Drax ready to harness power of plants

Drax, the coal power station owner which generates 7 per cent of the UK's electricity, will this week pledge to dramatically increase its use of environ-mentally friendly fuel.

As part of its drive to reduce carbon emissions, the company, which is set to drop out of the FTSE 100, will promise to replace 10 per cent of the coal it burns with biomass by 2009. This will require 1.5 million tons of biomass, obtained from energy crops including miscanthus (tall grass) and oil palm, as well as such bio-wastes as the mush left behind when olives are crushed to produce olive oil.

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Drax will make the pledge when it unveils full-year results on Thursday. It is also expected to announce plans to return about £200m to shareholders. The company is returning the cash after surging energy prices caused full-year profits to rocket.

Biomass will be used alongside coal in a process known as co-firing, which is two to three times more expensive than normal coal generation and needs to be subsidised. From April, the Government will lift restrictions on subsidies for electricity generated using energy crops.

In its previous energy review in 2003, the Government tried to discourage co-firing because it assumed that coal plants would not play a significant part in future electricity generation.

But concerns over ageing nuclear reactors and the slower-than-expected development of wind power and other renewables have forced a rethink for the current energy review.