Author: sarahfirminger

Can the EU lead certification of carbon removals globally?

20 September 2023

Opinion

By Kasia Wilk, Head of Public Affairs and Policy for Europe and Asia, Drax 

Key takeaways: 

  • Certification of carbon removals provides a mechanism to verify and ensure the credibility of carbon removal projects and their outcomes 
  • EU’s proposed certification mechanism is first of its kind but does not fully reflect the international dimension of carbon markets: it is unclear how removals outside of the EU and certificates issued outside of the EU will be treated. 
  • This might be problematic in the longer run – in particular in light of the foreseen end-uses of the certified carbon removal units.  
  • If the EU recognises and handles this challenge it could lead the world in carbon removals certification. 
  • EU climate policies should prioritise support for carbon removal solutions that are technically ready, economically feasible, permanent and have additional co-benefits. 
  • Bioenergy with Carbon Capture and Storage (BECCS) is unique in its ability to deliver renewable power and remove carbon from the atmosphere simultaneously.   
  • Sustainability of biomass is heavily regulated by the Renewable Energy Directive (RED). It is one of the strictest set of sustainability criteria for forest biomass used in the world. It applies equally to domestic and imported biomass and protects against over-sourcing. 

Why do we need carbon removals?  

July was the hottest month ever recorded, the impact of climate change is being felt here and now. Tackling the causes of global warming is now more pressing than ever. We are currently on track for a 14% rise in greenhouse gas emissions by 2030. This could lead to temperatures increasing by more than double the Paris Climate Agreement’s 1.5 degrees target and bringing about even more extreme weather. Urgent action is needed now to revert this catastrophic trend.  

It’s increasingly clear that carbon dioxide removal (CDR) will be essential to reach Net Zero by 2050 as these technologies balance out those emissions that are difficult to avoid as well as help companies remove their historic emissions. They do so by capturing carbon dioxide (CO2) that is already in the atmosphere and removing it and storing it permanently.  

According to the Sixth Assessment Report of the UN’s IPCC, nearly all pathways to Net Zero by 2050 will require a significant scale-up of carbon removals.  

Carbon removal technologies are developing at pace and can make a significant contribution to climate policies. Nevertheless, to get the sector to where it needs to be by mid-century requires the right policies and investment to support deployment. 

The EU has already taken a number of steps to support the development of carbon removals in the region. The CCS Directive establishes a regulatory framework for the geological storage of CO2 and the proposal for a Carbon Removal Certification Framework (CRCF) will support the development of a voluntary carbon market which is a cornerstone for the development of CDR. 

However, to support the scaling up of the sector it is essential to (1) assess the scale of removals required, (2) define binding EU targets and (3) develop roadmaps for the scale up of carbon removals in Europe. It is also important to coordinate Member State commitments, ensuring their plans for deployment can be realised through greater cooperation. 

The importance of certification 

Certification of carbon removals is essential for driving technological development and deployment. It provides a mechanism to verify and ensure the credibility of carbon removal projects and their outcomes. We need transparent and robust rules and procedures to ensure that only high-quality removals and removals that would not have taken place are credited, and to prevent the same activity from being certified twice or using the same certificate twice. This is what the EU proposal for a regulation establishing a Union certification framework for carbon removals aims to do. 

The proposed certification mechanism is a world-first and positions the EU as the leader in the field. Addressing the need for removals in climate policy and providing a stringent, transparent regulatory oversight on certification. It has the potential to set high-quality criteria, create much needed standards for growing the carbon removal market and address many of the shortcomings that hamper its growth today.  

Yet, the scope of the EU certification proposal does not go far enough. It is currently limited to removals within the EU and it is unclear how removals outside of the EU and certificates issued outside of the EU will be treated, despite the important international dimension of climate policy. 

The European Commission has said that international carbon markets can play a key role in reducing global greenhouse gas emissions cost-effectively. Although specifics are still under development, the Paris Agreement provides a robust and ambitious basis for the use of international markets and reinforces international targets, transparency and the accountability. Recognising the importance of international carbon markets, Article 6 of the agreement: 

  • allows parties to use international trading of emission allowances to help achieve emissions reduction targets 
  • establishes a framework for common robust accounting rules, and 
  • creates a new, more ambitious market mechanism. 

The lack of international consideration in the Commission’s proposals for certifying carbon removals could be challenging in the long run – particularly in light of the foreseen end uses of certified removal units, including their international exchange through voluntary carbon markets.  

To mitigate this, the Commission should consider two additional scenarios as part of the discussions on the scope of this voluntary certification framework: 

  • Credits generated outside the EU – EU businesses will still be able to use voluntary markets to purchase credits from projects in other jurisdictions, outside of the EU.  These could not be subject to the same high standards, unless they are being given the option to comply with the voluntary framework. 
  • Linking compliance markets – While integration of carbon removals with the ETS framework is only being discussed, and will be assessed by the European Commission over the next few years, this proposal should take account of future potential linking of compliance markets.  Should removals be fungible in those linked ETS markets, it will be within the EU’s interest to ensure removals outside the EU are subject to the requirements and standards of the EU CRC-F. 

How to assess and compare the existing CDRs methods? 

All carbon removal methods will have a role to play. However, they all differ in terms of process, permanence and technological readiness. To reach its Net Zero targets, EU climate policies should prioritise support for carbon removal solutions that are technically ready, economically feasible and permanent. They should take into account additional co-benefits for local communities, power systems and the environment, as well as the potential to be deployed at scale to ensure these technologies can make maximum contribution to the achievement of EU climate goals. 

BECCS is one of the best examples of this. When compared to other technologies, BECCS is unique in its ability to deliver renewable power and remove carbon from the atmosphere simultaneously whilst generating thousands of jobs across its value chain. 

It is also very well regulated. Sustainability of biomass is already covered by the Renewable Energy Directive (RED). The sustainability criteria for biomass in RED were updated in 2023 and has been formally adopted by the European Parliament. It is one of the strictest set of sustainability criteria for forest biomass used in the world. It applies equally to domestic and imported biomass and protects against over-sourcing. It also safeguards biodiversity, ensures forest regeneration and sets strict limits on all supply chain emissions, including transportation. The 2023 revision of the RED specifically took account of the projected growth in biomass demand to 2050, including for BECCS, and amended the sustainability criteria appropriately.  

BECCS projects will see carbon capture equipment installed in plants that will also produce power, heat or fuels. In many cases the technology will be retrofitted to existing plants. Regulatory consistency here will be paramount.  

The detailed methodologies that will be developed under the certification framework will need to reflect the vast array of existing regulations, such as RED, to support deployment of these technologies, stimulate investment – and ascertain EU climate leadership – supporting domestic technologies/ or technologies in the region.  

Appointment of Chair Designate

24 August 2023

Investors

RNS Number : 2710K
Drax Group PLC
24 August 2023

The appointment is in anticipation of the conclusion of Philip Cox’s successful nine-year tenure as a non-executive director during which he made a significant contribution to the Company’s growth and success. Mr Cox will step down as Chair and a non-executive director on 31 December 2023, and the Board expresses their sincere gratitude for Mr Cox’s valuable service. Ms Bertone will assume the position of Chair effective 1 January 2024.

The appointment of Ms Bertone in the role of Chair Designate allows for a managed handover from Mr Cox prior to Ms Bertone assuming the position of Chair.

Ms Bertone is the former President of Duke Energy Corporation’s (“Duke”) international division (‘DEI’). Ms Bertone spent 15 years at Duke, including seven years as President of DEI with executive responsibility for a portfolio of c.4,400MW of hydro and thermal assets. Prior to serving as President, Ms Bertone held senior legal positions between 2001 and 2009 at DEI, including as associate General Counsel from 2003 to 2009, as part of which she oversaw legal and regulatory matters for the Group’s business in Latin America. Ms Bertone left Duke in 2016. Prior to Duke, Ms Bertone’s roles included Latin America counsel with Baker McKenzie.

Ms Bertone has current experience in serving as a non-executive director of several companies each of which is publicly listed and operating in diverse sectors, spanning packaging manufacturing, energy and waste management.

Ms Bertone who is resident in Houston, Texas, earned a Bachelor of Law from the University of Sao Paulo Law School in Brazil and a Master of Law in International and Comparative Law from Chicago-Kent College of Law at the Illinois Institute of Technology. Ms Bertone is a member of the Brazilian Bar Association.

Commenting on the appointment of Ms Bertone, Will Gardiner, Drax CEO said, “I am delighted to welcome Andrea in her appointment as Chair Designate of Drax as we accelerate our strategy, including to become a global leader in carbon removals. Andrea’s extensive executive experience in the international energy sector will provide Drax with a deep understanding of global markets and their underpinning regulation, as well as invaluable experience in leading transformative change in multinational businesses. In addition, the breadth of Andrea’s non-executive roles in diverse and global businesses will further enhance the experience and capabilities of our Board.”

Ms Bertone said, “It is an honour to become Chair Designate of Drax and join the Board at this exciting time in the Company’s journey. As the global transition to net zero intensifies, opportunities are growing in carbon removals, renewable power and biomass. I look forward to working with Will, fellow Board members and colleagues across Drax, which is ideally placed to realise these opportunities both in the UK and internationally.”

ENDS

Enquiries:

Drax Investor Relations: Mark Strafford
+44 (0) 7730 763 949

Media:

Drax External Communications: Chris Mostyn
+44 (0) 7548 838 896

Website: www.Drax.com

Listing Rules disclosures

The following disclosures are made in accordance with Listing Rule 9.6.13

Ms Bertone currently holds the following external roles:

  • Non-executive director of Waste Connections, Inc., which is listed on the NYSE and Toronto Stock Exchange
  • Non-executive director of Amcor plc, which is listed on the NYSE and Australian Securities Exchange
  • Non-executive director of Peabody Energy Corporation which is listed on the NYSE

Ms Bertone was also formerly a non-executive director at:

  • Yamana Gold Inc. between July 2017 and May 2020
  • DMC Global Inc. between February 2019 and May 2023.

Additional notes:

Mr Cox will be standing down as a non-executive director and Chair on completion of the permitted nine-year tenure as a non-executive director in accordance with the UK Corporate Governance Code. Additional details on the process associated with the search for a new Chair were provided in Drax’s Annual Report and Accounts 2022 (see page 112).

The selection process for the new Chair was carried out by the Nomination Committee, with the support of external search agent Heidrick & Struggles. The criteria for the search reflected the growing global nature of Drax, the qualities essential for the role of Chair, as well as compliance with the Listing Rules.

Progress on building a positive future for climate, people and nature

14 April 2023

Opinion

As I come to the end of my second year with Drax, it is naturally time to reflect on my time with the company to date and the progress we have made.

Through delivery of its strategy, Drax is making three significant positive contributions to the climate; the elimination of fossil fuels in power generation; being a meaningful partner in the forestry and timber sector; and taking a lead in making large scale carbon-dioxide removals a commercial reality. We have made substantial progress already and my objective here is to ensure that Drax’s commercial success continues to be strongly aligned with proven positive outcomes for people, the climate and nature and I have been drawing heavily on my past experience in order to do this.

I previously worked with a retailer of wood products and back then the ask from campaigners was for the company to boycott tropical timber. After considering that ask, the company took a leading role in creating the Forest Stewardship Council (FSC), which in turn led to the Programme for the Endorsement of Forest Certification (PEFC) and Sustainable Forestry Initiative (SFI), and this process created the space for collaboration for interested parties to learn from each other, agreeing to forest management principles and verification processes.

During this period, I visited numerous forests and sawmills around the world and what always struck me was how forest residues in many cases went unused, were often burned, or were left to decay. Drax’s ability to utilise the by-products of the timber industry and forest fibre, and turn these into renewable power, is a much more productive use of that material.

Alan Knight at the log yard for Lavington Pellet Mill in British Columbia

As I look toward the future, it’s clear to me that our business and our industry at large could improve on how we communicate what we do in order to better demonstrate how the biomass we source delivers positive outcomes for the climate, for nature and for the communities in which we operate.

As a leader in biomass our business is aligned to this commitment through the evidence-based approach and robust standards which govern our sourcing and operations and the science from leading global organisations like the Intergovernmental Panel on Climate Change (IPCC) and International Energy Agency (IEA) which underpins our methodology. We have robust standards in place to align our biomass sourcing to the strict sustainability requirements of the UK, US, and Canadian governments, as well as those of the EU.

We work with our stakeholders, partners, and colleagues to champion this as best practice, not only throughout our operations and supply chain, but across the wider industry. An example of this is our work with the Glasgow Declaration on Sustainable Bioenergy, a joint effort by a group of businesses and organisations in the sector that have come together to further sustainability standards in the industry.

A core element of this is ensuring that we are transparent and that we are communicating clearly about what we do, why we do it and how it contributes to enabling a zero carbon, lower cost energy future. The science we rely on is complicated, nuanced and continues to evolve. We take our responsibility to track its evolution and represent it very seriously.

Drax Power Station is one of Europe’s largest single site decarbonisation projects. As a result, since 2012, Drax has reduced its generation scope 1 and 2 emissions by ~99%, an achievement that brings pride to our business. It is important to clearly explain what this means, primarily by distinguishing between the carbon emitted from the burning of fossil fuels for power generation (i.e. fossil emissions, which fall under scope 1 and 2) and that produced from biomass power generation (i.e. biogenic emissions, which do not fall under scope 1 and 2 and which are therefore reported on separately). Fossil fuels introduce new carbon emissions into the atmosphere and drastically reduce the planet’s ability to tackle climate change. However, emissions from the combustion of sustainable biomass stay within the biogenic carbon cycle, which involves the continuous exchange of carbon between the biosphere and atmosphere and therefore ensuring carbon levels remain in balance.

The principles of the biogenic carbon cycle have been set out by the IPCC and relevant EU and UK regulatory requirements suggest that when sourced under strict conditions and overseen by robust governance, carbon outputs from biomass should be treated as zero. These principles, however, are complex and multi-faceted, so we will continue to develop our explanation of them and thereby add to our stakeholders’ understanding.

As a business, we are required to meet strict regulatory and legal requirements. Biomass is more heavily regulated than other timber using sectors, which affects how we report on our supply chain emissions. We meet all reporting requirements placed on us as a biomass user and we aim to be transparent in our reporting. Drax annually publishes independently audited reports which cover our scope 1 and 2 supply chain emissions and separate biogenic emissions directly linked to our operations and stack emissions. And we are always looking to go further. We already voluntarily report our stack emissions and as of this year we have also committed to specifying biogenic CO2 emitted during pellet manufacturing from our overarching biogenic emissions figure and to voluntarily report on this as well.

We source our biomass from sawmill residues, harvesting residues, and fibre which has little other use or market value. We also use low-grade roundwood that is not suitable for sawmilling or cannot access higher-value markets and this often includes pulpwood and, for example, the by-product of thinning operations.

These types of fibre are regularly referred to as “whole trees”. This phrase implies that biomass is produced from the harvesting of sawlog grade trees and whole forests, which is unhelpful. We aim to be precise when describing our sources of biomass and we hope that others in the industry will do the same in order that there is a better understanding of biomass across the board.

Learn more about wood grading.

As I have travelled around our sourcing operations, I have witnessed the deep and committed role Drax plays in the forestry industries in which it operates, providing a market for the otherwise unmarketable fibre, and supporting communities through the creation of thousands of jobs across our supply chain.

But I also know we, as a leader in our industry, must continue to enhance how we engage, listen to, and inform our stakeholders on our work and our role within the UK’s energy transition. Without creating a foundation of mutual understanding and collaboration it will be difficult to foster productive relationships and make progress toward our shared goals. We have always been willing to engage with our stakeholders and we often take them to the regions from where we source fibre, our operations and our power station in Yorkshire.

In addition, we are leading players in the Sustainable Biomass Program (SBP) and are proactive in discussions relating to the development of standards for carbon removals. Recently, we also engaged Forum for the Future who worked with many stakeholders to identify how bioenergy with carbon capture and storage (BECCS) can be done well. We are actively considering the findings of this work.

I am, like all my colleagues at Drax, committed to delivering on this crucial work and clearly demonstrating the positive contribution that biomass can make to the climate, for nature and for people around the world and my ask of stakeholders is that they embrace the opportunities that this business works hard to make a reality and work closely with us to optimise those contributions.

Working towards carbon negative: Reducing supply chain emissions

17 March 2023

Sustainable bioenergy

Key takeaways:

  • Drax’s ambition of becoming a carbon negative company by 2030 means we’re always working to reduce our supply chain emissions further.
  • We’re partnering with different organisations to explore innovative solutions to lowering shipping emissions.
  • Through our experience of carbon capture and storage, we can deploy the technology to decarbonise operations at our pellet mills.
  • Using rail wagons specifically designed to transport biomass wood pellets helps us reduce transport on land emissions.
  • By developing a new BECCS power station in the U.S., we can help decarbonise electricity systems while removing emissions from the atmosphere and tackling climate change.

At Drax, we have ambitious plans to not only help countries around the world replace fossil fuels with renewable biomass, but to become a carbon negative company by 2030.

For the world to achieve its net zero targets and meet the Paris Agreement goals of keeping global temperature rises below 1.5°C, it’s essential to remove more carbon from the atmosphere than is produced.

Drax is leading in this effort through pioneering bioenergy with carbon capture and storage (BECCS) technology. BECCS is the process of generating renewable power using sustainably sourced biomass while capturing and permanently storing CO2.

Developing BECCS at scale and achieving our own carbon negative objective means working to decarbonise the technology’s entire supply chain. It’s a responsibility we’ve been committed to for decades, even before the Drax Power Station was converted to run on sustainable biomass, and we continue to look for new innovations.

Here are three of the ways we’re working to optimise our supply chains to make them as energy efficient and low-carbon as possible:

1. Shipping emissions: Harnessing the wind

Around 90% of the world’s goods are transported by sea, including the wood pellets produced at our pellet mills and used to generate renewable power at Drax Power Station in the U.K. And while shipping has a lower carbon footprint than road or air transport, the sector still accounts for around 3%, or 1 billion tonnes of global greenhouse gas (GHG) emissions. Initiatives to reduce the emissions associated with shipping are an important part of our efforts to decarbonise our supply chain and become carbon negative.

In 2022, we signed a memorandum of understanding with Japanese shipping company MOL Drybulk. Together, we’re exploring installing MOL’s proven Wind Challenger hard sail technology on vessels transporting wood pellets on routes such as British Columbia to biomass customers in Japan. Wind Challenger, which reduces fuel consumption and emissions by harnessing wind power through modern sails, could be ready to be fitted onto newly built vessels for Drax from 2025.

The Environmentally Friendly Bulk Carrier “EFBC” project’s use of new and more efficient wind-power could contribute to reducing emissions associated with shipping biomass by around 20%. At a later stage, the project could also incorporate the use of other low-carbon technologies, as well as lower-emission fuels such as liquefied natural gas, ammonia, and synthetic fuels.

We previously partnered with the Smart Green Shipping Alliance, dry bulk cargo transporter Ultrabulk, and Humphreys Yacht Design for a feasibility study that looked at reducing shipping emissions. The study examined the potential to retrofit an innovative sail solution known as FastRig onto Ultrabulk ships importing biomass into the UK. FastRigs, made from 100% recycled and recyclable material, are designed to considerably reduce GHG emissions and the use of fuel. The feasibility study found that the FastRig solution could help lower fuel use and GHG emissions on one of our export routes – from Baton Rouge, Louisiana, to Liverpool in the UK – by at least 20%.

2. Reducing emissions through carbon capture and storage

Biomass pellet plants are a key part of Drax’s supply chain. By producing renewable, sustainable biomass feedstock we can help countries around the world to replace fossil fuels.

Our pellet mills in Canada and the U.S. South use a mix of fibre sources – all of which are unsuitable for lumber or other solid wood products. Globally, in the first half of 2022, almost 70% of the fibre for our biomass came from sawmill residues, like sawdust and wood chips.

Fibre for biomass also comes from low-grade wood that’s rejected by the lumber industry, slash left over from lumber industry harvests, and trees removed in forest management processes, like thinning and wildfire mitigation.

The pelletisation process uses power from local grids – wedding us to regional power sources. In areas like the U.S. where 61% of electricity is still generated from fossil fuels, this adds to our Scope 2 emissions.

However, our pioneering development of carbon capture technology offers the potential to decarbonise emissions connected to pelletisation. It’s one of the ways that the experience and technology we put into action at a new U.S. BECCS plant can decarbonise other facilities, whole industrial clusters, and our own supply chains.

3. Rail: The low-carbon road option

For in-country transportation, Drax utilises rail freight as much as possible, as rail offers the capacity we need as well as having a lower carbon footprint than road transport. In the UK, we own 225 rail wagons, specifically designed to transport biomass wood pellets and will be taking delivery of 30 more in 2023. The bespoke wagons carry a greater volume of compressed wood pellets than traditional wagons are capable of, delivering around 20,000 tonnes of renewable biomass to Drax Power Station every day.

Train carrying sustainably sourced compressed wood pellets arriving at Drax Power Station in North Yorkshire

Train carrying sustainably sourced compressed wood pellets arriving at Drax Power Station in North Yorkshire [click to view/download]

Optimising the volume of biomass on each train allow us to run fewer trains to the power station, keeping emissions minimal. Using rail rather than road transport is estimated to save around 270,000 truck journeys and more than 32,000 tonnes of CO2 a year.

In 2020 a new rail link was opened to connect our LaSalle BioEnergy biomass pellet plant in Louisiana to the regional rail network, enabling the delivery of around 7,000 tonnes of biomass per week to the Port of Greater Baton Rouge. The rail link replaced the 27 tonnes that was previously transported by each individual truck.

Helping countries around the world achieve net zero and working towards becoming a carbon negative company is only possible if we continue our practice of examining our supply chain and developing new innovative ways to reduce emissions even further.