Controversial Drax power station gets more government subsidies

The UK government has reached a new financing agreement with the controversial Drax power station, claiming the agreement will cut subsidies by half. Located in North Yorkshire, the Drax power station is a converted coal-fired power plant that generates approximately 5% of the UK's total electricity. Because wood pellets are classified as a renewable energy source, the station has received billions of pounds in subsidies from the government and taxpayers.

Although there are plans to eventually capture the carbon emitted by Drax, its current emissions from burning wood pellets are uncontrolled. Critics of the power station call it one of the UK's major sources of carbon dioxide emissions, but Drax disputes this claim. Drax argues that burning wood is carbon neutral because when trees are cut down for fuel, new trees can be planted, effectively reabsorbing the released carbon dioxide.

The new agreement will run from 2027 to 2031 and will see the power station used only as a backup power source for cheaper renewable energy. The government says this means that when wind and solar power are plentiful, Drax will stop operating altogether. The government also stated that the company currently receives nearly £1 billion in subsidies annually and predicts that under the new agreement, this figure will be reduced by more than half to £470 million.

Energy Secretary Michael Shanks said that the previous subsidy arrangements allowed Drax to make "unacceptably large profits," and that the new agreement will be a "major shift in terms of value for money and sustainability." Drax said in a statement that the new mechanism will deliver "net savings" for consumers, citing analysis showing that it will cut electricity system costs by £1.6 billion to £3.1 billion over four years. A "clawback mechanism" in the new arrangement is designed to prevent the company from making excessive profits during periods of sharply rising electricity prices.

Drax CEO Will Gardiner said: "Under this proposed agreement, when there is insufficient power, Drax can step in to increase generation, thereby avoiding the need to burn more gas or import electricity from Europe; when there is too much power on the UK grid, Drax can reduce generation, helping to balance the system." Greenpeace called the agreement a "dirty compromise with a failing past," but said it hoped to limit the damage by restricting Drax's operations.

Greenpeace policy director Dr. Doug Parr said: "The government is still putting too much faith in large polluting companies asking for huge subsidies to decarbonise. We have cheap, clean sources of electricity and we shouldn't be betting on schemes like this anymore." The new agreement also stipulates that 100% of the wood pellets burned by Drax must be "sustainably sourced" and that "material from primary and old-growth forests" will not be eligible for subsidies.

All of the wood pellets burned by Drax are imported, mostly from the United States and Canada. The BBC's *Panorama* and BBC News have previously reported that Drax holds logging licenses in British Columbia, Canada, and uses timber from primary and old-growth forests (including whole trees) to produce wood pellets. In response to the BBC reports, Drax acknowledged that it does source wood from primary forests. But it told *Panorama* that 77% of its Canadian wood pellet material comes from sawdust and sawmill residues, with the remainder coming from forestry residues and low-grade logs. The company stated that it does not own forests or sawmills, no longer bids for logging licenses, and has stopped sourcing wood from certain locations in British Columbia where the government has asked companies to suspend further logging.