VLS.L Regulatory News (VLS)

News release

Velocys plc

("Velocys" or "the Company")

18 September 2017

Partnership formed, aimed at waste-to-jet-fuel plants in UK

Velocys plc (VLS.L), the renewable fuels company, is pleased to announce that it has entered into a partnership to prepare the business case for a commercial scale waste-to-renewable-jet-fuel plant in the UK. Velocys will lead this initial feasibility stage of the project, for which all members of the partnership are providing funding. Subject to this and to the successful completion of all development stages, the aim is to achieve a final investment decision in 2019.

The members of the partnership include:

· British Airways, the UK's largest international airline, which intends to fly with the jet fuel made in the plant;

· Suez, a world leading expert in recycling and waste management, which intends to provide technical and operational expertise and manage the supply of feedstock to the project;

· Norma, an affiliate of Ervington Investments, Velocys' largest investor, which is a potential investor in the project;

· Velocys, which intends to supply its technology to the plant and provide project management, engineering, operations and technical service support to the project going forward.

The plant would take hundreds of thousands of tonnes per year of post-recycled waste, destined for landfill or incineration, and convert it into clean-burning, sustainable fuels. The jet fuel produced is expected to deliver over 60% greenhouse gas reduction and 90% reduction in particulate matter emissions compared with conventional jet fuel, thereby contributing to both carbon emissions reductions and local air quality improvements around major airports.

Velocys believes that there is the opportunity to develop a series of waste-to-jet fuel plants in the UK. The changes to the Renewable Transport Fuels Obligation (RTFO) recently published by the Department for Transport provide the required commercial platform for this opportunity; for the first time, jet fuel is to qualify for credits under the RTFO. These changes to the RTFO are designed to promote sustainable aviation and heavy goods transport; once implemented, they are expected to provide long term policy support for this market.

The Company and its partners anticipate making further announcements concerning the project as it progresses.

David Pummell, CEO of Velocys, said:

"Our strategy remains highly focused on exploiting the large US market for cellulosic renewable fuels. Alongside the excellent progress we are making there, we believe that the recently announced RTFO changes will allow the UK to become a world leader in sustainable jet fuel. We are very pleased to be working with world class partners to help execute the vision of a repeatable series of plants, offering a commercially attractive route to a highly desirable product for an industry that now demands significant greenhouse gas reduction solutions. This opportunity leverages further our technology, integrated plant design and skills base, and is consistent with our renewable fuels strategy of delivering integrated plant solutions, in collaboration with partners, to fulfil a real market need."

British Airways' press release on the partnership can be found at http://mediacentre.britishairways.com/.

- Ends

For further information, please contact:

Field Consulting (Project public affairs) +44 20 7096 7726

Chris Rumfitt

Lyndsey Drea