Velocys signs collaboration deal with Toyo Engineering
Sustainable fuel technology company Velocys announced the signing of a collaboration agreement with Toyo Engineering Corporation on Monday, to start the development of their commercial projects to produce sustainable aviation fuel and other renewable fuels in Japan.
The AIM-traded firm said the agreement followed on from the successful work already conducted in 2020 between Velocys and Toyo at the biomass-to-jet-fuel demonstration facility in Japan.
That included the provision of technical engineering and operational services, as well as the completed construction and delivery of Velocys' Fischer-Tropsch (FT) technology.
As part of the new collaboration, the parties had engaged in the preliminary engineering evaluation of the FT island, in a joint effort to deliver a commercial scale biomass-to-jet fuel project in the country.
As it had previously announced, Velocys said it would grant an exclusive right for Toyo to secure and use the licence and technical services of the Velocys FT technology for the commercial plant in Japan.
An advance deposit of $4m was received in 2019, of which $3.5m remained in escrow, which would be offset against future revenues.
In addition, the collaboration would extend to include the supply of the Velocys FT technology in other sustainable aviation fuel, e-fuel and biomass-to-liquid projects in the Japanese market.
That would be led by Toyo, including other partners introduced by Toyo.
Subsequent project execution for sustainable aviation fuel, e-fuels and other renewable fuel projects would be delivered by Toyo and its partners, potentially in Japan and other regions, with Velocys providing technical engineering and operational services around the FT technology.
“Velocys has a long-standing relationship with Toyo Engineering and today's collaboration agreement further supports this commitment,” said chief executive officer Henrik Wareborn.
“It indicates that Velocys is now firmly in the phase of delivering our commercial scale technology to our clients' commercial projects.
“Making our first steps into commercial delivery in the Japanese market strengthens our position in an additional geography to North America and Europe.”
Wareborn said the company’s clients recognised the importance of its “here-and-now” technology for commercial scale projects, both greatly reducing scope 3 life-cycle carbon emissions as well as resulting in synthetic fuels with air quality advantages over conventional fuels.
“We look forward to working with Toyo and their partners to enable the supply of modern low greenhouse-gas synthetic fuels to the Japanese market.
“Whilst there is no immediate material impact on revenue, we are delighted that the collaboration provides a pathway to commercialisation in Japan.”
At 1246 GMT, shares in Velocys were up 7.65% at 8.16p.