Southwest and British Airways fuel deals send Velocys shares surging by over 40%

Shares of London-listed fuels expertise agency Velocys rose by greater than 40% on Wednesday after it introduced two deals associated to the provision of aviation fuel.

In a press release, the corporate stated its subsidiary, Velocys Renewables, had entered into an settlement with Southwest Airlines.

The deal pertains to a deliberate biorefinery in Mississippi, with Southwest set to purchase an anticipated 219 million gallons of sustainable aviation fuel at a set value throughout a interval of 15 years.

“After blending, this will enable approximately 575 million gallons of net zero SAF,” Velocys stated. The Bayou Fuels biorefinery is slated to begin business supply of fuel “as early as 2026.”

In addition to the take care of Southwest, Velocys Renewables signed a memorandum of understanding with the International Consolidated Airlines Group. Again, the deal is related to the Bayou Fuels challenge.

According to Velocys, it “covers the purchase by IAG’s constituent airlines, which includes British Airways, Aer Lingus and Iberia amongst others, of an expected 73 million gallons of SAF, in aggregate, at a fixed price.”

The buy contract is because of final for 10 years from 2026. Post mixing, the equal of 192 million gallons of internet zero SAF might be generated.

In a press release issued alongside Velocys’ announcement, IAG’s CEO, Luis Gallego, described the settlement as “another important step towards achieving our goal of 10 per cent sustainable aviation fuel use by 2030.”

Although the European Union Aviation Safety Agency says there’s “not a single internationally agreed definition” of sustainable aviation fuel, the overarching thought is that it may be used to cut back an plane’s emissions.

According to Velocys, Bayou Fuels will give attention to processing waste from the lumber and paper industries, which it describes as “woody biomass forest residue that would otherwise rot on the forest floor or contribute to forest fires.”

Carbon seize and storage expertise might be used on the challenge to permit for what Velocys calls “the commercial-scale production of SAF with an extremely negative carbon intensity.”

Aviation’s problem

As considerations about sustainability and the setting mount — the World Wildlife Fund describes air journey as “the most carbon intensive activity an individual can make” — discussions round aviation are more and more centered on how improvements and concepts may minimize its environmental footprint.

In a recent interview with CNBC’s Steve Sedgwick, Ryanair CEO Michael O’Leary was cautious when it got here to the outlook for brand spanking new and rising applied sciences within the sector.

“I think … we should be honest again,” he stated. “Certainly, for the next decade … I don’t think you’re going to see any — there’s no technology out there that’s going to replace … carbon, jet aviation.”

“I don’t see the arrival of … hydrogen fuels, I don’t see the arrival of sustainable fuels, I don’t see the arrival of electric propulsion systems, certainly not before 2030,” he went on to say.

“So it will certainly be after my career in the airline industry is finished … but I hope it will get here before the end of our mortal lives.”