There is urgent and increasing demand in the market. In California alone, the consumption of renewable diesel in 2016 was an estimated 300 million gallons. By 2030, the State will need some 1 billion gallons of renewable diesel to meet its own obligations.
There is expected to be an increase of over 3% in global air travel in the coming 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 biojet will be needed if they are to be met. By 2022 there is expected to be a demand of more than two billion gallons per year of renewable jet fuel based on carbon neutral growth, of which more than 700 million gallons per year will be required in North America. Many airlines worldwide, including South African Airways, United Airlines and British Airways, are interested in partnering with suppliers of biofuels.
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 2016 alone, more than 18 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 311 million gallons in 2017. 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 $4½ – $5 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 per gallon. Similar requirements are in place in Oregon, Washington State and several Canadian Provinces. States in the North East US such as Massachusetts are considering an LCFS-type regulation.
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’ waste to jet fuel project would produce between 10 and 20% of the target.