Minister: Drax power station could lose subsidies if found not to have complied

Ofgem is investigating whether the company is in breach of reporting requirements relating to the Renewables Obligations scheme.

Ben Hatton
Monday 03 July 2023 18:58 BST
Members of the House of Lords questioned the sustainability of Drax power station’s use of wood pellets (Anna Gowthorpe/PA)
Members of the House of Lords questioned the sustainability of Drax power station’s use of wood pellets (Anna Gowthorpe/PA)

Drax’s biomass power plant could lose subsidies if it is found not to be complying with sustainability requirements, a minister has said.

The House of Lords heard concerns on Monday over the environmental credentials of the power station in North Yorkshire, one of the UK’s largest, and which burns biomass such as wood pellets and receives green subsidies.

One peer called for independent scientists to be sent to Canada to verify the sustainability of wood used to make biomass pellets, and another accused a minister of having his “head in the sand” over the issue.

The energy regulator Ofgem said in May that it was investigating whether Drax Power Limited is in breach of “annual profiling reporting requirements relating to the Renewables Obligations scheme and other related matters”.

Last week, campaigners from Greenpeace, WWF, the RSPB, Wildlife Trusts, Wildlife and Countryside Link and Mighty Earth and others called on the Government to end all subsidies for burning wood from forests and energy crops in power stations and to not award energy companies any new support or contracts to do so.

Drax describes itself as providing renewable power using “sustainable biomass”.

The industry claims that the wood is sustainably sourced from forestry waste, but critics have raised doubts over the veracity of these sustainability claims.

Government minister Lord Callanan told the upper chamber: “This is a matter for Ofgem.

“The regulator is the administrator for monitoring compliance with the sustainability criteria within the renewables obligation scheme.”

Does the minister accept that to get to the truth, independent advisors and scientists should go to Canada to check that in fact 70% of the wood biomass being imported is actually sustainable off-cuts... and not from virgin forests?

Baroness Jones

Labour peer Baroness Jones of Whitchurch said: “It’s estimated that we will have given Drax some £11 billion in subsidies over the different renewable energy schemes.

“So is the minister concerned that Drax’s claim to be using sustainably-sourced wood from Canadian forests currently lacks any detailed full-cycle carbon accounting and audit trail that we would have the right to expect for that level of subsidy?”

She added: “Does the minister accept that to get to the truth, independent advisors and scientists should go to Canada to check that in fact 70% of the wood biomass being imported is actually sustainable off-cuts… and not from virgin forests?”

Lord Callanan responded: “The renewables obligation legislation was actually originally introduced by the last Labour government.

“Ofgem are investigating these matters. She’s jumping to a lot of conclusions there, and if it is proved that they are not in compliance, then of course some of the value of the certificates they have received will be withdrawn.”

I would just caution noble lords to wait for the outcome of the investigation by what is an independent regulator

Lord Callanan

Liberal Democrat peer Baroness Bakewell of Hardington Mandeville said: “The emissions which occur as a result of Drax burning mature trees are not counted as CO2 emissions. Only those transporting trees from forests to furnace count.

“When is the Government going to wake up to this ridiculous accounting fraud and stop giving Drax green subsidies?”

Lord Callanan said: “Again, the noble lady is jumping to conclusions before the investigation has proceeded.

“Based on the evidence that has been reviewed to date, Ofgem has not established any non-compliance with the scheme, but the investigation is continuing.

“I would just caution noble lords to wait for the outcome of the investigation by what is an independent regulator.”

Why on earth do you still persist in saying that we are jumping to conclusions, when you're burying your head in the sand?

Baroness Boycott

Independent crossbencher Baroness Boycott referenced information from Canadian environmentalists who she had reported “the ancient forest being destroyed for those wood pellets”.

She said: “Why on earth do you still persist in saying that we are jumping to conclusions, when you’re burying your head in the sand?”

Lord Callanan said: “As somebody famous once remarked, recollection of facts may vary. And forgive me if I don’t necessarily take as absolute facts the statements by some of the Canadian environmentalists.

“Officials have looked into it. Ofgem are investigating whether the biomass is sustainable or not. Let’s wait for the outcome of that investigation.”

Drax takes its regulatory responsibilities very seriously, and has strict governance structures in place to oversee our operations and compliance with the required legislation, standards and regulations which govern the energy sector, our businesses, and our supply chains

Drax spokesperson

A Drax spokesperson said: “Drax takes its regulatory responsibilities very seriously, and has strict governance structures in place to oversee our operations and compliance with the required legislation, standards and regulations which govern the energy sector, our businesses, and our supply chains.

“We are confident in our business and operations and committed to ensuring the biomass we source delivers positive outcomes for the climate, for nature and for the communities in which we operate.”

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