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ClientEarth Communications

6th January 2017

State Aid
Fossil fuels
Clean energy

Over £1bn in public funds to finance Drax’s not-so-clean power conversion

Yorkshire’s Drax power plant has this morning received approval for an estimated £1.3bn in subsidies to convert its third unit of six from coal to biomass. Environmental lawyers ClientEarth have criticised the hefty subsidy, questioning whether it drives towards the truly clean energy economy the UK needs.

Energy transition lawyer Susan Shaw said: “It’s projected that a mammoth £1.3bn in public money will be funnelled into this project over the next 10 years and we must question whether that money could be better spent by the UK Government on more sustainable modes of energy provision and management, like efficiency measures, demand response, battery storage, and lower-carbon technologies.

“Drax will receive a guaranteed payment of £100 per MW/hour – which is roughly double the current market price for electricity. This is even more per MW/hour than is planned for the heavily criticised new nuclear plant at Hinkley Point. The Commission has not specified a cap on the subsidies Drax will receive for this project over the coming years."

Biomass conversion - is the future really green?

Aside from the sheer scale of the financial support, there are issues with the status of biomass as a renewable energy source. A report recently named Drax as the largest buyer of US wood pellets - almost 70% of total US production in the first half of 2016. The UK notably does not include transportation of the pellets in its carbon accounting. That and other inconsistencies mean a portion of the emissions arising from Drax's biomass operations never reach the carbon balance books.

Susan said: “Big environmental question marks continue to loom over biomass and whether it is in fact renewable on this scale. Biomass has been classified indiscriminately as a ‘zero carbon’ energy source but this stems from flaws in the way the EU and US account for carbon. Neither the UK nor EU intend to address these questions until 2020 at the earliest.

“With these subsidies, the government is paying for damaging infrastructural lock-in that will last for many years to come."

The nature of the decision-making itself also came under fire. Susan voiced concerns over the lack of accessible information and transparency which surrounds State aid decisions with "very clear and potentially significant environmental consequences." She said: "There is a worrying reliance on commercially confidential industry reports, effectively written by industry for industry and which form the basis of the Commission’s decision.”