Alasdair Lumsden, Carbon Neutral Fuels: Ctrl C, Ctrl V-ing future of eSAF

In this episode, we sit down with Alasdair Lumsden, co-founder of Carbon Neutral Fuels, to explore how taking a screwdriver to a VCR led to his time in tech entrepreneurship, which eventually ended up in the world of sustainable aviation fuel. 

Alasdair walks us through the company's Power-to-Liquid e-SAF project, Project Starling — a commercial-scale facility planned for Workington, Cumbria, targeting 25,000 tonnes per year of SAF by 2031.

We dig into the nuts and bolts of CNF's technology stack — solid oxide electrolysis (with Topsoe), Fischer-Tropsch synthesis (Johnson Matthey's FT CANS process), and upgrading technology (Honeywell UOP) — and how CNF is integrating waste heat recovery to improve efficiency and unit economics. 

Alasdair also explains the decision to skip the demo phase and go straight to commercial scale, why their CO2 sourcing strategy shifted from 100% direct air capture to a mix of biogenic sources, and how they secured a 2031 grid connection date by choosing Cumbria over more traditional industrial sites.

On the commercial side, Alasdair discusses how CNF has raised over £11 million to date — including £7.4 million from the UK Advanced Fuels Fund across two rounds — and is now mid-way through a £24 million Series A, targeting patient capital and strategic investors. 

We also cover offtake strategy, the Revenue Certainty Mechanism, the hydrogen policy disconnect, and why Alasdair sees the UK's DFT as a genuine competitive advantage for SAF developers looking to de-risk before expanding internationally.

Transcript

Welcome And Guest Introduction

SPEAKER_00 0:08

And welcome to another episode of the Staff Podcast, the only dedicated staff podcast on the internet, probably. And I'm delighted this week to be joined by Alistair Lumsden from Carbon Neutral Fuels. Alistair, thanks so much for joining us. How are you?

SPEAKER_01 0:31

I'm great. Yeah, it's great to be here. Really enjoyed SAF Investor this year.

SPEAKER_00 0:37

Great. Great. Well, it was great to see you there, and it's great to have you on the podcast. And today we're going to be looking at carbon neutral fuels, the projects you're working on, different things around liaising with technology partners, fundraising. Obviously, that is something that comes up in every episode. So we're going to be looking at your how you found fundraising, plans for future raises, as well as overarching macro staff market trends that you are currently sailing with, sailing against. We can get into all of

From Computers To Climate Work

SPEAKER_00 1:18

that as well. But before we get into all of that, do you want to tell us a bit about your background before carbon neutral fuels, what your career looked like up to that point?

SPEAKER_01 1:32

Yeah, certainly. I might go a bit further back even than my career, just to give a kind of flavor for where I've come from. And um, my parents kind of allowed me to take things apart as a kid, and I wanted to take everything apart. And uh I I'm a child of the early 80s, and um my parents uh kind of got a VCR quite early on, and apparently I was took a screwdriver to it. And rather than tell me off and say, no, that's our most prized possession, uh, they just let me do it, and that kind of continued, I guess. So I've I've always had a bit of an engineering mind and always been very curious. And I ended up falling in love with computers when I was a young age. Uh my mum got me a Commodore 64 when I was about seven years old. And the internet was a big thing in the 90s, and so I ended up studying computer science at Imperial College in London and loved that. And I had some uh friends on the course that had started companies when they were really young. Um I just blew my mind that you could own a company age 16, and they were doing web hosting, and I kind of got involved with that. And after I graduated, I started my own web hosting company, um, built and sold that after a year, and then um did another one, and that lasted uh for 15 years, and I was kind of doing management consultancy and um IT cloud consultancy and that kind of stuff. And I sold that during COVID. Uh, it had been a long run, longer than I expected it to be. And I always wanted to be in energy, to be honest with you, because energy is just fascinating to me. It underpins everything. Um, you know, if the cost of energy is expensive, goods are expensive. If the cost of energy is cheap, everything's cheap. And I was really fortunate to get invited to COP26 in Glasgow in 2021. Um, and that was through the kind of nuclear tickets. Um, nuclear had kind of been excluded from previous COPs uh or or just not present. And the UK's got a strong um youth uh nuclear group, um the Young Generation Network, and and they they'd gotten invited to COP, and there were about 50 of us in the Blue Zone, which is the kind of the diplomat zone, going around evangelizing and spreading the good word of how nuclear energy can solve all of our problems. And I met Sophie through that kind of um that group, and she was great. She did a live interview on Sky News about nuclear, and she was getting absolutely grilled about Chernobyl and waste and all of the the stuff, and she was just cool, cool, calm and collected and came off brilliantly. And I just thought she had amazing leadership potential, and I knew I was kind of wine, you know, selling my company and looking for the next thing. So I I approached Sophie kind of a year later, once that was all wrapped up and said, Hey, do you want to do a power to liquid startup? And she was like, What's that? And three and a half years later, we've been building up carbon neutral fuels, and it's been um quite the journey.

SPEAKER_00 4:42

A VCR for the younger generation of listeners, if there are any, which hopefully there are, is a video cassette recorder because whilst you were talking, I Googled it because I couldn't remember. So reminder, and just uh heads up for everyone there, and Sophie is the co-founder with the U of Carbon Neutral Fuels. And I think uh it's always interesting when people say they wanted to go into energy, and there's such a diversity of backgrounds in this industry, how you ended up thinking SAF and PTL was the sector of energy that most appealed to you and how you came to that decision. So, how did how did you end up there?

Peak Oil And The Energy Bug

SPEAKER_01 5:29

Yeah, that's um that's an interesting one. Uh that that could date all the way back to whilst I was at university and uh learning about something called peak oil. And it was this idea that um an oil well follows a bell curve of production. So it starts out not producing very much, it ramps up, it hits a peak, and then as the oil well declines, it kind of goes down the curve until that you're not really producing anything anymore. And this guy, um, I think it was Hubbard, uh, came up with this notion that if you add up the production curves of all of the oil wells globally, um, that you will get peak oil and then it will start to decline and civilization will collapse because we've we're addicted to cheap oil, and you know, it it some something, some huge percentage of the calories in the food that we eat comes from oil because of things like fertilizer and tractors, and you know, the what used to be human labor toiling away in the fields has been replaced by oil labor. Um, and I found that fascinating. And and there was this whole community dedicated to this kind of peak oil doomerism. And uh I guess I found that fascinating. And it learned huge amounts about energy. And I guess the the solution that people were talking about to it was renewables and nuclear. And I knew nothing about nuclear, and I started learning about it, and it you know, it's it's it's also quite fascinating because you've got you know these huge disasters that that really capture people's minds but um and and terrified everyone, but also this amazing potential source of of clean energy. And the more I learned about it, the the kind of more everything that I'd led been led to believe about it turned out to be totally incorrect in that it's um you know air pollution kills millions of people a year, uh, and you know the nuclear is has has you know it's it's it's in the it's it's below a thousand over its entire life cycle. So on a on an adjusted life risk basis, it's far, far safer, but um has so many headwinds. And that led me to attending nuclear energy conferences. I kind of decided as a student, hey, let's just go to a nuclear energy conference, you just buy a ticket. And um ended up uh in particular at Thorum at Thorium Energy Conferences and um learning about new advanced nuclear technologies, and that led me to COP and just gave me this bug for energy. But power to liquid in particular was something that kept coming up as a potential use case if we had abundant, cheap nuclear energy. And I think renewables have kind of won because it's so expensive and difficult to do nuclear now, it's so regulated, and renewables have you know it's they're they're democratized. Anyone can kind of put a solar panel on their roof, and um, and it's a manufacturing thing, you know, it's um there's no regulations or minimal regulations, you can just manufacture them. So um less bullish on nuclear, more bullish on on renewables, but um that gave me the energy bug.

SPEAKER_00 8:36

We we had very different student days because I definitely wasn't attending energy conferences whilst I was at university. So you're obviously a much better student than I was.

SPEAKER_01 8:50

I'm a huge nerd, uh I have to confess.

SPEAKER_00 8:54

And that there's absolutely nothing wrong with that. You're certainly not alone in in this space. So now let's zoom in on carbon neutral fuels.

What Power To Liquid Means

SPEAKER_00 9:05

So what is just give everyone the high-level overview about what the proposition is. We've already mentioned it's PTL, Power to Liquid, ESAF company, and so maybe go into a bit more detail on that RE technology um projects that you're working on, and just timeline from foundings up to the present day.

SPEAKER_01 9:35

Yeah, absolutely. When Sophie and I started the company, we we knew we wanted to do power to liquid, and I think the the reason for that was because of that nuclear connection, and um it's a synthetic process, and you're kind of starting out with the raw ingredients. And the way I like to look at it is nature today, uh, through photosynthesis, you know, all the vegetation, etc., um, takes in sunlight energy and takes in carbon dioxide and takes up water, pulls off the oxygen atoms, and produces sugars, um, which are kind of you know hydrocarbons but with a bit of oxygen inside. Um and with e-fuels, you're trying to do that synthetically. So you're using electricity as your energy source, you're taking in carbon dioxide, and there's different ways of getting it. Um, you're taking in water, and then you're doing the same thing. You're pulling off those oxygen atoms and producing long-chain hydrocarbons. Um, and we kind of looked at the market in terms of you know, is there a technology gap? Do we need to invent new technology to do this? And I I think Sophie and I, you know, in the early days, in the first year, we were looking at getting lab space and getting technicians and doing RD. Um, but it came it became apparent that a lot of the technology to do this already existed. And an analogy is a bit like with EVs, you know, there was nothing stopping anyone making electric cars. It was just nobody put the ingredients together in the right combination and come up with a um compelling proposition. And we partnered quite early on with uh a company called IO Consulting, who do what's called front-end loading, and that's basically de-risking major projects by starting out with a feasibility study, you look at the options, you progress those, you then go into something called pre-feed, which is you advance your chosen concept and do some early engineering work ahead of going into feed, which is your front-end engineering design, and doing the kind of computer-based design work before you um move into construction. And the UK government's been incredibly supportive of SAF projects. Um, and so we we put together a proposition to the Advanced Fuels Fund in Window 2, which was kind of over two years ago now. And that proposition was to do solid oxide electrolysis, which is high temperature electrolysis, and I can maybe come on to that a bit later. It was to do 100% direct air capture for the CO2, and we partnered with Mission Zero about that, and I can maybe talk about them a bit later. Um, and then it was to do fissure troughs, um, and then produce produce SAF basically. And we were awarded 1.4 million in AFF window 2, and then we kind of completed feasibility and pre-feed, and we pivoted away from a demo reactor or a demo project that was proven in the feasibility study stage to just be it's gonna cost too much money, nobody was gonna pay for it, and the technology partners didn't want to do demos. And it kind of goes back to what I was saying earlier. It's like the technology to do this is proven it's ready. And so we pivoted to a commercial scale facility, and we moved away from 100% DAC to I think we're about 8% DAC now, with 92% of our CO2 coming from biogenic sources, and that was in recognition of where DAC is today in terms of its technology maturity and also its cost. And then we applied into AFF window three to do this commercial scale facility, um, and we were awarded uh six million by um AFF to do that, and so for the past um nine months, um we worked on the the front-end engineering design, and uh we're kind of halfway through the feed, I'd say, for the plants, and we're going to be applying into AFF window four. Um, we've we've we've heard from DFT that there will be another um round of funding coming, which is great. And then the plan is to finish that feed and move into EPC and construction.

SPEAKER_00 13:50

So you mentioned where you're planning on getting the carbon from, because one of the big issues around all these projects and about other pathways where you're getting your feedstock from. And particularly with PTL projects, is there's the other component of how you're going to source your electricity.

CO2 Sources And Grid Strategy

SPEAKER_00 14:08

Which is something that I don't think you mentioned in your overview there. So, what's your plan for getting access to what is usually for PTL projects a vast amount of consistent green electricity, or are you or do not need consistent, you can have intermittent electricity?

SPEAKER_01 14:28

These are great questions. Uh I'll start with the CO2. As I mentioned, the the initial strategy when we were at demo scale was 100% DAC. Um Mission Zero, they're a UK-based uh startup. Uh they've been going quite a number of years now, and they've um been funded by Breakthrough Energy Ventures, for example. And uh they've they've actually shipped systems um for doing DAC sort of around 50 to 150 tons per year. Um, one to the University of Sheffield, um, and there's uh some some other projects, there's one in Canada. So they've they've got a proven track record of actually delivering systems. Um, and we're looking at doing about 10,000 tons a year with them for this facility. For the remainder of the CO2, we've partnered with the carbon removers, and they have their own capture technology, and they're working with distilleries um in Scotland, and we should be able to get 100% of our CO2 with them, and we've got a priced MOU in place. Uh, and then for diversity of supply, we're also looking at other providers, for example, the biogas industry. Uh, and that's been a huge success story for the UK. And they pull out the methane from the biogas to inject into the gas grid to decarbonize you know the home heating and and and home cooking. Uh, and they're left with CO2. Uh, so it's quite easy, relatively speaking, to capture uh the CO2 from the biogas industry as well, and similar to the distillery industry. So we think we've got some really good sources of CO2 there. The downside is you have to truck it. Uh, it's it's there isn't a pipeline. Um, but at our chosen site in Workington, and this was one of the reasons we one of the many reasons we chose to be in Cumbria and Workington rather than somewhere more traditional like Teaside, and was that there's a paper mill over the road, and they have a biomass CHP plant. And we're in early stage discussions uh with them about options for potentially doing carbon capture, and that way we can just pipe it over the road and we don't have to worry about trucking. But that um does rely on post-combustion capture, that's lower TRL technology. They're on a journey with regards to their carbon capture strategy, etc. And we didn't want to have projects on project risk. So that's an optimization we're looking at. For the electricity, another reason we chose to be at Workington and Cumbria at the site we've got is grid connection. And grid, as you'll know in the UK, or many people are are familiar with, um, due to the regulations where it's first come, first serve, uh, there's a queue. And due to you know, underinvestment in the grid over a long period and the sudden activity rolling out huge amounts of renewables, that queue is enormous. And it's it's the back of the queue is 2040. And so we by going to Cumbria, the the local DNO has been able to give us a 2031 date, and um we're working with um you know NISO and NGET and the the other participants to make sure that we can get that 21 uh 2031 grid connection. And then when it comes to procuring the power to satisfy the UK mandate, DFT have a kind of um shopping list of things they require, and it's a bit onerous. The electricity has to be additional. That means that we need to contract with energy suppliers that will construct energy generation assets for us that are not going to grid or or not won't be selling to, you know, it's nuanced. It it it they can't bid into the contracts for difference for wind, for example, because um, you know, it's it's it's incompatible with that. So that that that pushes up the price of the electricity we need to procure. It needs to be time-matched, um, it's complicated. And so we've been working with Beringa, who are a management consultancy that specializes in the energy space to model our electricity requirements, and we're now working with them on a tender process where we're going out to market and and getting pricing. And the good news is that the pricing hasn't been as bad as we initially anticipated, and we are have good engagement, and um, it's not impossible, which I think was the the concern initially. Um and there's also support from government in terms of things like the British Industry Supercharger Scheme and the British Industry Competitiveness Scheme, BIC. Uh, and it looks like e-fuels will qualify. And because we're not going to be contracting with um providers that are under contracts for difference, it doesn't make sense for us to pay the levies that those programs will remove anyway. And if you look at that, that also reduces the cost of our electricity as well.

SPEAKER_00 19:24

Yeah. So you do you have a do you have are you there like you were in the days of meat counters and supermarkets where you have to get a ticket and they have to shout out your name. Is that where you're basically? Is that effectively what you're doing for electricity to while you're waiting for your number to be called?

SPEAKER_01 19:46

I think if we required um new infrastructure to be built at grid level, like a new major substation, then yeah, you're looking back at the queue. What we've been working with the local distribution network operator on is connecting into existing substation with existing capacity uh and um looking at things like active network management, etc., so that that can be um achieved. And and so that that's all shaping up, I would say, and that that puts us in a strong position.

SPEAKER_00 20:16

And what about hydrogen?

Hydrogen As Onsite Technology

SPEAKER_00 20:21

Because there's always conversations around hydrogen as well. And so what's your what's your plan on that front?

SPEAKER_01 20:29

Yeah, people talk about hydrogen like it's CO2 and it's a feedstock. And I have uh or or the as a company, we have a slightly different take, which is uh it's you buy an electrolyzer, it's a piece of technology, you you put it in the facility, and it makes the hydrogen that you need. And you know, hydrogen is hard to transport. If you have to go to a hydrogen producer, you have to buy, you then got a contract for a long period. Your investors are going to be looking at how robust that supply chain is, etc. And it just seemed really high risk to go out to market to buy it, and we didn't want to do that. So um our strategy for hydrogen is it's it's a technology, it's included in the facility design. Uh, something novel that we wanted to do with our design was to use high-temperature solid oxide electrolysis. It if you have a source of waste heat, you can use that heat to generate the steam that's needed for the electrolyzers. And that means some of the energy to produce the hydrogen is coming from heat rather than electricity, and that reduces your electricity requirements. And it's a great fit for fissure troughs. Fischer troughs is exothermic. When you're combining the hydrogen and the carbon monoxide, um, you generate waste heat. And if you don't have somewhere for that to go, it's wasted. And so we're using that waste heat um with the electrolyzers in an integrated process, and that's that's where some of our IP and our um uniqueness comes from, and that improves our efficiency and that improves our unit economics.

SPEAKER_00 22:02

I always love it when people come on this podcast and they've got a science background and they're explaining science and they make it seem so simple. Because it's inevitably not, otherwise things would be moving a lot quicker. But there's just a way that you can explain things. Why are we taking so long to do this? It seems so straightforward. You do this, add that, and it's like it's like almost like a recipe in a cookbook, albeit on a slightly larger scale. But it's it's never as easy as the science can be explained.

SPEAKER_01 22:36

Yeah, uh the the hydrogen economy I've found a little bit baffling as a as a concept. Just as an engineer, it's um it doesn't make a lot of sense. And I think that's being borne out by the market where there has been this strategic slowdown in in the hydrogen economy, because I just think the economics are not working out. Um and and also, you know, de there's also a bit of politics with it in that hydrogen's been run by DASNES and SAF is being run by DFT. And you can see it in policy where the hydrogen allocation rounds and the hydrogen business model um are that that that regime and that that subsidy, if you will, um is incompatible with the SAF mandate developed by, you know, being developed by DFT. So if we want to buy subsidized hydrogen, the producer loses their subsidy if it's subsequently used for SAF. And so, you know, there's there's complexities with the on the policy side that also make it impossible for us to buy hydrogen. So it's um there's a lack of joined up thinking with regards to hydrogen, I think. And it's just been easier for us to just treat it like a technology.

SPEAKER_00 23:43

With the technology you mentioned, a lot of these technologies existed, which means you're going out to technology licenses and creating a technology stack for your production process.

Integrating Licensors And Partners

SPEAKER_00 23:56

So, and you've got partners like Honeywell, Topso, Johnson Matthew, I believe are all providing different pieces to this technology stack, as well as what you just talked about with your own um solid oxide electrolysis portion, and you're effectively all stacking them together. How have you found, how are you finding managing those stakeholders, integrating that stack together to create this process that can go through the prefeed feed um studies that you're you're currently undergoing?

SPEAKER_01 24:37

Yeah, it's been really fun and interesting and fascinating journey. And when we were a startup, you know, before the we'd had our first advanced fuels fund when uh you know we we were speaking with these large companies, and some of them were skeptical to the point of not even engaging in the sales process.

SPEAKER_00 24:59

And which ones were they? Just just name and shame them right now?

SPEAKER_01 25:02

No. I I I wouldn't I wouldn't I wouldn't do that to them. Um it's quite funny. Some of them have come back begging for business, and it's like, sorry, your salespeople told us to go away, you missed that boat. And that that was quite fun, actually.

SPEAKER_00 25:17

That must be a great conversation.

SPEAKER_01 25:20

Yeah, yeah. Talk to the hand. But uh yeah, the partners that we've chosen have have been great. And um, you know, there was a a little bit of eyebrow raising when we told them what we wanted to do at the beginning. And I I think they felt what we were trying to bite off was too big for us. And I think we've proven them that that hasn't been the case. And I think the UK government support has been fantastic, and I think what the UK government's trying to do here is brilliant in that they're helping innovators do new new things, and um the the solid oxide that is uh Topso's technology, and it is relatively new compared to alkaline and PEM electrolyzers. Uh, but Topso, you know, they've got a very long history. They're they're a Danish company, they've um uh they they believe strongly in uh supporting the green economy. They've built the Europe's largest solid oxide uh fuel cell manufacturing facility. And we did a basic engineering design package with them in the previous um advanced fuels fund uh period, and and they they were fantastic, and you know, it was great seeing our design um you know come to life and be uh you know end up in a 3D model. Uh Johnson Matthew have also been really supportive, and um the technology was co-developed with BP, and they've you know it it comes from the gas to liquids space, so it's it's TRL kind of eight or nine.

SPEAKER_00 26:54

Um FT CANS process that exactly. Yeah.

SPEAKER_01 27:00

Yeah. There's no um running instances of it, so it's not quite TRL 9. Fulcrum bioenergy would have been a running instance of it had they not completely bungled their commissioning and EPC strategy and um rushed things, and through no fault of Johnson Matthew, my uh my understanding is that they they because it was a way uh gasification process, they managed to produce some um acetic acid and and sent that through the entire plant and destroyed it, which was not great. Um, but the technology itself, the the FT cans technology, is is we the reason we chose it is it has an incredibly high conversion rate of carbon through to FT liquids. And then we're working with Honeywell ULP, and they're actually acquiring uh Johnson Matthews FT cans technology and business unit. Yeah. And uh and that's a great fit. And and ULP have the refining technology to take the kind of the crude oil, if you will, from the FT process. It's much cleaner than crude oil, and then um convert that into kerosene. And we'll also make some green naphtha as well.

SPEAKER_00 28:12

And we haven't actually mentioned, we've mentioned you're doing a you're going straight to a commercial facility, which part of me seems bizarre given the the the process that everyone else is going through in terms of you get a demo, then you do pilot, and then you go through to a commercial and you gradually scale up.

Why Skip Demo And Go Commercial

SPEAKER_00 28:32

So maybe you can ex touch on a bit more about that. But the commercial project's called Project Starling, which is the one up in um Cumbria. So Workington, yeah. So why because you've got different technologies and some of them aren't totally de-ris, and you are stacking them together potentially in a in a new way that it's not a totally risk-free endeavor going straight to uh commercial, even if albeit commercially on a relatively small scale. Maybe you can explain sort of the the quantities you're looking at. But why would you skip that ramp up when, as you mentioned, Fulcrum, part of the reason they ran into their issues was they got their ramp up ratios wrong and they tried to scale at a far too greater um to a far too greater capacity from a too smaller demo plant. So there are risks there. So maybe explain that part of the the strategy and why you think that works for Starling.

SPEAKER_01 29:42

Yeah, great question. We've been doing right from the outset everything we can to de-risk this. And we you know, our proposition to DFT in our original application was uh kind of de-risked innovation uh and calculate taking calculated um risks with that because you know we wanted to improve efficiency and we wanted to move things forward whilst also doing it in as as uh in a risk-reduced way as possible. And Fulcrum Bioenergy was gasification of municipal solid waste, and you've got all kinds of contaminants and pollutions in there, and um, that's hard to control. With what we're doing, it's an incredibly clean process, and the CO2 we'll be taking is food grade, so it's safe enough to put in your your coke uh that you drink, or um, you know, the the beers that you that you have on the weekend. So uh that's the kind of the the first thing I'd say is it's um this is a very clean way of making the fuel, and that kind of de-risks things because ultimately we're working with CO2, um, which will become CO, hydrogen, you're then making an FT liquid and upgrading it. And that FT and upgrading piece is is proven, you know, that's been being done for over 50 years. And then on in terms of the higher risk elements of the plant, you know, the the DAC is new and novel, but again, it's just producing CO2. It's kind of you know off to the side, if you will, in terms of you know, if you look at our plot plan, they they've got their own plot and it can be turned off, it doesn't have to be on, uh, and and no issues there. And you know, we're working with Mission Zero on testing the CO2 to make sure uh you know that it meets the specification. Um so that really leaves the SOAC as a as a as the highest risk piece of the puzzle. Um, but you know, TOPSO have delivered um pilots of the SOEC technology. It's it's modular, it's it's stacks, and so scaling up it's just control C, control V. And from a risk perspective, you know, there's there's not a huge amount of of risk there. And because of you know their heritage, we've got a lot of confidence. This isn't a startup company with a new technology. It's it's it's something that they've been developing over a very long time. The pilots have been in operation for you know over between between five to ten years. Uh so the the it it's it's managed risk. And in terms of kind of going from demo, you know, skipping the demo, I'd say that was kind of pushed on us to a certain extent by these licensors. When we spoke to Topso and Johnson Matthew and Honeywell and said we want to do a demo plant, they said uh uh thanks, but no thanks. We've done our demos, we're we're ready to do this at scale, you know. So that we then spoke to the smaller players and they they were smaller companies, and then the risk was too high. So we kind of had to go to this scale to kind of de-risk it in a way, which is a bit counterintuitive. And one one final thing I'd say on this is um from an FT and upgrading perspective, Johnson, Matthew, and Honeywell consider this demo scale, even though you know the the CapEx is between 500 million to a billion.

SPEAKER_00 32:59

Yeah. The techno uh the technology that these guys have usually the way that it works at larger scales, it doesn't necessarily work to its optimal potential on a smaller scale as well. So I suppose that's part of the reason why they wanted to be operational at a higher at a higher capacity level. What is the anticipated capacity for for starling? What are you planning for on that front?

SPEAKER_01 33:30

That's a good question. Uh the the barrels per day of the FT unit is uh in the region of 750. Um we are looking as an optimization in the next phase of fees into introducing recycles and um possibly increasing the size of the FT in the upgrader. Um so that might go to a thousand barrels a day. But the the capacity the nameplate capacity of the facility as it stands today is 25,000 tons per year. And that's roughly enough to decarbonize 450 transatlantic flights and enough to satisfy about 40% of the UK's power-to-liquid sub-mandate when the facility comes online in 2031.

SPEAKER_00 34:11

And do you have uh an EPC partner who's

EPC Selection And Cost De-Risking

SPEAKER_00 34:15

sort of giving you a technology wrap, as it were, who's going to wrap all your technology in a nice de-risk bow for you? Or do because you've got these technology partners, that's something you're they're sort of fulfilling that role as well as uh the the technology de-riskers.

SPEAKER_01 34:35

Yeah, uh we're going out to market at the moment, actually. Uh we we've as I mentioned, we've kind of done an early stage feed and we've de-risked and we've we've gotten to a class three cost estimate. Um, but we want to do some optimization work, and it's it's it's it's an early stage class three. So we're going out to the EPC market to take the feed through to completion. Um we're putting together a feed scope of work at the moment. Um, an I.O. Consulting that did the feasibility prefeed and feed, they're going to be moving into an owner's engineer role for us to look after that um that process. Um and we're going out to market to get quotes from three EPCs. And we've shortlisted internally who those EPCs are, and we've gone through uh, you know, a selection process in terms of assessing are they, you know, have they built stuff in the UK over the past 10 years, is stuff to on time and on budget, what is their execution strategy, um, you know, and looking at all of those things. Um and yeah, we we the the plan is to go into AFF, having the next AFF having selected one EPC to work with who will complete the feed and then convert that into um uh you know the take it through the EPC stage and put together their bid package and you know bring it to a class two cost estimate. Um and then we'll you know get it built.

SPEAKER_00 36:03

Yeah, and and what's the the longer term strategy? Say you EPC selected, you go through feed, you start construction, you have styling up and running. What's the plan after that? Is it to stay in a in a production role? Do you want to be a a SAF PTL producer with multiple facilities? Do you want to slightly pivot and look at sort of licensing sides with bits of tech bits of tech on advisory side? Like what's the the goal? Are you gonna be looking at more facilities?

SPEAKER_01 36:43

We'd like to develop future projects. We'd like to take all the expertise um that we've we've gained over the past three and a half years and and use that to build additional projects. And you know, the the UK is a great place to do this because of things like the Advanced Fuels Fund, which is providing the DevEx capital. And that's traditionally a type of capital that's very hard to get from investors because it's it's high risk at this stage. Um and so if we can kind of de-risk this project in the UK and get it built, then we believe we should be in a strong position to take this abroad. But I would say that it's gonna come down to um, and this perhaps leads quite nicely into the investment side of things, but it's gonna come down to the kind of strategic investors that we get on board. Uh, you know, who's funding um our Series A, who's funding the project finance, what are their strategic goals? You know, are they um interested in SAF? Are they interested in marine fuels? Where can we take this de-risked technology pathway? And um, you know, we're we have to look at this opportunistically, I think, and not be too fixed in our thinking and see, you know, where where can we go from here?

SPEAKER_00 37:58

You mentioned the fundraising, the capital raising, and I want to dive into that

How The Company Is Funded

SPEAKER_00 38:05

a bit more. So you've already mentioned the advanced fuel funds, you've been a recipient of funds from their twice. And you've also got some investment from other sources as as well. Do you just want to explain how you funded up to this stage beyond the AFF and where the where other capitals come from? Because you're not just funding this from AFF as although it is extremely helpful to have that money as well, I'm sure.

SPEAKER_01 38:39

Yeah. We're quite open. Uh you know, to date, we've raised uh over 11 million pounds in in total, uh, of which you know 7.4 million was from the Advanced Fuels Fund, uh, putting us, you know, there's over over 3 million in terms of the the private capital that we've raised. Um that has come from you know a range of sources. Uh the initial capital that we got was from SFC Capital. They're one of the largest uh pre-seed and seed investors in the UK. Uh they they were incredibly supportive at that stage. Um through them, we we had subsequent uh kind of co-investments with uh British uh business bank, um, which is you know uh connected with the the the UK government. And Trailfinders, the the High Street Travel Agency, who uh came in uh at our siege round and uh have subsequently followed on with further investments. And um it we we love having them on board. Uh they've got connections you know into the airline sector, etc. So it's it's been a fantastic journey fundraising. And I I think what's enabled us to be successful with that has been kind of our origin story, the fact that Sophie and I are kind of values-oriented. We're not doing this just to get rich, we're not from the oil and gas sector seeing an opportunity because there's grants available. We believe in what we're doing. Sophie and I met at COP. We want to decarbonize, we want to leave the world in a better place. And I think that resonates with certain kinds of investors that want to see a future for their children and and and the planet. And um, and that also aligns with, you know, this is a a business opportunity as well. SAF is a big opportunity for energy security, and it's going to be a growth sector as aviation needs to decarbonize. And, you know, people feel guilty going on holiday, and I see it all the time. People are like, oh, you know, I I I love to travel, but I worry about the emissions, and I tell them about what we're doing with carbon neutral fuels. And you know, they a lot of a lot of people haven't heard of SAF and they they kind of find it a bit mind-blowing. And uh, you know, that's I love being able to tell people that there's a solution and that they hopefully in the future won't have to feel guilty. And um, so I think there's there's been a good story, there's there's a good journey that we're on, and and um we've connected with some fantastic investors, and you know, we now need to prove to the strategic investors that this is a uh proposition that will make money, make returns, uh, and that you know they they can go to their investment committees uh and say, look, this is a first-of-a-kind proposition, but it's a de-risk proposition, and it's a good proposition.

SPEAKER_00 41:30

Is that who you're targeting as future investors? You'd really like some strategics, some corporate venture capitalists to come and join in a series A round, which I'm presuming you're either currently raising or about to raise, you you must be very close to starting that. So is that the ideal type of investor you want to have on board in that round?

SPEAKER_01 41:58

It is. We're doing our series A at the moment. We've had uh some some great initial conversations. We're quite early uh in the series A process, but um, you know, we've got our data room up, we've got our uh decks, um, you know, we we we are actively pitching, and uh we've had some real interest in terms of uh you know follow-on. But what we're really looking for is that lead investor that's gonna come in, that understands the market and that wants to see this through and is thinking potentially about projects after this. And what we've kind of learned through this journey is that it's this isn't a fit for those VCs that want a 20x return on a short time scale for some new groundbreaking technology that's high risk, high reward. Um, we are kind of looking at that more patient capital, sophisticated investors, family offices. Um, and that's uh we're working with a strategic advisory firm, near Mirror Capital, that are going out to those types of investors. And um, and so far it's it's um it's been good. We we've had some really interesting conversations where people kind of understand the space and um we'll see where we get to.

SPEAKER_00 43:10

It's tricky because SAF projects, certainly if you're developing projects or developing technology, the returns horizons don't suit a purely financial VC a lot of the time. They're looking for a five, six, maybe seven-year portfolio return so they can go back to their LPs within that time. But the real realistically developing a SAF project within that timescale, and then being able to give return to investors within that time scale just isn't practical, which is why there is there is so much more corporate investment going into staff than there is other purely financial, certainly in the venture capital stages, the early stages C series A, series B. So it's a tricky thing to balance investors money. Returns versus the timelines that these projects take because you do require an inordinate amount of patience to actually see them to fruition.

Politics And Energy Security Tailwinds

SPEAKER_01 44:09

Absolutely. And it is a it is a challenging environment as well because of what's happening in terms of the wider um, you know, I'll I'll say his name, uh Trump, and the damage that he's doing to the the the the the green economy. And it's it it's you know he's paid two billion dollars of US tax money to get Total Energies to not build a wind farm because he hates wind farms because of his obsession with golf and it's uh it's it's bonkers and you know it's um it is uh it is affecting everybody and it's making investors skittish and that means it's it's it's things are moving more slowly. But the the what we have seen is it's not stopped. People are just being a little bit more cautious and it is happening, and so that's fine, you know, you can work with that.

SPEAKER_00 44:59

I I think the yes, the the green agenda has come under fire over recent years, particularly from the man in the White House. Um but equally, I think the industry is going to benefit for it because it's coming up, it's becoming more resilient by coming up with other narratives in order to justify its rationale rationale. And we've seen with the straight of hormous the issues around oil prices and the energy security argument has become far more influential and almost become you know as significant as the green agenda in terms of justifying staff in terms of that energy diversification strategy for everyone, every country in the world to look at and how they can domesticate/slash diversify their energy needs and requirements. So I think that in the long run, I think that's only a good thing for the industry scale up and how it can cement its place in the global psyche and how just to justify itself to investors.

SPEAKER_01 46:08

Absolutely. It it is a you know, if you look at what's happening with wind and solar, uh they've kind of become unstoppable in a way. And you know, I was a bit of a nuclear uh fanboy back in the day and thought renewables were you know um pretty anemic in terms of the the the the the the heft that they could bring to bear. But um I think I've been proven wrong on that front, and uh it's it's you know that there is this huge momentum behind it, and uh you know, Trump, Trump's efforts to stop it are just pointless. You know, he's gonna be gone uh in a number of years. And I mean China's pressing ahead anyway, and so is Europe. So um I think the SAF, especially the e-fuels, uh plays really nicely into that because you're taking you know that that that energy and you're putting it into domestic energy security, and it's it's something that um you know other countries can't use as a political football. You know, they can't stop your um your wind and your solar energy. It's it's uh it's not gonna happen. But with the there's still work to do. We need to get the grid situation sorted. We need to get battery energy storage and long-duration energy storage to bear. And I'm still I I said earlier that I was less bullish on nuclear. I I'd still say there's an opportunity for nuclear, especially with the small modular reactors and the advanced modular reactors, that um if the regulators can kind of streamline the processes and enable some of these new approaches to come to market sooner, that we'll we'll see a balanced portfolio of energy assets, all providing domestic energy security and feeding into um paratiliquid uh fuels of you know not just for SAF, but potentially for marine as well.

SPEAKER_00 47:55

Yeah. Quickly back on the series A, what what's your your timeline to to close? When would you ideally like it to be to be closed? And what's the the rough estimate on the amount you you're looking to raise in that round?

SPEAKER_01 48:13

Yes. So we are raising at the moment. We'd like to close by the end of summer. We'd ideally like to have a firm commitment by the end of July so that we can include that with our Advanced Fuels Fund uh application, assuming that that launches this summer. Um and I'd say the Advanced Fuels Fund presents an opportunity for their Series A investors because you know, if we're the it's possible for investors to put in a conditional offer, you know, if you're successful with AFF, we'll go ahead and invest. And we had that with SFT Capital the first time with AFF window two. It was we'll give you money if you get that grand. And the AFF is kind of a force multiplier because it means you you don't need to put in as much DevX. But our our base case for the the round, we've received 2 million from uh Trailfinders towards our Series A investment. We want to raise 24 million in total, so we're looking for another uh 22 million. Um DevX is expensive. You're looking at 5% of CapEx to get a project FID. We're within that range. So although it is a big series A raise that we're looking to do, it's it's not um you know out of the the you know, it's it's within reason. And um and we can look at this in terms of uh tranching it and aligning it with AFF and um and things like that.

SPEAKER_00 49:42

So yeah. You said hopefully by the the end of summer, but and my mind immediately went to well, the weather we've had currently that probably means mid-June.

SPEAKER_01 49:57

We want an Indian summer where it's nice and warm in October, but ideally we'd uh we we'd have closed our rays well before then.

SPEAKER_00 50:05

Yeah.

Offtake And The UK Revenue Model

SPEAKER_00 50:06

Um one thing we haven't talked about, and it's not something that you guys are overly communicative about. And I was I was curious about that. It's off take. Lots of people talk about off take and how important it is. Maybe it's slightly more important, slightly further down the line than where you guys where you guys are, but you it's probably something you are beginning to to think about, particularly with if you're looking at strategics a lot of the time, if they are airline strategics or corporate strategics, off takes come rolled up in in investment. So how are you guys looking at uh off take? And is it something that you've thought about yet, you're currently working on, or is it something you're probably gonna be targeting post-Series A around?

SPEAKER_01 50:56

We don't make a big deal out of it because I guess we we've got a superpower in that uh our commercial director, Mark Amore, he he has uh 30 years experience in the fuel supply sector. And he's previously worked at um SR and World Fuel Services and BP and RBP. Um and when he came on board, he he knew all the right people to speak to. And so we've got LOIs in place with fuel suppliers and the and the airline sector. Um but it's all confidential and and we don't we don't talk about it. And it's also you know, the revenue certainty mechanism is in legislation at the moment, and there will be a guaranteed strike price. Uh, it's you know it remains to be seen how all this it's all going to be structured. Um but what it has created is a wait-and-see situation with anyone that wants to buy fuel within the UK, because you know, with the RCM and the strike price, the reality is that there will be a floor price. And the in the consultation they were discussing the floor price being either Jet A1 or HEFA. We don't know which it's going to be. But for e-fuels, you know, I think it's no secret if you're doing e-fuels in the UK where you know the cost of construction here is very high because of labor unions and um, you know, everything's expensive in the UK. Uh, and then you also have the high cost of electricity, it it will not come as a surprise that the cost of production is above the buyout price. And it is expected that the RCM, if the UK government wants to support power to liquid, the strike price offered to PTL will have to be above um the buyout price. But that means that we will probably have to sell to the airlines and the fuel suppliers at below the buyout price because otherwise they're just gonna buy out. And kind of you can't really settle on a price until all of this is worked through. So we've got LOIs, but in terms of offtake, I think everyone's in the same position. It's gonna be quite difficult to agree pricing and and do deals until there's more certainty with regards to the RCM.

SPEAKER_00 53:19

Yeah, that's that's an interesting point, and setting these prices are gonna be be fundamental to actually working out where the dynamic how this the market dynamics are gonna play out on the on the demand side. Does part of you you sort of look over to Europe and you look at the sustainable transport investment plan and the double-sided auctions that they're proposing over there, particularly with a with a view to e-fuels in eSouth? Do you look at that with uh an element of jealousy going, oh, that's a that's quite a nice, neat little model, or are you do you have faith that with enough consultation the RCM will set the prices in the rights and the right locations for for you guys to actually be able to benefit equally?

SPEAKER_01 54:14

I think what we've seen is people are concerned that HAR, the hydrogen allocation rounds and the hydrogen business model was not a roaring success, perhaps that everyone wanted it to be. And and that whole scheme was run by DASNAS. Um DFT have been pretty competent with everything that they've been doing around SAF. The mandates, competent piece of legislation. The AFF has been extremely well run. Um, you know, I think the RCM team are competent in DFT and they have the benefit of learning the lessons of what happened with HAR and the HBM to kind of uh change things. And they have said that they want it to be simpler and it's not going to be, you know, as it's gonna be different in its implementation. And there has been this consultation process that's been pretty thorough, and you know, we've fed into the consultation process as well. So um I'm pretty confident in the UK, and I think it's and I feel being in the UK is a bit of a superpower for us because of the great support of the Department for Transport. And, you know, it's not the EU, it's not some huge legislative body that has you know loads of member states all with their own opinions. You know, DFT as a civil service body seemed to operate relatively independently from central government. There's been consistency across the Conservative government and the Labour government, which has been fantastic. So I'm actually very confident about it. And I think you know, this is in international investors should see the UK as a fantastic place to de-risk SAF, and then you know, we can then take that project abroad. And um, I think the EU is doing a lot of right things there as well. But um, you know, as a business, being able to have a de-risk project that's achieved FID and has been commissioned and is up and running, you know, we'll be in a great place to take that to Europe and and Asia.

SPEAKER_00 56:16

Yeah. I'm gonna ask two final questions.

Founder Mindset Routines And Closing

SPEAKER_00 56:19

I'm gonna ask one that's slightly more negative, and then we're gonna end on a positive note. So starting with the negative, what frustrates you the most, whether it's in whether it's everyday sort of the day-to-day business of growing carbon neutral fuels, or whether it's slightly more on the macro side and the headwinds you're fighting against? What where's your biggest frustration currently sitting?

SPEAKER_01 56:49

I'm not feeling particularly frustrated at the moment, to be completely honest with you. Although it is exceptionally busy, and there have been, you know, there's always headwinds with project development because you you don't know what you don't know, and as you go through the process, you you learn. Um, but you know, it's it's it is challenging, it is difficult. Uh you always wish there's more time and more money available, but I'm yeah, I'm not feeling particularly frustrated to be honest.

SPEAKER_00 57:20

Well, that's incredibly encouraging to hear. I was expecting you to list up a litany of things that are just constantly keeping you frustrated for on a day to day. So it's great to hear that you're keeping it real and nothing's really frustrating apart from maybe like having some more time in the day and a few more pounds in the in the old bank account. That seems like a pretty good place to be. And finally, before we end, are you are you enjoying it as much now as you did at the beginning, or are you now enjoying it more because you're starting to see the wheels and the the cogs churn a bit faster?

SPEAKER_01 58:02

Yeah, it's um it's been a roller coaster for sure. Because you have weeks where you get a win and it's felt like you weren't gonna get anywhere, you know, when we were originally pitching and you do pitch after pitch, and nobody says yes, and then finally you get that yes, it is it is an adrenaline rush. Um I'm I I feel like it's it's it's getting more fun actually, because we are getting this traction. And through the the previous feed process, um, you know, with AFF window three, getting a 3D model at the end of it, and we're currently working with um uh a designer to turn that into something we can actually show people is is really exciting as well. So um no, it's it's still fun. My only uh you know thing that is less optimal is that I haven't had a life for the past three years, and that I've really had to nail down my routines in terms of eating healthy, exercising, meditating every day, so that I can be a bit like a pro-athlete at work and put in a you know a proper eight-hour day every day and be on you know 10 Teams calls every day. It's it's pretty draining, but um yeah, I've I'm I'm enjoying it.

SPEAKER_00 59:15

How long do you meditate for?

SPEAKER_01 59:19

I try and do between five to fifteen minutes, but um at the moment I quit coffee because coffee was giving me energy surge during the day and then crash in the evening, and then I found I just didn't have the energy to meditate in the evening and I managed to do six months no coffee, but lately I'm back back on the coffee because life without coffee is a bit boring. So I'm I'm having more coffee, less meditation at the moment.

SPEAKER_00 59:42

You need to work out your coffee meditation equilibrium. That sounds like the next next salute problem you need to you need to solve.

SPEAKER_01 59:50

Yeah, Alison.

SPEAKER_00 59:52

Thanks so much for joining us and telling everyone about carbon neutral fuels. That was that was brilliant, and it was it was great to have you on.

SPEAKER_01 1:00:01

Yeah, great. Thanks, Oscar. It's been uh been fun and look forward to seeing you back and better next year.