Over and above the US federal standards, California takes a particularly active stance in combatting emissions from carbon fuels; it established the Low Carbon Fuel Standard (LCFS) by executive order in 2007 to reduce the carbon intensity of transportation fuels to below 2010 levels. Based on current consumption patterns, California will need approximately 1 billion gallons of renewable diesel to meet its own obligations.
Using our technology, renewable fuels can be made from abundant reserves of biomass feedstock. Feedstock comes from sustainable sources available in areas that have not seen the benefits of the energy revolutions of the past. In these places, the infrastructure servicing the forestry industry has spare capacity.
In the US these fuels generate renewable fuel credits under the federal Renewable Fuel Standard program, for which there is strong legislative support. The RFS was designed to promote the uptake of advanced biofuels. In 2018 alone, more than 19 billion gallons of renewable fuels were produced or imported into the USA that qualified under the RFS. Of this, the Renewable Volume Obligation for Cellulosic Biofuels was 288 million gallons in 2018 and 418 for 2019. The renewable fuels made by Velocys have qualified for the highest level of RIN (Renewable Identification Number) credits with an indicative current value of around $3 per gallon.
Renewable diesel sold in California also qualifies for State Low Carbon Fuel Standard (LCFS) credits, traded in terms of carbon emissions prevented, worth more than $1.25 per gallon based on the carbon intensity associated with the Natchez plant. Similar requirements are in place in Oregon, British Columbia, and under discussion in States such as Washington, Minnesota, and New York.
Image right: Advanced bio-jet fuel, produced using the Velocys FT process.
In the UK millions of tonnes of waste are exported from the country every year and a Velocys waste-to-jet fuel plant could sell Renewable Transport Fuel Certificates worth up to £1.6/litre for a portion of the fuel. The RTFO development fuel target for 2022 is 100 million gallons/year. No qualifying development fuels are currently produced in the UK and Velocys’ Altalto waste to jet fuel project would produce between 10% and 20% of the target.