Government to 'enhance' monitoring and enforcement of Drax power station, top official admits

The Government recently agreed heads of terms for a bridging deal with Drax, granting financial support to keep the power station running from 2027 to 2031.

This cut its annual subsidies in half, from £950m to £470m, and the Selby plant will go from running about two-thirds of the time to only operating when renewable energy is low.

Biomass as a clean energy source has long been under dispute and the Government has faced calls to end financial support for companies such as Drax.

Last year, Drax agreed to pay £25m after a probe by energy industry regulator Ofgem found that the company had failed to properly report data on the types of wood it uses for its biomass pellets.

A BBC Panorama investigation found Drax has held logging licences in Canada and used wood, including whole trees, from primary and old-growth forests for its pellets. The company has maintained its biomass is sustainable and legally harvested.

A National Audit Office report found that the Government is unable to prove that biomass fuel is sustainably sourced.

Yesterday, the Department for Energy Security and Net Zero’s most senior civil servant, permanent secretary Jeremy Pocklington, told the Public Accounts Committee that the enforcement of Drax would be enhanced.

He explained that after finalising the heads of terms, DESNZ was “now in a process of agreeing the details of contracting arrangements, that will include the arrangements around monitoring, enforcement and verification”.

“We will want to enhance those arrangements, compared to the existing arrangements.

“We’ve also announced the appointment of a sustainability adviser to support us as we finalise these arrangements with Drax.”

He said that MPs were “rightly raising questions of how we can have confidence in the arrangements that exist”.

Mr Pocklington revealed that the Department was working with regulator Ofgem and external experts around a new “common framework” for monitoring biomass, which will be consulted on later this year.

Speaking about the £25m Ofgem fine, Kiera Schoenemann, the regulator’s director of audit and compliance said “we are very confident” that Drax’s breaches were in line with the company’s sustainability criteria.

Under the new subsidy agreement, the proportion of woody biomass burned that comes from sustainable sources must increase from 70 per cent to 100 per cent.

Supply chain emissions must be cut to stricter levels in line with Europe, while material from primary and old growth forests will be excluded from receiving payments.

Speaking about the new agreement, Drax CEO Will Gardiner said: “Under this proposed agreement, Drax can step in to increase generation when there is not enough electricity, helping to avoid the need to burn more gas or import power from Europe, and when there is too much electricity on the UK grid, Drax can turn down and help to balance the system.”

The Public Accounts Committee chair Sir Geoffrey Clifton-Brown also referenced The Yorkshire Post’s report that C-Capture is making almost all of its staff redundant.

The pioneering Yorkshire carbon capture company backed by Drax, bp and the Government is searching for a new owner.

The Government also has a near 20 per cent stake in the company after the state-owned British Business Bank participated in an £8m funding round in 2021 alongside private investors. C-Capture also received a £1.7m Government grant in 2022.

C-Capture had been running a pilot plant at Drax Power Station to capture one tonne per day of carbon.

Yesterday, Ashley Ibbett, the director general of energy infrastructure at DESNZ, confirmed the Government’s stake in the company to the Public Accounts Committee, but declined to comment further.

He said: “It’s sad news for the employees involved in C-Capture.

It’s a company we’ve worked with through our Net Zero Innovation Programme over the years.

“My understanding is they are looking for a buyer to take the company forward, so obviously we’ll want that process to play out.

“It’s one of a number of capture technology companies that we’ve worked with and obviously this particular set of circumstances are difficult for those people involved.”