Subsidies for Drax biomass
New data shows Drax received £893m in subsidies for burning forest biomass last year
About
Drax’s annual report shows that the company earned £893m in government subsidies in 2021 for burning forest biomass. Ember analysis shows this is pushing up UK energy bills, with no guarantee of reducing CO2 emissions.
Drax biomass subsidies
2021 subsidies continue to add to energy bills without clear climate benefit
COO, Ember
The UK continues to pay an extraordinary price to import and burn forest biomass, when wind and solar provide a far cheaper and cleaner alternative. Although in the last year we have seen new scepticism from British politicians, UK legislation doesn’t yet adequately deal with the climate and economic risks posed by biomass. The government must ensure that in future biomass pays for its carbon emissions, and must avoid repeating decades-old policy mistakes by running head-long into new subsidies for BECCS. The country can’t afford more unnecessary costs to be added to energy bills.
Supporting Material
Methodology
Biomass Sustainability
The Climate Change Committee’s 2018 report Biomass in a low carbon economy contains more information on biomass in the power sector. Key quote: “Most current uses of biomass do not sequester carbon and are in sectors where there are increasingly other viable low carbon alternatives. Current uses of biomass will therefore need to change. Over time, Government policies should assist a transition towards increased use of biomass in construction and BECCS, and away from using biofuels in surface transport, biomass for heating buildings, or biomass for generating power without CCS.” More recently, in January 2022 the CCC’s Head of Carbon Budgets David Joffe told the Parliamentary Environment Audit Committee: “There are big challenges about ensuring the sustainability of biomass grown outside the UK. It’s not impossible but it is very difficult. It’s not something the UK should be relying on at large scale in terms of biomass imports for greenhouse gas removals.”
Understanding our calculations
- Ember calculation for residential energy bills: Total annual subsidy divided by residential/industrial split of energy bills, divided by number of households
- Ember estimates the value of future subsidies in line with the index they are tagged to: ROC prices increase each year by Retail Price Index (RPI), which currently stands at 7.8%. CfDs increase each year by the Consumer Price Index (CPI), which currently stands at 5.5%
- Drax also has some Scottish hydropower assets, some of which receive ROCs. The amount is not declared in the financial reports but is less than <2.5% of the overall subsidy Drax receives.
- BECCS: Ember’s May 2021 estimate put the cost of BECCS at £181 per MWh in this 2020 research. This is supported by the October 2021 BEIS “Investable commercial frameworks for power BECCS” paper which estimates the price similarly, at £179 per MWh.
- For more information and a detailed methodology behind Ember’s calculations, please read the 2020 report The Burning Question.
