Drax to commit ‘less development investment’ until it receives certainty on Government regulation
North Yorkshire power station operator Drax has said that it expects to commit less development investment into carbon capture until it has greater certainty on government regulation.
The announcement comes after earlier this month, the Government announced that it would continue to support the company with subsidies, but at a lower rate. Annual subsidies to Drax were cut in half by the Government, from around £950m to £470m.
Drax is currently developing the use of carbon capture at its Selby-based powerplant – notably the biggest in the UK. The company currently generates energy using biomass wood pellets at four of its units in Selby, with its remaining two coal units closed down.
It is responsible for around four per cent of the UK’s energy production per year.
In a statement issued alongside the company’s annual results, Drax said: “In the long term we remain focused on our strategic investment opportunities in 24/7 renewable power and carbon removals via BECCS, data centres, and energy storage.
“As we seek to maximise value we will exercise prudence in how we commit development investment to our larger projects. Until we receive greater certainty on appropriate regulatory structures and investment returns, we expect to commit less development investment.”
Though supporters claim that bioenergy is carbon neutral, as the trees used to produce the wood pellets sequester CO2 during growth, thetechnology’s green credentials have been questioned by environmental groups and MPs, who claim that the time taken for trees to regrow does not match the rate at which CO2 is being produced through their being burnt.
Multiple groups have also called for an end to Government subsidies for companies such as Drax which use the method of energy production.
Drax said in its most recent announcement: “Biomass, when sustainably sourced, supports good forestry, is a renewable source of energy, and we believe represents an important part of both UK and international renewable energy policy.”
Drax intends to use a combination of bioenergy with carbon capture and storage – also known as BECCS – which will also see the emissions from burning wood pellets captured and stored underground.
Drax’s latest announcement comes alongside the company announcing its financial results for 2024.
The company posted adjusted earnings of £1.06bn, up from £1.01bn the year prior.