Tag: Will Gardiner

Updating on ambitions for pellet plants, biomass sales and BECCS

Foresters in working forest, Mississippi

Highlights

  • New targets for pellet production and biomass sales
    • Biomass pellet production – targeting 8Mt pa by 2030 (currently c.4Mt)
    • Biomass pellet sales to third parties – targeting 4Mt pa by 2030 (currently c.2Mt)
  • Continued progress with UK BECCS(1) and biomass cost reduction
    • BECCS at Drax Power Station – targeting 8Mt pa of negative CO2 emissions by 2030
    • Biomass cost reduction – continuing to target biomass production cost of $100/t(2)
  • £3bn of investment in opportunities for growth 2022 to 2030
    • Pellet production, UK BECCS and pumped storage
    • Self-funded and significantly below 2x net debt to Adjusted EBITDA(3) in 2030
  • Development of additional investment opportunities for new-build BECCS
    • Targeting 4Mt pa of negative CO2 emissions outside of UK by 2030
  • Targeting returns significantly in excess of the Group’s cost of capital

Will Gardiner, Drax Group CEO, said:

Drax Group CEO Will Gardiner

Will Gardiner, CEO, Drax Group. Click to view/download.

“Drax has made excellent progress during 2021 providing a firm foundation for further growth. We have advanced our BECCS project – a vital part of the East Coast Cluster that was recently selected to be one of the UK’s two priority CCS projects. And we’re now setting out a strategy to take the business forward, enabling Drax to make an even greater contribution to global efforts to reach net zero.

“We believe Drax can deliver growth and become a global leader in sustainable biomass and negative emissions and a UK leader in dispatchable, renewable generation. We aim to double our sustainable biomass production capacity by 2030 – creating opportunities to double our sales to Asia and Europe, where demand for biomass is increasing as countries transition away from coal.

“As a global leader in negative emissions, we’re going to scale up our ambitions internationally. Drax is now targeting 12 million tonnes of carbon removals each year by 2030 by using bioenergy with carbon capture and storage (BECCS). This includes the negative emissions we can deliver at Drax Power Station in the UK and through potential new-build BECCS projects in North America and Europe, supporting a new sector of the economy, which will create jobs, clean growth and exciting export opportunities.”

Capital Markets Day

Drax is today hosting a Capital Markets Day for investors and analysts.

Will Gardiner and members of his leadership team will update on the Group’s strategy, market opportunities and development projects. The day will outline the significant opportunities Drax sees to grow its biomass supply chain, biomass sales and BECCS, as well as long-term dispatchable generation from biomass and pumped storage.

Purpose and ambition

The Group’s purpose is to enable a zero carbon, lower cost energy future and its ambition is to be a carbon negative company by 2030. The Group aims to realise its purpose and ambition through three strategic pillars, which are closely aligned with global energy policies, which increasingly recognise the unique role that biomass can play in the fight against climate change.

Strategic pillars

  • To be a global leader in sustainable biomass pellets
  • To be a global leader in negative emissions
  • To be a leader in UK dispatchable, renewable generation

The development of these pillars remains underpinned by the Group’s continued focus on safety, sustainability and biomass cost reduction.

A Global leader in sustainable biomass pellets

Drax believes that the global market for sustainable biomass will grow significantly, creating opportunities for sales to third parties in Asia and Europe, BECCS, generation and other long-term uses of biomass. Delivery of these opportunities is supported by the expansion of the Group’s biomass pellet production capacity.

The Group has 13 operational pellet plants with nameplate capacity of c.4Mt, plus a further two plants currently commissioning and other developments/expansions which will increase this to c.5Mt once complete.

Drax is targeting 8Mt of production capacity by 2030, which will require the development of over 3Mt of new biomass pellet production capacity. To deliver this additional capacity Drax is developing a pipeline of organic projects, principally focused on North America. Drax expects to take a final investment decision on 0.5-1Mt of new capacity in 2022, targeting returns significantly in excess of the Group’s cost of capital.

Underpinned by this expanded production capacity, Drax aims to double sales of biomass to third parties to 4Mt pa by 2030, developing its market presence in Asia and Europe, facilitated by the creation of new business development teams in Tokyo and London.

Drax is a major producer, supplier and user of biomass, active in all areas of the supply chain with long-term relationships and almost 20 years of experience in biomass operations. The Group’s innovation in coal-to-biomass engineering, supply chain management and leadership in negative emissions can be deployed alongside its large, reliable and sustainable supply chain to support customer decarbonisation journeys with long-term partnerships.

Drax expects to sell all the biomass it produces, based on an appropriate market price, typically with long-term index-linked contracts.

Continued focus on cost reduction

In 2018 the Group’s biomass production cost was $166/t(2). At the H1 2021 results, through a combination of fibre sourcing, operational improvements and capacity expansion (including the acquisition of Pinnacle Renewable Energy Inc), the production cost had reduced to $141/t(2). Drax’s aims to use the combined expertise of Drax and Pinnacle to apply learnings and cost savings across its portfolio and continues to target $100/t(2) (£50/MWh equivalent(4)) by 2027.

A Global leader in negative emissions

The Intergovernmental Panel on Climate Change(5) and the Coalition for Negative Emissions(6) have both outlined a clear role for BECCS in delivering the negative emissions required to limit global warming to 1.5oC above pre-industrial levels and to achieve net zero by 2050, identifying a requirement of between 2bn and 7bn tonnes of negative emissions globally from BECCS.

Separately, the UK Government has recently published its Net Zero Strategy and Biomass Policy Statement reaffirming the established international scientific consensus that sustainable biomass is renewable and that it will play a critical role in helping the UK achieve its climate targets. It also signposted an ambition for at least 5Mt pa of negative emissions from BECCS and Direct Air Capture by 2030, 23Mt pa by 2035 and up to 81Mt pa by 2050. The reports commit the Government to the development during 2022 of a financial model to support BECCS to meet these requirements.

Subject to the right regulatory environment, Drax plans to transform Drax Power Station into the world’s biggest carbon capture project using BECCS to permanently remove 8Mt of CO2 emissions from the atmosphere each year by 2030. The project is well developed, the technology is proven and an investment decision could be taken in 2024 with the first BECCS unit operational in 2027 and a second in 2030, subject to the right investment framework.

The Group aims to build on this innovation with a new target to deliver 4Mt of negative CO2 emissions pa from new-build BECCS outside of the UK by 2030 and is currently developing models for North American and European markets.

A UK leader in dispatchable, renewable generation

The UK’s plans to achieve net zero by 2050 will require the electrification of heating and transport systems, resulting in a significant increase in demand for electricity. Drax believes that over 80% of this could be met by intermittent renewable and inflexible low-carbon energy sources – wind, solar and nuclear. However, this will only be possible if the remaining power sources can provide the dispatchable power and non-generation system support services the power system requires to ensure security of supply and to limit the cost to the consumer.

Long-term biomass generation and pumped storage hydro can provide these increasingly important services. Drax Power Station is the UK’s largest source of renewable power by output and the largest dispatchable plant. The Group is continuing to develop a lower cost operating model for this asset, supported by a reduction in fixed costs associated with the end of coal operations.

Drax is also developing an option for new pumped storage – Cruachan II – which could take a final investment decision in 2024 and be operational by 2030, providing an additional 600MW of dispatchable long-duration storage to the power system.

In its Smart Systems and Flexibility plan (July 2021), the UK Government described long-duration storage technologies as essential for achieving net zero and has committed to take actions to de-risk investment for large-scale and long-duration storage.

Capital allocation and dividend

Strategic capital investment (3Mt of new biomass pellet production capacity, BECCS at Drax Power Station and Cruachan II) is expected to be in the region of £3bn between 2022 and 2030, backed by long-term contracted cashflows and targeting high single-digit returns and above.

No final investment decision has been taken on any of these projects and both BECCS and Cruachan II remain subject to further clarity on regulatory and funding mechanisms.

The Group believes these investments can be self-funded through strong cash generation over the period with net debt to Adjusted EBITDA significantly below 2x at the end of 2030, providing flexibility to support further investment, such as new-build BECCS as these options develop.

Drax remains committed to the capital allocation policy established in 2017, noting that average annual dividend growth was around 10% in the last 5-years.

Webcast and presentation material

The event will be webcast from 10.00am and the material made available on the Group’s website from 7:00am. Joining instructions for the webcast and presentation are included in the links below.

https://secure.emincote.com/client/drax/drax016

Notes:
(1) BioEnergy Carbon Capture and Storage.
(2) Free on Board – cost of raw fibre, processing into a wood pellet, delivery to Drax port facilities in US and Canada, loading to vessel for shipment and overheads.
(3) Earnings before interest, tax, depreciation, amortisation, excluding the impact of exceptional items and certain remeasurements.
(4) From c.£75/MWh in 2018 to c.£50/MWh, assuming a constant FX rate of $1.45/£.
(5) Coalition for Negative Emissions (June 2021).
(6) Intergovernmental Panel on Climate Change (August 2021).

Enquiries:

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

Media:

Drax External Communications: Ali Lewis
+44 (0) 7712 670 888

Website: www.drax.com/northamerica

Forward Looking Statements
This announcement may contain certain statements, expectations, statistics, projections and other information that are or may be forward-looking. The accuracy and completeness of all such statements, including, without limitation, statements regarding the future financial position, strategy, projected costs, plans, investments, beliefs and objectives for the management of future operations of Drax Group plc (“Drax”) and its subsidiaries (the “Group”), including in respect of Pinnacle Renewable Energy Inc. (“Pinnacle”), together forming the enlarged business, are not warranted or guaranteed. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Although Drax believes that the statements, expectations, statistics and projections and other information reflected in such statements are reasonable, they reflect the Company’s current view and beliefs and no assurance can be given that they will prove to be correct. Such events and statements involve significant risks and uncertainties. Actual results and outcomes may differ materially from those expressed or implied by those forward-looking statements. There are a number of factors, many of which are beyond the control of the Group, which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These include, but are not limited to, factors such as: future revenues being lower than expected; increasing competitive pressures in the industry; and/or general economic conditions or conditions affecting the relevant industry, both domestically and internationally, being less favourable than expected; change in the policy of key stakeholders, including governments or partners or failure or delay in securing the required financial, regulatory and political support to progress the development of Drax and its operations. We do not intend to publicly update or revise these projections or other forward-looking statements to reflect events or circumstances after the date hereof, and we do not assume any responsibility for doing so.

END

Half year results for the six months ended 30 June 2021

Engineers walking in front of sustainable biomass wood pellet storage dome at Drax Power Station, June 2021

RNS Number: 8333G
Drax Group plc
(“Drax” or the “Group”; Symbol:DRX)

Six months ended 30 JuneH1 2021H1 2020
Key financial performance measures
Adjusted EBITDA (£ million)(1)(2)186179
Continuing operations165160
Discontinued operations – gas generation2119
Net debt (£ million)(3)1,029792
Adjusted basic EPS (pence)(1)14.610.8
Interim dividend (pence per share)7.56.8
Total financial performance measures from continuing operations
Operating profit / (loss) (£ million)84(57)
Profit / (loss) before tax (£ million)52(85)

Will Gardiner, CEO of Drax Group, said:

“We have had a great first half of the year, transforming Drax into the world’s leading sustainable biomass generation and supply company as well as the UK’s largest generator of renewable power.

“The business has performed well, and we have exciting growth opportunities to support the global transition to a low-carbon economy.

Drax Group CEO Will Gardiner in the control room at Drax Power Station

Drax Group CEO Will Gardiner in the control room at Drax Power Station

“Drax has reduced its generation emissions by over 90%, and we are very proud to be one of the lowest carbon intensity power generators in Europe – a huge transformation for a business which less than a decade ago operated the largest coal power station in Western Europe.

“In the past six months we have significantly advanced our plans for Bioenergy with Carbon Capture and Storage (BECCS) in the UK and globally. By 2030 Drax could be delivering millions of tonnes of negative emissions and leading the world in providing a critical technology needed to tackle the climate crisis.

“We are pleased to be announcing a 10% increase in our dividend, and we remain committed to creating long-term value for all our stakeholders.” 

Financial highlights

Pinnacle named ship

  • Adjusted EBITDA from continuing and discontinued operations up £7 million to £186 million (H1 2020: £179 million)
  • Acquisition of Pinnacle Renewable Energy Inc. (Pinnacle) for cash consideration of C$385 million (£222 million) (enterprise value of C$796 million) and sale of gas generation assets for £186 million
  • Strong liquidity and balance sheet
    • £666 million of cash and committed facilities at 30 June 2021
    • Refinancing of Canadian facilities (July 2021) with lower cost ESG facility following Pinnacle acquisition
  •  Sustainable and growing dividend – expected full year dividend up 10% to 18.8 pence per share (2020: 17.1p/share)
    • Interim dividend of 7.5 pence per share (H1 2020: 6.8p/share) – 40% of full year expectation

Strategic highlights

Kentaro Hosomi, Chief Regional Officer EMEA, Mitsubishi Heavy Industries (MHI) at Drax Power Station, North Yorkshire

Kentaro Hosomi, Chief Regional Officer EMEA, Mitsubishi Heavy Industries (MHI) at Drax Power Station, North Yorkshire

  • Developing complementary biomass strategies for supply, negative emissions and renewable power
  • Creation of the world’s leading sustainable biomass generation and supply company
    • Supply – 17 operational plants and developments across three major fibre baskets with production capacity of 4.9Mt pa and $4.3 billion of long-term contracted sales to high-quality customers in Asia and Europe
    • Generation – 2.6GW of biomass generation – UK’s largest source of renewable power by output
  • >90% reduction in generation emissions since 2012
    • Sale of gas generation assets January 2021 and end of commercial coal March 2021
  • Development of BECCS
    • Planning application submitted for Drax Power Station and technology partner (MHI) selected
    • Participation in East Coast Cluster – phase 1 regional clusters and projects to be selected from late 2021
    • Partnerships with Bechtel and Phoenix BioPower evaluating international BECCS and biomass technologies
  • System support – option to develop Cruachan from 400MW to over 1GW – commenced planning approval process

 Outlook

  • Adjusted EBITDA, inclusive of Pinnacle from 13 April 2021, full year expectations unchanged

Operational review

Pellet Production – acquisition of Pinnacle, capacity expansion and biomass cost reduction

close-up of truck raising and lowering

  • Sustainable sourcing
    • Biomass produced using forestry residuals and material otherwise uneconomic to commercial forestry
    • Science-based sustainability policy fully compliant with current UK, EU law on sustainable sourcing aligned with UN guidelines for carbon accounting
    • All woody biomass verified and audited against FSC®(4), PEFC or SBP requirements
  • Adjusted EBITDA (including Pinnacle since 13 April 2021) up 60% to £40 million (H1 2020: £25 million)
    • Pellet production up 70% to 1.3Mt (H1 2020: 0.8Mt)
    • Cost of production down 8% to $141/t(5) (H1 2020: $154/t(5))
  • Near-term developments in US Southeast (2021-22)
    • Commissioning of LaSalle expansion, Demopolis and first satellite plant in H2
  • Other opportunities for growth and cost reduction
    • Increased production capacity, supply of biomass to third parties and expansion of fuel envelope to include lower cost biomass

Generation – flexible and renewable generation

  • 12% of UK’s renewable electricity, strong operational performance and system support services
  • Adjusted EBITDA down 14% to £185 million (H1 2020: £214 million)
    • Biomass – Lower achieved power prices and higher GBP cost of biomass reflecting historical power and FX hedging
    • Strong system support (balancing mechanism, Ancillary Services and optimisation) of £70 million (H1 2020: £66 million) – additional coal operations and continued good hydro and pumped storage performance, in addition to coal operations
    • Coal – utilisation of residual coal stock in Q1 2021 and capture of higher power prices
  • Pumped storage / hydro – good operational and system support performance
    • £34 million of Adjusted EBITDA (Cruachan, Lanark, Galloway schemes and Daldowie) (H1 2020: £35 million)
  • Ongoing cost reductions to support operating model for biomass at Drax Power Station from 2027
    • End of commercial coal operations in March, formal closure September 2022 – reduction in fixed cost base
    • Major planned outage for biomass CfD unit – August to November 2021 – including third turbine upgrade delivering improved thermal efficiency and lower maintenance cost, supporting lower cost biomass operations
    • Trials to expand range of lower cost biomass fuels – up to 35% load achieved in test runs on one unit
  • Strong contracted power position – 29.3TWh sold forward at £52.1/MWh 2021-2023. Opportunities to capture higher power prices in future periods, subject to liquidity
As at 25 July 2021 202120222023
Fixed price power sales (TWh) 15.99.14.3
-      CfD(6)3.80.6-
-      ROC10.88.44.0
-      Other1.30.10.3
At an average achieved price (£ per MWh)51.752.452.7

Customers – renewable electricity and services under long-term contracts to high-quality I&C customer base

 

  • Adjusted EBITDA loss of £5 million inclusive of £10-15 million impact of Covid-19 (H1 2020 £37 million loss inclusive of £44 million impact of Covid-19)
  • Continuing development of Industrial & Commercial (I&C) portfolio
    • Focusing on key sectors to increase sales to high-quality counterparties supporting generation route to market
    • Energy services expand the Group’s system support capability and customer sustainability objectives
  • Closure of Oxford and Cardiff offices as part of SME strategic review and the rebranding of the Haven Power I&C business to Drax
  • Continue to evaluate options for SME portfolio to maximise value and alignment with strategy

Other financial information

  • Total operating profit from continuing operations of £84 million including £20 million mark-to-market gain on derivative contracts and acquisition related costs of £10 million and restructuring costs of £2 million
  • Total loss after tax from continuing operations of £6 million including a £48 million charge from revaluing deferred tax balances following announcement of future UK tax rate changes
  • Total loss after tax from continuing operations of £6 million including a £48 million charge from revaluing deferred tax balances following confirmation of UK corporation tax rate increases from 2023
  • Capital investment of £71 million (H1 2020: £78 million) – continued investment in biomass strategy
    • Full year expectation of £210–230 million, includes pellet plant developments – LaSalle expansion, satellite plants and commissioning of Demopolis
  • Group cost of debt now below 3.5% reflecting refinancing of Canadian facilities in July 2021
  • Net debt of £1,029 million (31 December 2020: £776 million), including cash and cash equivalents of £406 million (31 December 2020: £290 million)
    • 5x net debt to Adjusted EBITDA, with £666 million of total cash and committed facilities (31 December 2020: £682 million)
    • Continue to expect around 2.0x net debt to Adjusted EBITDA by end of 2022
View complete half year report View investor presentation Listen to webcast

Global collaboration
is key to tackling
the climate crisis

Leaders from 40 countries are meeting today, albeit virtually, as part of President Joe Biden’s Leaders’ Summit on Climate. The event provides an opportunity for world leaders to reaffirm global efforts in the fight against climate change, set a clear pathway to net zero emissions, while creating jobs and ensuring a just transition.

Since taking office President Biden has made bold climate commitments and brought the United States back into the Paris Agreement. Ahead of the two-day summit, he announced an ambitious 2030 emissions target and new Nationally Determined Contributions. The US joins other countries that have announced significant reduction goals. For example, the EU committed to reduce its emissions by at least 55%, also South Korea, Japan and China have all set net-zero targets by mid-century.

Here in the UK, Prime Minister Boris Johnson this week outlined new climate commitments that will be enshrined in law. The ambitious new targets will see carbon emissions cut by 78% by 2035, almost 15 years earlier than previously planned. If delivered, this commitment which is in-line with the recommendations of the Climate Change Committee’s sixth carbon budget will put the UK at the forefront of climate action, and for the first time the targets include international aviation and shipping.

What makes climate change so difficult to tackle is that it requires collaboration from many different parties on a global scale never seen before. As a UK-North American sustainable energy company, with communities on both sides of the Atlantic, at Drax we are keenly aware of the need for thinking that transcends borders, creating a global opportunity for businesses and governments to work together towards a shared climate goal. That’s why we joined other businesses and investors in an open letter supporting the US government’s ambitious climate actions.

Collaboration between countries and industries

It’s widely recognised that negative emissions technologies will be key to global efforts to combat climate change.

At Drax we’re pioneering the negative emissions technology bioenergy with carbon capture and storage (BECCS) at our power station in North Yorkshire, which when up and running in 2027 will capture millions of tonnes of carbon dioxide (CO2) per year, sending it for secure storage, permanently locking it away deep under the North Sea.

Experts on both sides of the Atlantic consider BECCS essential for reaching net zero. The UK’s Climate Change Committee says it will play a major role in removing CO2 emissions that will remain in the UK economy after 2050 from industries such as aviation and agriculture that will be difficult to fully decarbonise. Meanwhile, a report published last year by New York’s Columbia University revealed that rapid development of BECCS is needed within the next 10 years in order to curb climate change and a recent report from Baringa, commissioned by Drax, showed it will be a lot more expensive for the UK to reach its legally binding fifth carbon budget between 2028 and 2031 without BECCS.

A shared economic opportunity

Globally as many as 65 million well-paid jobs could be created through investment in clean energy systems. In the UK, BECCS and negative emissions are not just essential in preventing the impact of climate change but will also be a key component of a post-Covid economy.

Government and private investments in clean energy technologies can create thousands of well-paid jobs, new careers, education opportunities and upskill workforces. Developing BECCS at Drax Power Station, for example, would support around 17,000 jobs during the peak of construction in 2028, including roles in construction, local supply chains and the wider economy. It would also act as an anchor project for the Zero Carbon Humber initiative, which aims to create the world’s first net zero industrial cluster. Developing a carbon capture, usage, and storage (CCUS) and hydrogen industrial cluster could spearhead the creation and support of tens of thousands of jobs across the Humber region and more than 200,000 around the UK in 2039.

Under the Humber Bridge

Additional jobs would be supported and created throughout our international supply chain. This includes the rail, shipping and forestry industries that are integral to rural communities in the US South and Western Canada.

A global company

As a British-North American company, Drax embodies the positive impact that clean energy investments have. We directly employ 3,400 people in the US, Canada, and the UK, and indirectly support thousands of families through our supply chains on both sides of the Atlantic. Drax is strongly committed to supporting the communities where we operate by investing in local initiatives to support the environment, jobs, education, and skills.

From the working forests of the US South and Western Canada to the Yorkshire and Humber region, and Scotland, we have a world-leading ambition to be carbon negative by 2030. At Drax, we believe the challenge of climate change is an opportunity to improve the environment we live in. We have reduced our greenhouse gas emissions by over 80% and transformed into Europe’s largest decarbonisation project. Drax Power Station is the most advanced BECCS project in the world and we stand ready to invest in this cutting-edge carbon capture and removal technology. We can then share our expertise with the rest of the world – a world where major economies are committing to a net zero future and benefiting from a green economic recovery.

If we are to reach the targets set in Paris, global leaders must lock in this opportunity and make this the decade of delivery.

The world’s leading sustainable biomass generation and supply business

Today we completed a transformational deal – our acquisition of Canadian biomass pellet producer Pinnacle Renewable Energy.

I’m very excited about this important acquisition and welcoming our new colleagues to the Drax family – together we will build on what we have already achieved, having become the biggest decarbonisation project in Europe and the UK’s largest single site renewable power generator as a result of us using sustainable biomass instead of coal.

The deal positions Drax as the world’s leading sustainable biomass generation and supply business – making us a truly international business, trading biomass from North America to Europe and Asia. It also advances our strategy to increase our self supply, reduces our biomass production costs and creates a long-term future for sustainable biomass – a renewable energy source that the UN’s IPCC says will be needed to achieve global climate targets.

It’s also an important milestone in Drax’s ambition to become a carbon negative company by 2030 and play an important role in tackling the global climate crisis with our pioneering negative emissions technology BECCS.

That’s because increasing our annual production capacity of sustainable biomass while also reducing costs helps pave the way for our plans to use bioenergy with carbon capture and storage (BECCS) at Drax.

Negative emissions from BECCS are vital to address the global climate emergency while also providing the renewable electricity needed for a net zero economy, supporting jobs and clean growth in a post-Covid recovery.

Inside a Pinnacle pellet mill

Inside a Pinnacle pellet mill

We already know Pinnacle well – it is one of our key suppliers and the company is a natural fit with Drax.

Our new colleagues have a wealth of operational and commercial expertise so I’m looking forward to seeing what we can achieve together.

We will benefit from Pinnacle’s scale, operational efficiency and low-cost fibre sourcing, that includes a high proportion of sawmill residues. In 2019, Pinnacle’s production cost was 20% lower than Drax’s.

Completing this deal will increase our annual production capacity to 4.9 million tonnes of sustainable biomass pellets at 17 plants in locations across Western Canada and the US South – up from 1.6Mt now.

It also expands our access to three major North American fibre baskets and four export facilities, giving us a large and geographically diversified asset base, which enhances our sourcing flexibility and security of supply.

This positions us well to take advantage of the global growth opportunities for sustainable biomass. The market for biomass wood pellets for renewable generation in Europe and Asia is expected to grow in the current decade, principally driven by demand in Asia.

Biomass wood pellet storage dome, Drax Power Station

Biomass wood pellet storage dome, Drax Power Station

We believe that with increasingly ambitious global decarbonisation targets, the need for negative emissions and improved understanding of the role that sustainably sourced biomass can play, will result in continued robust demand.

Pinnacle is already a key supplier of wood pellets to other markets with C$6.7 billion of long-term contracts with high quality Asian and European customers, including Drax, and a significant volume contracted beyond 2027.

Drax aims to leverage Pinnacle’s trading capability across its expanded portfolio. We believe that the enlarged supply chain will provide greater opportunities to optimise the supply of biomass from its own assets and third-party suppliers.

The transport and shipping requirements of the enlarged company will provide further opportunities to optimise delivery logistics, helping to reduce distance, time, carbon footprint and cost.

Train transporting biomass wood pellets arriving at Drax Power Station

Importantly – there will also be opportunities to share best practice and drive sustainability standards higher across the group.

We recognise that the forest landscape in British Columbia and Alberta is different to the commercially managed forests in the south eastern US where we currently operate.

In line with our world leading responsible sourcing policy, Drax will work closely with environmental groups, Indigenous First Nation communities and other stakeholders and invest to deliver good environmental, social and climate outcomes in Pinnacle’s sourcing areas.

We are determined to create a long-term future for sustainable biomass and deliver BECCS –  the negative emissions technology that will be needed around the world to meet global climate targets. The acquisition of Pinnacle takes us a big step forward in achieving our goals.


Read press release: Drax completes acquisition of Pinnacle Renewable Energy Inc.


 

At the heart of the energy transition

Tree nursery in Mississippi

Will Gardiner opened the second day of the Chatham House Energy Transitions conference. Watch his keynote address below or scroll down the page to read his speech in full.

The energy transition is central to our purpose of enabling a zero carbon, lower cost energy future.

Drax has been at the heart of Britain’s energy system for decades. And we have played a key role in the decarbonisation of the power sector: Drax Power Station in Selby, North Yorkshire, is the UK’s largest power station and Europe’s largest decarbonisation project. Cruachan, our Scottish Pumped Storage facility is a key complement to Britain’s ever increasing supply of offshore wind.

Our transition from coal to biomass has allowed us to reduce our greenhouse gas emissions by over 80% while providing clean and flexible energy to millions of homes and businesses across the UK. This month saw the end of commercial coal generation at Drax power station – a milestone in the history of our company and of the UK economy, too.

But the scale of the climate crisis means that we cannot stop here.

Which is why we have committed to a world-leading ambition to be carbon negative by 2030.

We will achieve this by making a transformational investment in bioenergy with CCS, or BECCS, which will enable us to permanently remove carbon emissions from the atmosphere while continuing to supply the renewable electricity that millions of British homes and businesses depend upon.

Water outlet into Loch Awe from Cruachan Power Station

Water outlet into Loch Awe from Cruachan Power Station

Today, we are pioneering BECCS at Drax Power Station as part of the Zero Carbon Humber Cluster, a coalition of diverse businesses with one ambition: to create the world’s first net zero emissions industrial cluster.

The benefits are enormous

BECCS is a vital technology in the fight against climate change. Expert bodies such as the Climate Change Committee here in the UK and the IPCC at a global level are clear that we need negative emissions technologies including BECCS to reach net zero, and BECCS is central to the UK and Europe’s decarbonisation plans.

As the world’s largest, and most experienced, generator and supplier of sustainable bioenergy there is no better place to pioneer BECCS than at Drax. The economic, social and environmental benefits are enormous.

BECCS at Drax will permanently remove millions of tonnes of carbon from the atmosphere and help heavy industry in the UK’s largest emitting area decarbonise quickly and cost effectively;

It will enable the creation of tens of thousands of green jobs in the North of England, levelling up the economy and delivering a green recovery from the Covid crisis;

And it will put the UK at the forefront of global efforts to develop carbon removal technology in this, the year that we host COP26 in Glasgow.

The scale of the climate crisis means that we cannot stop here.

A proven technology

We know that BECCS works and that the technology is available now. Looking at cost projections from the CCC, we also know that it is the best value negative emissions technology.

Engineer at BECCS pilot project within Drax Power Station

Engineer at BECCS pilot project within Drax Power Station

We have already successfully run two BECCS pilots at the power station. In 2019 we demonstrated that we can capture CO2 from a 100% biomass feedstock. And in 2020, we began a second pilot working with Mitsubishi Heavy Industries to further enhance the potential for delivering negative emissions.

We aim to deploy BECCS at scale by 2027. To that end, earlier this month, we kickstarted the planning process for our proposals to build our first BECCS units, marking a major milestone in the project and putting us in a position to commence building BECCS as soon as 2024.

The support we need

Drax Power Station has a proud history of transformation. And today we are making rapid progress in further decarbonising our operations and making bold commitments about our future.

The core of our successful decarbonisation has been a close partnership with government. And it is this partnership that will make BECCS a reality and enable the multiple benefits that come with it. An effective negative emissions policy and regulatory framework from government will enable further investments from companies such as Drax.

We believe it is possible for such a policy framework to emerge in the coming months.

With COP26 later this year, making that policy commitment will allow us to accelerate our own decarbonisation journey and support the industries of the future here in the UK.

BECCS in context

But we know that there is no silver bullet solution to tackling climate change.

Negative emissions technologies such as BECCS will be needed alongside others, for example more renewables, electric vehicles, energy storage, energy efficiency and hydrogen.

BECCS will enable us to permanently remove carbon emissions from the atmosphere while continuing to supply the renewable electricity that millions of British homes and businesses depend upon.

BECCS complements – and does not – and should not – substitute for ambitious decarbonisation plans. Technologies such as BECCS have a clear and unique role to play by helping harder to abate sectors such as heavy industry, aviation and agriculture – decarbonise.

This is critically important if we are to meet our legally binding 2050 net zero target. The CCC estimates that 51m tonnes of CO2 will need to be captured via BECCS to meet net zero.

Sustainability at our core

We know that BECCS can only make a meaningful contribution to tackling climate change if the bioenergy is sustainably sourced. This has been fundamental to Drax’s transition from coal to biomass, and it remains fundamental as we progress our plans for BECCS.

Infographic showing how BECCS removes carbon from the atmosphere

Biomass, as the UK Government has stated, is one of our most valuable tools for reaching net zero emissions. So we need the right framework to ensure it is sourced sustainably.

As the world’s largest bioenergy producer and generator, we recognise our responsibility to be the world leaders in sustainability, too.

At Drax, we have invested in world leading policies, tools and expertise to ensure that our biomass is sustainably sourced. We go beyond regulatory compliance and have set up an Independent Advisory Board, Chaired by the UK Government’s former Chief Scientific Advisor, to help us and challenge us on sustainable biomass and its role in Drax’s transition to net zero.

front cover of 'Responsible sourcing' PDF

[click to read]

Thanks to our independent catchment area analyses, we know more about the forests we source from than ever before. We know and can demonstrate how demand for biomass can support healthy forests. For example, in the South East US where Drax sources most of its biomass, there is more than double the carbon stored in forests than there was 50 years ago.

A partnership with our stakeholders

The purpose of today’s session is to discuss all these issues and more. Our aim is clear: to enable a successful energy transition.

At Drax we stand ready to invest hundreds of millions of pounds to scale up BECCS technology;

To put the UK at the forefront of global efforts to reach net zero emissions;

And to help create tens of thousands of green jobs in the North of England.

But I want your help in making BECCS as sustainable and successful as it can be.

We know and can demonstrate how demand for biomass can support healthy forests.

Thank you very much for listening and I wish you a good and constructive session tackling this critical global challenge.

Will Gardiner delivered this keynote address at Energy Transitions 2021.

The video of Will’s speech can be watched in full here and with subtitles here.

Attracting investment in emerging low carbon technologies

Biomass dome at Drax Power Station

Hello everyone. My name is Will Gardiner and I am the CEO of the Drax Group. It is great to have the opportunity to speak to you today at the Utility Week Investor Summit and to discuss attracting investment in emerging low carbon technologies.

Drax at the heart of the energy transition

My company Drax has been at the heart of Britain’s energy system for decades. And we have played a key role in the decarbonisation of the power sector: Drax Power Station in Selby, North Yorkshire, is the UK’s largest power station and Europe’s largest decarbonisation project. Cruachan, our Scottish Pumped Storage facility, is a key complement to Britain’s ever-increasing supply of offshore wind.

Our transition from coal to biomass has allowed us to reduce our greenhouse gas emissions by over 80% while providing clean and flexible energy to millions of homes and businesses across the UK.  This month saw the end of commercial coal generation at Drax power station – a milestone in the history of our company and of the UK economy, too.

But the drive to create a more sustainable, net zero economy means that we cannot stop here.

Which is why at Drax we have committed to a world-leading ambition to be carbon negative by 2030.

Engineer in the workshop at Drax Power Station

Engineer in the workshop at Drax Power Station

We will achieve this by increasing our capacity to generate renewable electricity, and by making a transformational investment in bioenergy with CCS, or BECCS, which will enable us to permanently remove carbon emissions from the atmosphere.

We are pioneering BECCS at Drax Power Station as part of the Zero Carbon Humber cluster, a coalition of diverse businesses with the same ambition: to create the world’s first net zero emissions industrial cluster.

I am delighted to confirm today that the Zero Carbon Humber Cluster project has received more than £21m in funding from the Government’s Industrial Strategy Challenge Fund to help accelerate our plans and to help transform our vision of a zero carbon industrial cluster into a reality.

The benefits are enormous

BECCS is a vital technology in the fight against climate change. Expert bodies such as the Climate Change Committee here in the UK and the IPCC at a global level are clear that we need negative emissions technologies including BECCS to reach net zero. And BECCS is central to the UK government and Europe’s decarbonisation plans.

As the world’s largest, and most experienced, generator and supplier of sustainable bioenergy there is no better place to pioneer BECCS than at Drax.  The economic, social and environmental benefits are enormous.

BECCS at Drax will permanently remove millions of tonnes of carbon from the atmosphere and help heavy industry in the UK’s largest emitting area decarbonise quickly and cost effectively;

It will enable the creation of tens of thousands of green jobs in the North of England, levelling up the economy and delivering a green recovery from the Covid crisis;

And it will put the UK at the forefront of global efforts to develop carbon removal technology in this, the year that we host COP26 in Glasgow.

A proven technology

We know that BECCS works and that the technology is available now. Looking at cost projections from the CCC, we also know that it is the best value negative emissions technology.

We have already successfully run two BECCS pilots at the power station. In 2019 we demonstrated that we can capture CO2 from a 100% biomass feedstock. And in 2020, we began a second pilot working with Mitsubishi Heavy Industries to further enhance the potential for delivering negative emissions.

We aim to deploy BECCS at scale by 2027. To that end, earlier this month, we kickstarted the planning process for our proposals to build our first BECCS unit, marking a major milestone in the project and putting us in a position to commence building BECCS as soon as 2024.

A partnership between industry and government

Successful decarbonisation has always been a partnership between industry and government.

This is evident looking at the incredible rise of Britain’s offshore wind sector. As a direct response to government’s political commitment, a strong price signal, and an investable Contract for Difference mechanism, offshore wind capacity has grown from 1GW to over 10GW in a decade. And build costs are now two thirds lower than what they were 10 years ago.

Pylon that takes excess wind power to be stored at Cruachan pumped hydro storage power station in Scotland

Pylon that takes excess wind power to be stored at Cruachan pumped hydro storage power station in Scotland

At Drax, our conversion from coal to biomass was benefited from much the same framework:

  • The UK Government was – and continues to be – very strong in its support for biomass as a renewable technology to replace coal;
  • Our CfD mechanism has given investors the certainty they need to invest;
  • And successive government’s commitment to a carbon price that matches or exceeds that of our European neighbours has told the market that Britain is serious about decarbonising the power sector rapidly.

That combination of factors – a clear, transparent, investable framework for renewables, combined with a strong price signal from the UK government discouraging fossil fuel power generation – has been the key to driving private sector investment in renewable power technology in the UK. As a result, the UK leads the world in decarbonising its electricity sector, while also enabling a global technology revolution in offshore wind power. Importantly, the whole effort has been underpinned by transparency, competition and confidence in the regulatory and legal framework, all of which are critical.

Building a partnership for the future

By continuing this partnership between industry and government, the UK could become the world leader in emerging green technologies such as BECCS.

Right now, markets and regulatory frameworks for BECCS or negative emissions more broadly either don’t exist – or aren’t flexible enough – to support the scaling of the technologies we need to get to net zero. But the first-generation framework, as I have just described, provides a great model.

Fundamentally, we believe that we can do BECCS at a cost of less than £100/t of CO2, which is less than any other negative emissions technology available.

We know this investment will help the UK reach net zero at a lower cost than it otherwise could do.

Maintenance inside a water cooling tower at Drax Power Station

Maintenance inside a water cooling tower at Drax Power Station

But although we’re ready to make the investment – the UK’s regulatory system isn’t yet ready to support it.

Despite being world leaders in these areas, our carbon pricing system and financial markets don’t yet recognise the value of negative emissions, even though our political institutions and scientists say they are vital to tackling climate change.

There is no government defined business model for BECCS, which will be essential to signalling long term political support as well as operational support.

And despite being the best placed country in the world to develop BECCS, we risk losing out as other countries race to deploy this technology first. Just last week we saw Aker, Microsoft and Orsted sign a memorandum of understanding to develop BECCS in Denmark.

However, in its ten-point plan, the UK government has committed to outline what role biomass and BECCS will play in the UK’s transition to net zero by the end of this year. Soon it will be consulting on a new bioenergy strategy. And it has already taken evidence on Greenhouse Gas Removal technologies and consulted on CCS clusters.

This, we believe, demonstrates that a set of policies could emerge in the coming months that will support investment in BECCS.

At their core, we think these policies should capture the stability and investability of a CfD for the renewable power that we will produce, as well as deliver payment for the negative emissions. By compensating negative emissions with a credit for every ton of CO2 they remove from the environment, the government can properly reward those technologies, and add a critical new set of tools to the fight against climate change – ultimately lower the cost of winning that battle.

This would enable Drax to invest in BECCS, begin delivering negative emissions and helping to decarbonise the North of England as soon as 2027.

With COP26 later this year, making this policy commitment will allow us to accelerate our own decarbonisation journey and support the industries of the future develop here in the UK.

BECCS in context

We know that there is no silver bullet solution to tackling climate change.

Negative emissions technologies such as BECCS will be needed alongside others, for example more renewables, electric vehicles, energy storage, energy efficiency and hydrogen.

Drax employee charging an electric car at Haven Power in Ipswich

Drax employee charging an electric car at Haven Power in Ipswich

BECCS complements – and does not – and should not – substitute for ambitious decarbonisation plans. Technologies such as BECCS have a clear and unique role to play by helping harder to abate sectors such as heavy industry, aviation and agriculture – decarbonise.

This is critically important if we are to meet our legally binding 2050 net zero target. The CCC estimates that 51m tonnes of CO2 will need to be captured via BECCS to meet net zero.

Sustainability at our core

We know that BECCS can only make a meaningful contribution to tackling climate change if the bioenergy is sustainably sourced. This has been fundamental to Drax’s transition from coal to biomass, and it remains fundamental as we progress our plans for BECCS.

Wood residues at Morehouse Bioenergy, Louisiana

Sustainably sourced wood residues at Morehouse Bioenergy pellet plant in Louisiana

Biomass, as the UK Government has stated, is one of our most valuable tools for reaching net zero emissions. So we need the right framework to ensure it is sourced sustainably.

As the world’s largest bioenergy producer and generator, we recognise our responsibility to be the world leaders in sustainability, too.

At Drax, we have invested in world leading policies, tools and expertise to ensure that our biomass is sustainably sourced. We go beyond regulatory compliance and have set up an Independent Advisory Board, Chaired by the UK Government’s former Chief Scientific Advisor, to help us and challenge us on sustainable biomass and its role in Drax’s transition to net zero.

Thanks to our independent catchment area analyses, we know more about the forests we source from than ever before. We know and can demonstrate how demand for biomass can support healthy forests. For example, in the South East US where Drax sources most of its biomass, there is more than double the carbon stored in forests than there was 50 years ago.

Ready to deliver

BECCS will be a critical green technology. And with the right support and policy framework we could be pioneers in making it a reality.

There is no better place to deliver BECCS than at Drax, and no better time to deliver it than now.

At Drax, we stand ready to invest hundreds of millions of pounds to scale up BECCS technology;

To put the UK at the forefront of global efforts to reach net zero emissions;

And to help create tens of thousands of green jobs in the North of England.

Thank you very much for listening.

Will Gardiner delivered this keynote address at the Utility Week Investor Summit

Standing together
against climate
change

Global leadership illustration

Tackling climate change requires global collaboration. As a UK-US sustainable energy company, with communities on both sides of the Atlantic, we at Drax are keenly aware of the need for thinking that transcends countries and borders.

Joe Biden has become the 46th President of my native country at a crucial time to ensure there is global leadership and collaboration on climate change. Starting with re-joining the Paris Agreement, I am confident that the new administration can make a significant difference to this once-in-a-lifetime challenge.

This is why Drax and our partners are mobilising a transatlantic coalition of negative emissions producers. This can foster collaboration and shared learning between the different technologies and techniques for carbon removal that are essential to decarbonise the global economy.

Biomass storage domes at Drax Power Station in North Yorkshire at sunset

Biomass storage domes at Drax Power Station in North Yorkshire

Whilst political and technical challenges lie ahead, clear long-term policies that spur collaboration, drive innovation and enable technologies at scale are essential in achieving the UK and US’ aligned targets of reaching net zero carbon emissions by 2050.

Collaboration between countries and industries

What makes climate change so difficult to tackle is that it requires collaboration from many different parties on a scale like few other projects. This is why the Paris Agreement and this year’s COP26 conference in Glasgow are so vital.

Sustainable biomass wood pellets being safely loaded at the Port of Greater Baton Rouge onto a vessel destined for Drax Power Station

Our effort towards delivering negative emissions using bioenergy with carbon capture and storage (BECCS) is another example of ambitious decarbonisation that is most impactful as part of an integrated, collaborative energy system. The technology depends upon sustainable forest management in regions, such as the US South where our American communities operate. Carbon capture using sustainable bioenergy will help Drax to be carbon negative by 2030 – an ambition I announced at COP25, just over a year ago in Madrid.

Will Gardiner at Powering Past Coal Alliance event in the UK Pavilion at COP25 in Madrid

Will Gardiner announcing Drax’s carbon negative ambition at COP25 in Madrid (December 2019).

Experts on both sides of the Atlantic consider BECCS essential for net zero. The UK’s Climate Change Committee says it will play a major role in tackling carbon dioxide (CO2) emissions that will remain in the UK economy after 2050, from industries such as aviation and agriculture that will be difficult to fully decarbonise. Meanwhile, a report published last year by New York’s Columbia University revealed that rapid development of BECCS is needed within the next 10 years in order to curb climate change.

A variety of negative emissions technologies are required to capture between 10% and 20% of the 35 billion metric tonnes of carbon produced annually that the International Energy Agency says is needed to prevent the worst effects of climate change.

We believe that sharing our experience and expertise in areas such as forestry, bioenergy, and carbon capture will be crucial in helping more countries, industries and businesses deploy a range of technologies.

A formal coalition of negative emissions producers that brings together approaches including land management, afforestation and reforestation, as well as technical solutions like direct air capture (DAC), as well as BECCS, would offer an avenue to ensure knowledge is shared globally.

Direct air capture (DAC) facility

Direct air capture (DAC) facility

It would also offer flexibility in countries’ paths to net zero emissions. If one approach under-delivers, other technologies can work together to compensate and meet CO2 removal targets.

As with renewable energy, working in partnership with governments is essential to develop these innovations into the cost-effective, large scale solutions needed to meet climate targets in the mid-century.

A shared economic opportunity

I agree whole heartedly that a nation’s economy and environment are intrinsically linked – something many leaders are now saying, including President Biden. The recently approved US economic stimulus bill, supported by both Republicans and Democrats in Congress and which allocates $35 billion for new clean energy initiatives, is a positive step for climate technology and job creation.

Globally as many as 65 million well-paid jobs could be created through investment in clean energy systems. In the UK, BECCS and negative emissions are not just essential in preventing the impact of climate change, but are also a vital economic force as the world begins to recover from the effects of COVID-19.

Engineer inside the turbine hall of Drax Power Station

Government and private investments in clean energy technologies can create thousands of well-paid jobs, new careers, education opportunities and upskill workforces. Developing BECCS at Drax Power Station, for example, would support around 17,000 jobs during the peak of construction in 2028, including roles in construction, local supply chains and the wider economy.

Additional jobs would be supported and created throughout our international supply chain. This includes the rail, shipping and forestry industries that are integral to rural communities in the US South.

We are also partnered with 11 other organisations in the UK’s Humber region to develop a carbon capture, usage and storage (CCUS) and hydrogen industrial cluster with the potential to spearhead creating and supporting more than 200,000 jobs around the UK in 2039.

The expertise and equipment needed for such a project can be shared, traded and exported to other industrial clusters around the world, allowing us to help reach global climate goals and drive global standards for CCUS and biomass sustainability.

Clear, long-term policies are essential here, not just to help develop technology but to mitigate risk and encourage investment. These are the next crucial steps needed to deploy negative emissions at the scale required to impact CO2 emissions and lives of people.

Engineer at BECCS pilot project within Drax Power Station

At Drax we directly employ almost 3,000 people in the US and UK, and indirectly support thousands of families through our supply chains on both sides of the Atlantic. Drax Power Station is the most advanced BECCS project in the world and we stand ready to invest in this cutting-edge carbon capture and removal technology. We can then share our expertise with the United States and the rest of the world – a world where major economies are committing to a net zero future and benefiting from a green economic recovery.

A net zero UK will be good for people and the planet

Peak district walker

For the UK to reach net zero CO2 emissions by 2050 and do its part in tackling the biggest challenge of our time, all sectors of the economy must reduce their emissions and do it quickly.

I believe the best approach to tackling climate change is through ‘co-benefit’ solutions: solutions that not only have a positive environmental impact, but that are economically progressive for society today and in the future through training, skills and job creation.

As an energy company, this task is especially important for Drax. We have a responsibility to future generations to innovate and use our engineering skills to deliver power that’s renewable, sustainable and that doesn’t come at a cost to the environment.

Our work on Zero Carbon Humber, in partnership with 11 other forward-thinking organisations, aims to deploy the negative emissions technology BECCS (bioenergy with carbon capture and storage), as well as CCUS (carbon capture, usage and storage) in industry and power, and ramp up hydrogen production as a low carbon fuel. These are all essential technologies in bringing the UK to net zero, but they are also innovative projects at scale that can benefit society and the lives of people in the Humber, and around the UK.

New jobs in a new sector

The Humber region has a proud history in heavy industries. What began as a thriving ship building hub has evolved to include chemicals, refining and steel manufacturing. However, these emissions-intensive industries have grown increasingly expensive to operate and many have left for countries where they can be run cheaper, leading to a decline in the Humber region.

If they are not decarbonised, these industries will face an even greater cost. By 2040, emitters could face billions of pounds per year in carbon taxes, making them less competitive and less attractive for international investment.

Deploying carbon capture and hydrogen are essential steps towards modernising these businesses and protecting up to 55,000 manufacturing and engineering jobs in the region.

Capturing carbon at Drax: Delivering jobs, clean growth and levelling up the Humber. Click to view executive summary and case studies from Vivid Economics report for Drax.

A report by Vivid Economics commissioned by Drax, found that carbon capture and hydrogen in the Humber could create and support almost 48,000 new jobs at the peak of the construction period in 2027 and provide thousands of long term, skilled jobs in the following decades.

As well as protecting people’s livelihoods, decarbonisation is also a matter of public health. In the Humber alone, higher air quality could save £148 million in avoided public health costs between 2040 and 2050.

I believe the UK is well position to rise to the challenge and lead the world in decarbonisation technology. There is a clear opportunity to export knowledge and skills to other countries embarking on their own decarbonisation journeys. BECCS alone could create many more jobs related to exporting the technology and operational know-how and deliver additional value for the economy. As interest in negative emissions grows around the world, the UK needs to move quickly to secure a competitive advantage.

A fairer economy

This is in many ways the start of a new sector in our economy – one that can offer new employment, earnings and economic growth. It comes at just the right time. Without intervention to spur a green recovery, the COVID-19 crisis risks subjecting long-term economic damage.

Being at the beginning of the industrial decarbonisation journey means we also have the power to shape this new industry in a way that spreads the benefits across the whole of the UK.

We’ve previously seen sector deals struck between the government and industry include equality measures. For example, the nuclear industry aims to count women as 40% of its employees by 2030, while offshore wind is committed to sourcing 60% of its supply chain from the UK.

Wind turbines at Bridlington, East Yorkshire

At present, the Humber region receives among the lowest levels of government investment in research and development in the UK, contributing to a pronounced skills gap among the workforce. In addition, almost 60% of construction workers across the wider Yorkshire and Humber region were furloughed as of August 2020.

A project such as Zero Carbon Humber could address this regional imbalance and offer skilled, long term jobs to local communities. That’s why I welcome the Prime Minister’s announcement of £1bn investment to support the establishment of CCUS in the Humber and other ‘SuperPlaces’ around the UK.

As the Government’s Ten Point Plan says, CCUS can ‘help decarbonise our most challenging sectors, provide low carbon power and a pathway to negative emissions’. 

Healthier forests

The co-benefits of BECCS extend beyond our communities in the UK. We aim to become carbon negative by 2030 by removing our CO2 emissions from the atmosphere and abating emissions that might still exist on the UK’s path to net zero.

Background. Fir tree branch with dew drops on a blurred background of sunlight

This ambition will only be realised if the biomass we use continues to be sourced from sustainable forests that positively benefit the environment and the communities in which we and our suppliers operate.

Engineer working in turbine hall, Drax Power Station, North Yorkshire

Engineer working in turbine hall, Drax Power Station, North Yorkshire

I believe we must continuously improve our sustainability policy and seek to update it as new findings come to light. We can help ensure the UK’s biomass sourcing is led by the latest science, best practice and transparency, supporting healthy, biodiverse forests around the world; and even apply it internationally.

Global leadership

Delivering deep decarbonisation for the UK will require collaboration from industries, government and society. What we can achieve through large-scale projects like Zero Carbon Humber is more than just the vital issue of reduced emissions. It is also about creating jobs, protecting health and improving livelihoods.

These are more than just benefits, they are the makings of a future filled with opportunity for the Humber and for the UK’s Green Industrial Revolution.

By implementing the Ten Point Plan and publishing its National Determined Contributions (NDCs) ahead of COP26 in Glasgow next year, the UK continues to be an example to the world on climate action.

In a crisis people come first

This crisis will be remembered for many things. Many are not positive, but some are inspiring. Around the world we’ve seen tremendous acts of kindness and witnessed remarkable resilience from people continuing to live, work and to support one another. The actions we are all taking as individuals, businesses and communities will not only help us get through this crisis, they will shape how we emerge from it.

At Drax we are proud of the ongoing role we’re playing in supporting the UK and its essential services, continuing to generate and supply the electricity needed to keep people healthy and the economy running.

It is what we have always done, and it is what we will continue to do.

This is possible because our people have continued to carry out their important work in these uncertain times safely and responsibly. My leadership team in the UK and US must continue to support them, and we must also support the communities they are a part of.

Employees Drax Power Station show their support and appreciation for the heroic efforts of those within the NHS by turning one of its cooling towers blue at 8pm each Thursday

Employees Drax Power Station show their support and appreciation for the heroic efforts of those within the NHS by turning one of its cooling towers blue at 8pm each Thursday

Our communities are at the core of what we do and who we are. They support our business globally and enable us to supply energy to the country. We have a responsibility to do what we can to help them through this crisis.

To do this we have put together a Covid-19 support package totalling more than three quarters of a million pounds that goes beyond just financing to make a positive impact. I’d like to highlight a few of these.

Supporting communities in Great Britain and the US

The Robinson family collect their laptop at Selby Community Primary School

The closures of schools and the need to turn homes into classrooms has been one of the biggest changes for many families. With children now depending on technology and the internet for schooling, there’s a very real chance those without access may fall behind, with a long term negative impact on their education.

We want to ensure no child is left out. So, we have donated £250,000 to buy 853 new laptops, each with three months of pre-paid internet access, and delivered them to schools and colleges local to our sites across the UK.

This has been implemented by Drax, working closely with headteachers. As one of our local heads Ian Clennan told us: “Schools don’t just provide education – they’re a whole support system. Having computers and internet access means pupils can keep in touch with their teachers and classmates more easily too – which is also incredibly important at the moment.”

In the US, we’re donating $30,000 to support hardship funds for the communities where we operate. Our colleagues in Louisiana are playing an active role in the community, and in Amite County, Mississippi, they have helped provide PPE to first responders as well as supporting charities for the families worse affected.

Helping businesses, starting with the most vulnerable

As an energy supplier to small and medium sized businesses (SMEs), we must act with compassion and be ready to help those who are most economically exposed to the crisis. To do this, we are launching a number of initiatives to support businesses, starting with some of the most vulnerable.

It’s clear that care homes require extra support at this time. We are offering energy bill relief for more than 170 small care homes situated near our UK operations for the next two months, allowing them to divert funds to their other priorities such as PPE, food or carer accommodation.

But it is also important we understand how difficult a period this is for small businesses of all kinds. Many of our customers are facing financial pressure that was impossible to forecast. To help relieve this, we have agreed deferred payment plans with some of our customers who are unable to pay in full. We have also extended current energy prices for three months for 4,000 customers of Opus Energy who have not been able to secure a new contract during this period.

The impact of this crisis will be long term, so we made a significant, two-year charitable donation to Business Debtline. A dedicated phoneline and webpage will be provided to our small businesses customers, offering free debt advice and helping them to recover for the future.

An engineer looks up at flue gas desulphurisation unit (FGD) at Drax Power Station. The massive pipe would transport flue gas from the Drax boilers to the carbon capture and storage (CCS) plant for CO<sub>2</sub> removal of between 90-95%.

An engineer looks up at flue gas desulphurisation unit (FGD) at Drax Power Station. The massive pipe would transport flue gas from the Drax boilers to the carbon capture and storage (CCS) plant for CO2 removal of between 90-95%.

Change for the future recovery

While there is still uncertainty around how the UK, the US and the world will emerge from the pandemic it is the responsibility of the whole energy industry to show compassion for its customers and to take the actions needed to soften the economic blow that Covid-19 is having across the globe.

The disruption to normal life caused by the pandemic has changed how the country uses electricity overnight. In the coming weeks we will be publishing a more in-depth view from Electric Insights showing exactly what effect this has had and what it might reveal for the future of energy.

No matter what that future holds, however, we will remain committed to enabling a zero carbon, lower cost energy future. This will mean not only supporting our people, our communities and our countries through the coronavirus crisis, but striving for a bright and optimistic future beyond it. A future where people’s immediate health, safety and economic wellbeing are prioritised alongside solutions to another crisis – that of climate change.