Drax faces critical few months in quest for carbon capture project

Rishi Sunak, the then-Tory leadership candidate, also backed the project to be approved before going on to lose to Liz Truss in the summer’s leadership contest.

It was the latest step in what has largely been positive relations between the North Yorkshire company and successive Governments since 1974, and followed Drax agreeing to extend the life of its coal-fired units at the plant for six months to assist with the energy crisis engulfing Europe.

Two months later the company in Yorkshire came under extensive scrutiny after the BBC aired its bombshell Panorama documentary into whether Drax’s climate credentials were legitimate.

Drax burns biomass, specifically a form of wood pellet that is shipped from all over the world before being blasted into its North Yorkshire power plant: the biggest single source of electricity in Britain.

Originally designed to burn coal, the power station now burns what Drax claims is sustainable biomass, and has become a major player in the latest money-spinner in the energy market, green energy

This over the years has seen the company receive around £6 billion in subsidies from the Government because the process is classed as sustainable.

Despite the fact that there are carbon dioxide emissions that come from burning wood, the fuel’s source, forests which themselves grow and take in carbon dioxide, means in subsidy terms this is a sustainable process.

Last year’s Panorama documentary cast doubt on just how sustainable that process is.

Canada, where around 20 per cent of Drax’s wood comes from, currently logs hundreds of thousands of hectares from forests, including its “primary” hitherto untouched forests that remove millions of tonnes from the atmosphere.

The central point of contention is while the Drax claim that the wood used in its pellets only comes from the diseased and rotten wood, sawdust, and debris caused by the sawmills of Canada that cannot be used for wood products, the BBC claims that whole trees are being used.

Fast forward to March and the Government is set to announce a swathe of green energy announcements, dubbed “Green Day”, with many at Drax and the wider Yorkshire region expecting that the company’s carbon capture project will be among those given the go-ahead by ministers.

The project, known as BECCS, has seen pilot projects at the North Yorkshire plant capture carbon dioxide, where it can then be shipped off for commercial use or stored elsewhere.

If given Government funding for the full commercial scale, the company says that this will “permanently remove at least 8 million tonnes of CO2 each year from the atmosphere”.

The ambitions also stretch to the east, with the project a key part of the “Zero Carbon Humber” proposal to create the world’s first net zero industrial cluster by 2040.

This would in theory use a pipeline network to store the CO2 from electricity generation, hydrogen production and heavy industry offshore under the North Sea.

The company notes that the Humber’s carbon footprint per head is bigger than anywhere else in the country, and at an international level is the “second largest industrial cluster by CO2 emissions in the whole of Western Europe”.

In March, the Chancellor announced that £20 billion would be invested in carbon capture technology as part of his Spring Budget, with all eyes on the Drax and the Humber to be in line for a share of funding to push forward their own Net Zero ambitions.

The Government currently aims to capture 20-30 million tonnes of carbon dioxide per year by 2030, with Drax arguing that its project will be able to contribute at least 8 million tonnes to that target.

A week later Drax paused its £2 billion investment into BECCS in the UK over a lack of clarity from ministers.

At the same time the company revealed that its technology was attracting interest from abroad, with a delegation of US senators visiting the plant in North Yorkshire as part of the Biden administration’s attempt to tempt companies abroad with generous subsidies for green energy as part of his Inflation Reduction Act (IRA).

The point made by Government sources in August was that Drax’s BECCS project is the only pathway for a sustainable future for biomass, but just over six months and two prime ministers later the Government passed on funding it.

In March, Grant Shapps, the Energy Minister, announced that eight projects would be getting “Track-1” funding for their carbon capture and storage solutions, with Drax’s BECCS not among them.

These are part of two “clusters” for the technology, one on Teesside, and the other in the North West.

“It was a surprise, I think, both to us at Drax and everyone in the Humber region that we weren’t selected,” Mr Gwilliam told The Yorkshire Post in an exclusive interview.

“That announcement was sort of the key moment in the continued progress of CCS [carbon capture and storage] in the UK.

“I think as a consequence of being not only one of the most mature carbon capture storage projects in the country, and probably the most mature greenhouse gas removal projects in the country, it's probably unlikely the Government will be able to meet that target [of CO2 removals] without deploying BECCS at Drax.”

In the aftermath of Green Day, Drax announced that it had entered “formal bilateral discussions” with ministers in order to safeguard the future of its project.

But, in a rather punchy statement from the Energy Department, a spokesperson said: “No company can circumvent the process.”

“The Track-1 clusters announced as part of our Powering Up Britain package are not the end of our ambition, and conversations with companies such as Drax focus on future deployment options.”

These options involve both an expansion of the original “Track-1” clusters, which could be extended down from Teesside to the Humber, as well as a separate “Track 2” set of projects.

A month later, Drax was again hit with questions over the sustainability of its business model.

The i newspaper reported that the company was subject to an “additional assessment audit” by the energy regulator, Ofgem, over its climate credentials.

The following month the watchdog opened a formal investigation into the company over whether it is in breach of its reporting requirements for Renewable Obligation Certificates (ROCs) which allow it to access Government subsidies.

Following the resignation of Nigel Adams, the local MP and vocal campaigner in Parliament for the future of the company in his patch, the Selby and Ainsty by-election has given an opportunity to renew their case for funding with a new MP they hope will be their champion in Westminster.

It has also given an opportunity for those with questions about the company’s green credentials to voice their concerns.

Wednesday’s hustings saw a significant number of green and anti-Drax campaigners among the assembled constituents waiting to hear the views of the candidates, with accusations of “greenwashing” among the questions levelled at the five candidates in attendance.

This saw, albeit from an audience of around 40 that was unlikely to be representative of the whole constituency, the Green candidate get the most votes in a rudimentary show of hands at the end of the debate.

Next week and the ensuing months is finely poised for the future of the company’s project in Selby and the wider Humber region.

In a response to the Business select committee published yesterday, the Government said that it aims for its long-awaited Biomass Strategy to be published next week.

The hope from Drax is that the strategy will give further assurances over the future of its BECCs project, and that the summer will provide the opportunity to get onto the Government’s list of approved projects for carbon capture.

Yet with the backdrop of the allegations by the BBC and the following investigation by Ofgem, ministers will have food for thought over whether they will tie themselves to the company and pump yet more money into its project.

“Over the next couple of months we need to work very closely [with Government],” said Mr Gwilliam, adding that they have started to get “the right signals” from officials to mean that they can start preparing to deploy BECCS.

While the Government on the one hand will be understandably wary of the public perception of further funding for a company that has come under recent criticism, the case for Net Zero has been made more stark in recent weeks.

The Climate Change Committee, which advises the Government on its path to Net Zero, published its progress report to Parliament at the end of last month, concluding that the UK is no longer a world leader in the fight against climate change.

It noted that the “best uses for bioenergy” are to combine it with carbon capture technology, after it previously warned that Government subsidies for biomass should end after they are due to expire in 2027.

Earlier this week, the Office for Budget Responsibility (OBR) published its report on the country’s “fiscal risks and sustainability”, and concluded that the reliance on gas means that the costs of not getting to Net Zero could be double the costs it takes to reach it.

“For a long time, the UK has been seen as the flagbearer globally in the fight against climate change,” Mr Gwilliam told The Yorkshire Post.

“Things like setting into legislation net zero targets, initiating competition for CCS, we were well ahead of the pack and quite often looked upon in envy around the world as “this is how you do the fight against climate change”.

“Other countries are catching us, other countries have caught us. They’ve put in very simple economic frameworks that make deploying this sort of technology elsewhere attractive.

“For the UK, the framework that we set up is world-leading and is just taking a longer time to materialise than in those other countries, with the danger that we erode our global leadership positions.”

The stage is now set for a make or break few months for Drax, with the Government urged by some to back jobs in the Humber, but by others to distance themselves from the company.

Yet it remains to be seen whether the now-Prime Minister Rishi Sunak’s previous support for the project will result in yet more funding heading up to North Yorkshire.