Red light? Amber light? No! Green is the colour for the UK aviation industry
25th June 2021 |
The UK aviation industry is leading by example.
We are talking here about the country’s airlines and the companies that provide those airlines with the fuel and hardware to keep their planes flying.
In an industry that is currently still fraught with Covid-19 pandemic uncertainty, it remains certain about one thing at least. It is heading towards a sustainable future.
Not even the red and amber from the travel traffic light system can stop it from going green.
In February last year, it became the first aviation body to commit to net zero emissions by 2050.
Put simply, this is a point where no new emissions are released into the atmosphere.
Now, the roadmap to achieving this net zero emissions target has become even clearer.
On 22 June 2021, industry alliance Sustainable Aviation laid out the first interim decarbonisation targets, on behalf of the UK aviation industry.
They are as follows:
- By 2030, the industry will look to reduce emissions by 15% compared to 2019’s level
- By 2040, the industry will look to reduce emissions by 40% compared to 2019’s level
- Net zero emissions by 2050.
To help achieve these targets, Sustainable Aviation has pinpointed two focus areas.
Firstly, innovations in sustainable aviation fuel (SAF), that can be used on a commercial scale.
Secondly, the deployment of sustainable technologies, such as hydrogen and electric powered aircraft.
Saying how to achieve something is one thing. Taking action to achieve them is another.
Velocys (LSE: VLS) is doing the latter.
The company, which specialises in the production of sustainable aviation fuel (SAF), has achieved a historic milestone, and one which shows that the commercial deployment of SAFs is underway.
On 17 June 2021, Velocys powered the first commercial flight using its SAF technology. The fuel was used to power a domestic Japan Airlines flight from Tokyo to Sapporo.
The fuel is derived from gassified woodchips, which have been synthesised into aviation fuel.
This process is carried out in Velocys’ signature Fischer-Tropsch (FT) reactor.
Henrik Wareborn, CEO of Velocys, noted:
“Velocys is pleased to announce the validation of SAF derived from woody biomass as evidenced by the use of 25% SAF blend in this first in the world commercial flight using wood-chips derived jet fuel.
“SAF synthesised with the Velocys FT technology from gasified forestry revenue has a 70 percent lower carbon intensity than conventional fossil jet fuel.”
To us, this is big news.
For the industry, it provides much-needed sustainability, and helps to tackle the issue of climate change. At the same time, it makes the ambitious decarbonisation targets seem more realistic and achievable.
In terms of Velocys, it puts it at the forefront of the SAF market, which is largely untapped. Hopefully, the announcement will trigger the start of its wider scale SAF deployment across the airline industry – and not just in the UK.
This is following the Virtual Climate Summit Meeting, hosted by US President Joe Biden, which took place on 22 and 23 April.
It saw world leaders from 40 economies meet to discuss, and indeed set, carbon emissions targets.
With this most recent development, Velocys’ SAF could become a viable option to help achieve these targets.
We are even more positive than we were previously about the prospects for Velocys…
… and for other stocks in our Frontier Tech Investor portfolio.
Rolls-Royce Holdings (LSE: RR) and Meggitt (LSE: MGGT) are providers of aviation component parts and systems that facilitate sustainable aviation.
Both companies have outlined their commitment to achieving net zero emissions.
We reiterate our BUY recommendation on Velocys and Rolls-Royce, whilst maintaining our HOLD recommendation on Meggitt.
Buy list update
Blancco Tech Group (LSE: BLTG)
Blancco Tech Group specialises in providing data erasure software.
It is essential for strong cybersecurity, and at the same time, allows compliance with data handling regulations.
Globally, cyber-attacks are on the rise. To illustrate, in Europe incidents of cyber-attack rose from 432 in 2019 to 756 in 2020. Cyber-attacks can incur irreversible financial and reputational costs to businesses.
With Blancco’s data erasure software, adequate protection against them is provided.
On 2 June 2021, Blancco announced the opening of a new branch in Hanoi, Vietnam.
Quang Cao, who is Blancco’s Vietnam regional manager, stated:
“Globally, the digital transformation brought on by COVID has emphasised the need for government organisations and enterprises to exercise even greater levels of vigilance at every point of the data cycle.”
With this, we are anticipating a rise in demand for Blancco’s services. The increased ubiquity of digital systems, as highlighted by Cao, should in theory, lead to higher demand for cybersecurity services.
This is because businesses will look to protect valuable information that is now, by and large, stored online.
We reiterate our HOLD recommendation whilst the current price is above the buy-up-to price. You can find the original recommendation here.
Kanabo Group
Kanabo is a medicinal cannabis company that primarily focuses on the distribution of cannabis products.
On 25 May 2021, the company announced the signing of a deal with Hellenic Dynamics, a producer of medicinal cannabis plants. It has a 200,000 square metre growing facility in Northern Greece.
In the deal, Kanabo will purchase around 1,000 kg of cannabis flowers, for extraction of medical oils. This is subject to regulatory approval.
Kanabo has also acquired £750,000 worth of shares in Hellenic Dynamics.
Avihu Tamir, who is CEO of Kanabo, said the following:
“The Memorandum of Understanding (MOU)with Hellenic Dynamics and the subsequent investment is part of Kanabo’s strategy to quickly grow its core business whilst pursuing complementary, synergistic, acquisitions and investments in the medical cannabis space, leveraging our position as a quoted company.”
To us, this deal will help Kanabo to boost business growth through increased supply chain efficiency.
In addition, it will ensure that it has guaranteed access to high-quality CBD plants for the foreseeable future.
With the UK’s CBD market now being declared to be the second largest market in the world behind the United States, we are excited about Kanabo’s future prospects.
We reiterate our BUY recommendation. You can find the original recommendation here.
The Frontier Tech Investor “Top Three”
Sometimes it’s hard to decide on which stocks to invest in from our buy list.
Below is our Frontier Tech Investor “Top Three” section showing three stocks in open BUY positions. If you’re trying to figure out what to invest in next, these are three that we think are a great place to start.
This doesn’t mean our other stocks are no good: this is just a tool to help you spot the next Frontier Tech Investor stock that could be worthy of your consideration.
Kanabo Group (LSE:KNB) – one of the world’s most controversial investment ideas is based on the legalisation of medicinal and recreational cannabis. It’s sweeping across Canada and now the United States. Both countries are leaders on the way to legalisation. In Australia a similar path is being followed. And now the UK is on the same track. Kanabo is one of the newest and best plays in this huge investment opportunity. The most recent developments are discussed above. You can find our recommendation here.
Mode Global Holdings (LSE: MODE) – our most recent recommendation, Mode, looks to revolutionise the way in which payments are being conducted. Its platform provides a seamless way to manage, and spend assets from both monetary systems; the old, fiat currency system, and the new, crypto and digital assets system. The platform has unique features, such as the potential for you to earn interest on your bitcoin holdings. We see the popularity of Mode rising in line with the wider adoption of cryptocurrencies as a means of payment. You can find the original recommendation here.
Velocys (LSE: VLS) – there’s no doubt that governments will continue to push their “green agenda”. This means that they will do what they can to support industry in ways that will help enable carbon neutral economies. Velocys is a big part of this – developing sustainable fuels for transport and logistics (in particular aviation) with pioneering technology. If you’re looking for a great “green energy” play, Velocys is a very good place to start. The latest, and exciting, news about the company is discussed above. You can find the original recommendation here.
Sam Volkering
Editor, Frontier Tech Investor
Elliott Playle
Junior Analyst, Frontier Tech Investor
PS You may also find that when you email us now at Frontier Tech Investor you get a new automated response from our customer services team.
Due to the high level of questions we get, we’ve put in place new systems to ensure that minor items, like accessing reports, or navigating your user login, go to our customer services team to help you out with.
Things that only I can answer will go through our customer services team and passed on to me – that way it ensures my time is better spent answering the key questions about the recommendations, the trends we’re focusing on and everything else we’ve got going on.
Really though, you won’t notice any difference in how you contact me, and I’ll still answer the key questions you have.
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