Drax pauses £2bn carbon capture project
Drax has paused its £2bn investment scheme in bioenergy with carbon capture at its power plant in North Yorkshire, stating that it needs a “firm” offer of support from the UK Government before proceeding.
The power generator announced the pause on Tuesday (21 March), further to Chancellor Jeremy Hunt’s Budget last week in which £20bn was committed to the British carbon capture and storage (CCS) industry over a 20-year period. This is an unprecedented sum of public investment in the sector.
Drax’s chief executive Will Gardiner said that while his firm “welcomes the Government’s ambition”, it needs a “firm commitment” that the funding package will cover CCS co-located with bioenergy – specifically biomass – before proceeding with its plans to deliver 2.6GW of biomass generation with CCS fitted.
BECCS technologies have been in place at Drax’s Selby power plant in North Yorkshire since February 2019 and have been scaling up in stages ever since. Drax intends to bring its first full-scale BECCS unit online at the site in 2024 at the earliest and add a second by 2030, capturing eight million tonnes of CO2e annually. This entire workstream has been costed at some £2bn.
Gardiner warned that any delay to Government support to this workstream “could impact the UK’s security of supply, net-zero and levelling up ambitions, and the viability of the Selby power station”. Specifically, he warned of the plant becoming commercially unviable by 2027.
Drax has stated that the Government will have a chance to clarify its CCS funding response later this month. It is legally required to update its Net-Zero Strategy by the end of March, as the High Court ruled the strategy unlawful last summer and requested an update within nine months. The Government will reportedly publish an updated strategy alongside a full response to the Net-Zero Review from Chris Skidmore MP.
Moreover, Hunt did state at the Budget that a shortlist of projects eligible for the new CCS funding would be published in March.
Carbon and cost controversies
Whether the UK Government should financially support Drax has been a hot debate among environmentalists for years, with the conversation brought to the fore once more last month as Drax posted a major year-on-year uplift in profits from £398m to £731m. Ember claims that Drax received some £893m in subsidies in 2021.
Green groups have long been calling for greater scrutiny of the impact of Drax’s supply chains on forests and for improved carbon accounting. The energy price crisis and ever-falling cost of renewables also raises questions about the economics and ethics of subsidising BECCS.
Drax maintains that its wood pellet supply chain, which is largely concentrated in the US, uses sustainable sourcing methods and that it includes value chain emissions in emissions accounting.
In posting its results this year, Drax has continued to call its biomass power “renewable”. It has also commissioned new third-party research from Baringa concluding that it is more cost-effective to keep existing biomass plants open and fit them with CCS that to either build new gas plants with CCS or retrofit CCS to existing gas plants.