VLS.L Share News (VLS)

(Sharecast News) - Sustainable fuels technology company Velocys has jointly agreed to extend the current option agreement with British Airways for the 'Altalto' project, it announced on Tuesday, to 31 March 2022.
The AIM-traded firm said exercise of the option would give both parties equal equity ownership of Altalto Ltd, and the right to appoint a director.

It also noted the UK government announcement of the launch of a new £15m 'Green Fuels, Green Skies' grant funding competition.

That funding was intended to support the production of sustainable aviation fuel, with Altalto Immingham intending to apply for a grant in the competition on behalf of Velocys and British Airways.

The results of the competition were expected to be announced by the Department for Transport on 31 July.

Velocys said it expected the project to be in a position to launch its front-end engineering design later in 2021, subject to confirmed UK government policy support and the addition of new investment partners in the project.

In addition, on 25 March, the Secretary of State for Transport Grant Shapps opened a consultation into amending the Renewable Transport Fuel Obligation (RTFO) to increase the carbon savings it achieves.

Velocys said it "welcomed" the launch of that process, was fully supportive of its objectives, and would be actively participating in the consultation.

Shapps said that expanding the RTFO to include recycled carbon fuels would "transform the commercial viability" of waste-to-fuel technology, and support projects in the UK looking to develop sustainable aviation fuel from household waste.

"Sustainable aviation fuel remains critical to the decarbonisation of aviation; it is applicable to all flights including long-haul and can be used immediately with no need for modifications to aircraft fleets or refuelling infrastructure," said chief executive officer Henrik Wareborn.

"Velocys has the technology to enable the production of sustainable aviation fuel from wastes, avoiding landfill or incineration, and our technology can be coupled with carbon capture and storage to achieve net zero fuels."

Wareborn said policy support remained "critical" to the establishment of UK sustainable aviation fuel facilities.

"Whilst there is no guarantee that the Altalto project's application to the Green Fuels, Green Skies competition will be successful, we are delighted to see this new government initiative to support the production of sustainable aviation fuels."

At 1539 BST, shares in Velocys were up 1% at 6.06p.