Shell pulls out of Velocys/British Airways project to build the UK’s first commercial SAF production plant

Shell has pulled its support for the Velocys/British Airways Altalto project, which plans to produce sustainable aviation fuel (SAF) from municipal waste in a new plant due to be constructed at Immingham in north-east England. The oil major, which was supplying commercial and technical expertise to the project, did not reveal reasons for the withdrawal but said it would be focusing elsewhere to leverage its own technology on other low-carbon initiatives. Under a joint development agreement, from which it has now withdrawn, Shell had an option to take a one-third share in the equity capital of Altalto. Velocys, a specialist in compact reactors used to produce sustainable fuels from wastes and residues and the lead in the project, said the move was by mutual consent and would have no impact on the existing development plan or funding for the plant.

A statement by Velocys indicated Velocys and British Airways will continue to work together to secure sources of finance for the plant and hinted new partners could join the venture as the project progresses. It said preparations were underway to apply for significant government funding for the project that the partners believe is well-placed to succeed.

Planning permission for the Altalto Immingham plant was issued by the local council last May and the project has received grants totalling near £1 million ($1.4m) under two stages of the government’s Future Fuels for Flight and Freight competition. Shell and British Airways each contributed £1 million towards the project in June. Depending on securing the remaining finance, construction of the £500 million ($680m) plant is due to begin in 2022 and start producing fuel in 2025. When fully operational, it will convert over 500,000 tonnes per year of municipal waste destined for landfill or incineration into 60 million litres of sustainable jet and road fuel, saving an estimated 80,000 tonnes of net CO2 per year.

“We are looking forward to moving Altalto Immingham to the next stage of development in 2021,” commented Velocys CEO Henrik Wareborn. “It is the most advanced commercial SAF project in the UK and is ready to take advantage of the strong push from both government and industry for the decarbonisation of aviation, especially using waste feedstocks.”

Shell, British Airways and Velocys are members of the Jet Zero Council, a UK government/industry initiative formed last year to help develop greener air travel towards a net-zero target by 2050. The Altalto project has been backed by government ministers.

“Sustainable aviation fuel is vital to the decarbonisation of aviation and to helping us achieve our net zero target. The formation of the Council and the recent launch of its Sustainable Aviation Fuels Delivery Group are testament to the importance the government attaches to SAF,” said Sean Doyle, CEO of British Airways.

Shell is one of the biggest suppliers of jet fuel to the UK aviation market. Wishing Altalto “every success in the future”, Matthew Tipper, Shell VP New Fuels, said: “On this occasion, we have decided to focus our resources on other lower-carbon fuels opportunities which leverage our own technology. We will continue to work with the aviation industry and the UK government and, as part of the Jet Zero Council, to help decarbonise UK aviation.”

Shell Aviation recently sourced SAF via World Energy and SkyNRG for Rolls-Royce’s ALECSys programme that is ground testing the use of 100% SAF in engines at its Derby, UK, facility.

Further afield, last month Shell Aviation agreed to supply SAF to DHL Express at Amsterdam Schiphol, the first customer to be supplied under an agreement reached with Neste in September. The volume of fuel being supplied represents a full year of DHL Express’s requirements from the airport. In October, Shell entered into an agreement with Red Rock Biofuels to purchase SAF and cellulosic renewable diesel fuel from Red Rock’s new biorefinery in Lakeview, Oregon.

Shell Aviation is also supporting the development of another planned European commercial-scale SAF production plant, SkyNRG’s DSL-01 project in the Netherlands. Unlike the intention with Altalto, Shell is not investing directly in the project and instead is providing technical and commercial advice along with an option to purchase SAF when production starts.

Photo: Shell Aviation