Drax defies green energy plan with foreign coal threat

The UK's largest power station says it must increase its sulphur emissions by 25 per cent or cut its support of the UK coal industry.

In a snub to the Government's green strategy, as set out by Tony Blair last week, the managers of Drax power station in North Yorkshire have applied to the Environment Agency to increase their emissions from 47,000 tonnes per year to 60,000.

Drax gets low-sulphur coal from the nearby Selby Colliery, but this will be closed down next year. Instead, it wants to buy from the Kellingley pit, also in Yorkshire, but this coal has twice the sulphur content of the Selby coal and would lead to much higher emissions. UK Coal, which supplies the power station and owns both pits, could be hit if the agency does not agree to the increase.

Any increase would be detrimental to Drax's proud boast to be the cleanest coal-fired plant in the UK and to buy 96 per cent of its coal from these shores. It is also trying to get permission to trial the use of petcoke, known as "dirty fuel", at one of its units, which would again increase its sulphur emissions.

Sulphur emissions contribute to acid rain. But Drax points out that although it is the cleanest station in the UK, it is not compensated for its higher costs.

UK Coal will report its financial results for 2002 next week and is expected to show a loss of £65m, according to analyst Charles Kernot at the investment bank BNP Paribas. This is primarily due to the cost of closing the Selby pit. Last week the UK coal industry was given a £60m aid package from the Government, too late to save Selby.

"The release of the Energy White Paper is good news for UK Coal as it shows the Government is interested in the long-term viability of a domestic coal industry," said research from BNP Paribas.

The draft legislation also blocked proposals to build new nuclear power stations in the wake of the problems at the nuclear operator British Energy, which is financially stressed. But to meet targets to reduce emissions of carbon dioxide – emitted by coal and oil but not produced by nuclear power – the Government will back renewable sources of energy such as solar and wind power.

Drax, owned by the American company AES, is currently negotiating with its bankers for its survival, as a £1bn debt mountain and low electricity prices put financial pressure on the company.

Drax was unavailable for comment. However, a spokes-person for UK Coal said that if the power station were not allowed to increase its sulphur quota, "it would be able to burn a fair amount [of British coal] but not as much as they are currently doing".