Sourcing - Drax
Responsible sourcing

Our commitment to sourcing natural resources responsibly is underpinned by our sustainability policy and we apply the strictest standards to sourcing biomass and coal.

“Wood pellets can help us cut carbon, expand forests, conserve wildlife and support jobs, if it’s done in the best possible way”

— Tony Juniper, Author, Adviser and Environmental Campaigner

Sustainable biomass

Our group approach to sustainable biomass sourcing

We believe the best way to ensure our biomass is sustainable and legal is through a combination of proactive supplier engagement, third party certification and our own audits and checks. We rely on a number of forest certification programmes, including the Sustainable Forest Initiative (SFI), Forest Stewardship Council® (FSC®) – Drax FSC License Code: FSC-C119787, the Programme for the Endorsement of Forest Certification (PEFC) and Sustainable Biomass Program (SBP).

Our requirements are laid out in our Group sustainability policy. We adhere to the UK Government criteria for sustainable biomass, the Forest Europe Sustainable Forest Management criteria and we comply with the European Union Timber Regulation (EUTR).

The Group Director of Corporate Affairs has overall responsibility for delivering Drax Group’s sustainability performance and ensuring biomass meets the Government’s sustainability criteria. Cases requiring special attention are escalated to the Ethics and Business Conduct Committee or the Executive Committee.

An example of this in 2017 was when new information came to light on one of our suppliers through the SBP auditing process. Background information collected during preparation for the SBP assessment highlighted that our supplier had not provided us with the most accurate information regarding harvesting locations. Without this, we cannot carry out the regional risk-based assessment required under the legislation.

Although the volume in question was low, we halted deliveries until our supplier could properly identify the material and we could carry out the appropriate due diligence.

In 2017, Drax Group started a review and update of our policy with various stakeholders to ensure that it is still relevant and addresses the key biomass sustainability issues. We also asked The Forest Trust (TFT) to visit our key supply regions to examine local challenges and identify opportunities for improved environmental and social performance. TFT is a UK-registered charity working with other global companies to improve the environmental and social impact of their supply chains.


Our biomass sustainability requirements

  • Group sustainability policy – in place since 2008, our policy covers our core sustainability values on protecting biodiversity, reduction of greenhouse gas emissions and contribution to social values.
  • UK Government criteria for sustainable biomass – we report monthly on compliance with the UK sustainability criteria, including life cycle emissions limits and the land criteria. This covers the requirements of the Forest Europe Sustainable Forest Management criteria, including: maintaining forest area and carbon stocks; encouraging the production of forest products; maintaining the health and vitality of the forest ecosystem; conserving and enhancing biological diversity; contributing socio-economic benefits; and ensuring that soil and water protection is maintained.
  • European Union Timber Regulation – in place since 2013, the EUTR requires purchasers of wood products to have coherent due diligence processes in place to minimise the risk of trading illegally logged timber.

Maintaining forest carbon stocks

Ensuring that forest carbon stocks are maintained, or not adversely impacted by biomass demand, is one of the requirements of the UK Government’s criteria for sustainable biomass. Drax sources sustainable biomass only from working forests. We regularly monitor forest inventory data, in addition to our detailed certification and auditing process, to ensure that biomass demand is having a positive impact on regional forest industries.

Recent analysis of historical trends in the southern US has shown that as demand for wood products increased over the last 60 years, management practices have also improved to increase forest growth rates and more than double the amount of carbon stored in the working forest from 4 billion m3 to 8.4 billion m3.

Healthy markets for wood products have led to an increase in forest growth and therefore in carbon sequestration, and also in stored carbon. The total growing stock in the forests of the member states of the European Union increased by 7.4 billion m3 between 1990 and 2015, an increase of 38%. Over this same period, total production of roundwood (harvesting) also increased by 103 million m3, around 29%. This demonstrates that increasing demand for wood products and increased harvesting does not necessarily lead to deforestation or lower forest carbon stocks.

The continuous cycle of sustainable forest management, production of wood products, improving management practice and increased sequestration of atmospheric carbon leads to substantial GHG benefits. These benefits are even greater when compared to the linear emissions associated with burning coal.

How we ensure sustainable biomass sourcing

Drax has developed a rigorous process to ensure that new and existing biomass suppliers demonstrate that all sustainability and legal requirements are being met. Our eight key stages for ensuring compliance are: chain of custody; supplier audits; the EUTR legality assessment; GHG life cycle assessment and monitoring; the sustainability data return (SDR) captured in the contract; the SDR and annual declaration; regional and country risk assessments; and supplier relationship management and monitoring. These stages are implemented in an ongoing cycle to provide robust evidence across each element.

Our due diligence process always begins with a regional risk assessment, which identifies high-level risks such as deforestation or illegal logging, corruption and issues with workers’ rights. This ensures that we focus on these high risks and how they are being mitigated. These reports are renewed every three years, or more frequently if there are causes for concern, to ensure that we always stay on top of developing issues.

This is followed by the SDR, where we ask the supplier 43 detailed questions about all aspects of their supply chain and to provide documentary evidence to support their answers. This sustainability declaration subsequently forms part of the contract between Drax and the supplier.

Our supplier audit process

Each new supplier is subject to an independent audit before pellets can be delivered. Existing suppliers are audited at least once every three to four years. The audit requires the supplier to pass a series of detailed environmental and social checks along the whole length of their supply chain and pellet manufacturing process. Findings are categorised as high, medium or low priority.

High-priority findings can result in termination of a supplier agreement. Medium-priority findings result in the supplier being given a deadline for rectifying them. Low-priority issues highlight areas where our independent auditors believe there is scope for the supplier to improve their practices. Drax engages with our suppliers to share best practice and support and encourage improvements to procedures.

The Sustainable Biomass Program

Alternatively, suppliers can evidence the necessary sustainability requirements through Sustainable Biomass Program (SBP) certification, as SBP-compliant material has been benchmarked by Ofgem to fully meet the UK sustainability requirements. If a supplier is SBP compliant, Drax does not require an audit to be carried out and the supplier can progress through the process much faster. We encourage our suppliers to move towards SBP certification and we aim to achieve 90% SBP-compliant material by the end of 2018.

Drax Power is certified under the SBP Chain of Custody standard. In 2017, 2.7 million tonnes of Drax Power’s sourced biomass came from SBP-certified pellet mills. Drax Biomass is an SBP-certified Biomass Producer.

Drax Power supplier audit and SBP figures for 2017(1)

(1) Figures for audited plants only

The number of audits has decreased since 2016 because increasingly more audits are covered by SBP. In 2017, 69.6%% of our biomass suppliers were in the audit cycle. Of the pellet mills, 34 of the 56 were SBP certified and audited by an independent third party. In addition, we carried out five first party audits by Drax employees and six third party audits by independent auditors. In 2017, three of the suppliers that we audited did not meet our standards and as a result we made the decision not to contract them.

Case study: The Sustainable Biomass Program

Forest management certification

In addition to the Drax internal process and third party SBP certification, sustainability can also be demonstrated through the Forest Stewardship Council® (FSC®) – Drax FSC License Code: FSC-C119787 – and PEFC’s Forest Management (FM) certification. These schemes are global not-for-profit organisations dedicated to the promotion of responsible forest management worldwide. FM certification process confirms that the forest is being managed in a way that preserves the natural ecosystem and benefits the lives of local people and workers, while ensuring that it sustains economic viability. In 2017, Drax Power purchased 1.3 million tonnes of wood fibre from FM-certified forests, 20% of our total supply of pellets.

FM certification may be difficult to achieve for some types of forest owners and, for this reason, a secondary level of FSC certification called Controlled Wood is available. This ensures that wood fibre is not: illegally harvested; harvested in violation of traditional and human rights; harvested in forests in which high conservation values are threatened by management activities; harvested in forests being converted to plantations or non-forest use; or from forests in which genetically modified trees are planted. In 2017, Drax Power purchased 4.9 million tonnes of wood fibre from Controlled Wood-certified sources.

Case study: American Tree Farm

Chain of custody

Once certified, Chain of Custody (CoC) can be used as a mechanism for tracking wood fibre from the forest to the final product and destination. Each supplier in the chain must have a documented system that enables the supplier to demonstrate that the wood fibre has been identified and separated from non-certified and non-controlled wood at each stage in the supply chain. Drax requires that all of its suppliers achieve CoC certification before contracts are signed and pellets can be delivered.

At Drax Power, our key biomass buyers, logistics, legal and communications employees are required to complete Chain of Custody training with the sustainability team.


1.3 million tonnes

The amount of wood fibre Drax Power purchased from FM-certified forests


Managing supplier relationships

Drax operates a proactive supplier engagement programme to develop closer relationships with all biomass suppliers on sustainability issues. Our approach includes regular site visits to improve overall performance by identifying any potential risks, understanding constraints and capacity, monitoring audit findings and corrective actions, carrying out training and providing resources as required.

Case study: Working with our suppliers

Our feedstock sources in 2017

In 2017, Drax Power sourced 83% of our biomass feedstock from North America, with the remainder coming from the Baltics (13%), Brazil, Portugal and other countries within the European Union.

We report our feedstock types according to the Ofgem guidelines and criteria. In 2017, 40% of our feedstock mix came from sawmill residues.

 Sawmill residuesBranches, tops and bark tonnageDisease tonnageEnd of life tonnageThinnings tonnageLow grade roundwood tonnesProduct tonnageAgri tonnesCountry total tonnes
TOTAL2,703,2131,129,12343,191481,238,4511,593,8441,93445,8466,755,651
USA958,930962,269--999,7931,075,059--3,996,051
Canada1,298,077155,09137,599--105,536--1,596,303
Latvia274,6845,8441,607-121,978196,084--600,197
Estonia94,512---91,66374,423--260,598
Portugal12,0585,8803,8284822,35591,2801,932-137,381
Other EU63,90739157-2,6624,5272-71,294
Brazil-----46,935--46,935
UK-------45,84645,846
Other non-EU1,045-------1,045

Drax is required to report all feedstock categories to Ofgem in accordance with their guidelines and criteria. This information can be found on the Ofgem website.

Drax Biomass

Drax self-supplies a significant proportion of its pellets through our Group company, Drax Biomass. Drax Biomass is situated in an area of vigorously growing forests that is managed to provide over half of all forest products in the United States. Referred to as the “southern wood basket”, favourable climate and soils combined with healthy markets and active forest management have contributed to forest growth which has exceeded removals for the last six decades. This forested landscape is also home to myriad wildlife species, many of which are endemic to the region. Drax Biomass is committed to sourcing fibre in a manner which maintains or enhances this vibrant forest system.

Drax Biomass’ pellet plants and third party pellet suppliers source fibre from the Gulf Cluster Region (GCR). The GCR encompasses the southern US States of Arkansas, Louisiana, Mississippi and other regions of east Texas and west-central Alabama.

Drax Biomass owns and operates three pellet plants in the GCR: Amite BioEnergy in Gloster, Mississippi; Morehouse BioEnergy near Beekman, Louisiana; and LaSalle BioEnergy near Urania, Louisiana. Each plant draws feedstocks direct from the forest within a 70-mile radius, but reserves the ability to procure out to a 100-mile radius in response to market pressures and weather events.

Drax Biomass purchases the majority of its fibre indirectly from private landowners via a supplier network, with small amounts originating from public ownership. Less than half of the fibre originates from institutionally owned private forests, while the overwhelming majority is derived from family-owned private forests. A gradual increase of residual fibre will become available from forest products’ manufacturing facilities as markets for solid wood products increase.

To broaden the practice of sustainable forestry, Drax is committed to sourcing biomass that meets the following standards and requirements:

  • Sustainable Forestry Initiative (SFI)
  • Forest Stewardship Council (FSC)
  • Programme for the Endorsement of Forest Certification (PEFC)
  • Standards, and the Sustainable Biomass Program (SBP)

These third party-verified certification systems form a framework for achieving our sustainability commitments, as outlined in the Group sustainability policy. The objectives, indicators, performance measures and criteria of these sustainable forestry standards are integrated into programmes and procedures which guide all of our wood procurement and fibre-sourcing activities. These programmes and procedures are set out in reference documents such as the SFI Certified Sourcing Requirements document and the Chain of Custody manual.

Continuous improvement in these standards has led Drax Biomass on a unique sustainability journey. Since inception, Drax Biomass has instituted an all-inclusive approach to sustainability certification programmes. Drax Biomass has led the way by implementing a track-and-trace system for procured biomass along with a procurement-to-sale accounting system for greenhouse gas emissions. Drax Biomass has followed through by quickly putting into practice newly released sustainability standards and guidelines and working with applicable public agencies governing aspects of natural resource conservation in the states in which we operate. Stakeholder engagement is essential to keeping our sustainability programmes healthy. Drax Biomass fully complies with FSC, PEFC and SBP guidelines to complete these essential engagements with our valued stakeholders.

Ensuring a coal-free future

Reducing our reliance on coal

Our business is changing rapidly. Today we have cut our coal consumption by over 70%, from 9.8 million tonnes in 2011 to 2.7 million tonnes in 2017, with three units upgraded to run on renewable biomass.

Given the UK Government’s policy decision to remove coal from the nation’s energy system by 2025, we are preparing for a post-coal future. Our goal is to replace coal with alternative lower-carbon fuels (subject to alternative generation being available).

In June 2017 we announced plans to consult on upgrading two of the remaining coal-fired units at Drax Power Station to become gas-powered generating plants. This is in addition to our plans to construct four fast-response Open Cycle Gas Turbine (OCGT) generation plants at new sites across England and Wales.

The upgraded gas-powered units could provide flexible and reliable electricity for the UK’s homes and businesses and facilitate other investments in renewable energy such as wind and solar power by helping to bridge intermittent renewable supplies. In January 2018 the UK Government confirmed support for conversion of a fourth unit to biomass fuel. The conversion will complete during 2018, allowing us to optimise generation across three ROC-accredited units together with the unit that benefits from the Contract for Difference arrangements.

Sourcing coal responsibly

Transitioning away from coal is challenging and will take time. In the meantime, we must continue to secure reliable and responsible sources of coal. Our coal sourcing approach is strictly governed by our compliance, sustainability and risk teams. Drax’s corporate social responsibility (CSR) statement sets out the legal, ethical, environmental and social standards we expect of our suppliers. Requirements are also set out in our contracts, including our preference for Bettercoal.

Case study: The Bettercoal initiative

We buy coal only from known sources and from suppliers that are transparent about origin mines. Any jurisdictions we source from are vetted against our policies. In 2017, 31% of the coal we used came from UK deep and surface mines, with the remainder coming predominantly from the US, Colombia and Russia. Where possible, we use pond fines (the filtered residue of coal washings) and other advantaged fuels to reduce the amount of raw coal extracted and burned.

As we look to the future, coal sourcing will continue to be governed by our focus on responsible sourcing. Origins will be determined by balancing quality and economics. Where possible, we source from Bettercoal-engaged mines.

We carry out due diligence to ensure coal is supplied in line with our CSR statement and carry out visits to suppliers’ sites. Where our checks raise any “red flags” we undertake enhanced due diligence and commission third party investigations. Results and concerns are reviewed by Drax’s Ethics and Business Conduct Committee if necessary.


23%

The amount of coal we sourced in 2017 that was Bettercoal


Partnering with others to raise standards

We work with a range of stakeholders to try and improve standards in the coal industry. For example, we engage with coal suppliers through conferences and through our membership of industry initiatives such as Bettercoal. In 2017, we attended conferences with large suppliers such as Cerrejón, to understand developments in their sustainability approach. We also enhanced our risk assessment process by capturing key questions on potential risks to revisit with suppliers.

The Bettercoal initiative works with coal suppliers to encourage continuous improvements in social, ethical and environmental standards. Suppliers complete a self-assessment process and are independently audited against the Bettercoal Code by approved assessors. We make it clear in supplier contracts that we prefer to source Bettercoal. Results from Bettercoal assessments form part of our supply chain due diligence procedures and any new information on suppliers is reviewed by Drax’s procurement and compliance teams.

In 2017, 23% of the coal we sourced was Bettercoal. As a member of its Technical & Advisory Committee, we worked with other members to further develop rigorous procedures, protocols and assurance in the Bettercoal system.

B2B energy supply

In our business to business energy supply (B2B Energy Supply) operation, we are committed to sourcing the renewable power that our customers want.

Haven Power has always sourced its renewable energy from Drax Power to offer a renewable energy option to its customers. In 2017, we added Opus Energy to the Drax Group. Opus Energy buys its electricity, wherever possible, from renewable sources. Opus Energy sources its renewable energy from a variety of sources, including Drax Power biomass-generated power and over 2,300 UK-based renewable generators.

Opus Energy’s renewable generator network