Tag: decarbonisation

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.

Charge. Recharge. The evolution of batteries

From watches to toothbrushes, mobile phones to cars, batteries are a power source for many of our everyday belongings. And while their beginnings can be traced back to the 19th century, their innovation has transformed industries, technology use and society at large today.

Energy storage systems such as pumped-hydropower have long played an important role in balancing electricity systems, but as the UK and countries around the world seek to decarbonise industries and make greater use of intermittent, renewable sources, there is a need for greater levels of storage.

While pumped-hydro storage requires the right kind of terrain, batteries can theoretically be built wherever there is the space and investment. But what actually is a battery, and how does it work?

Turning chemicals to electrical flow

Batteries are comprised of one or more cells which store chemical energy, and are able to convert that energy into electricity. In most batteries, there are three main components: an anode, cathode and electrolyte.

The anode and cathode are terminals for the flow of energy and are typically made of metal. The electrolyte is a chemical medium that sits between the terminals allowing an electrical charge to pass through. This is often a liquid, but increasingly research points to the potential to use solids and create what are known as solid-state batteries.

How a lithium ion battery works

How a lithium ion battery works

It’s only when a battery is connected to a device that it completes a circuit and chemical reactions take place that allow the flow of electrical energy from the battery to the device. But how much electrical energy a battery can dispense has always been a hurdle to using them as a power source, making rechargeable batteries an important breakthrough.

The same reaction backwards

A key element in battery development was the exploration of rechargeable cells. These have long provided mobility and reliability in small scale outputs, but are now being looked to as a source of large-scale energy storage.

Invented by physician Gaston Planté in 1859, rechargeable batteries are possible because the chemical reactions that take place are reversible. Once the initial stored charge has been depleted via chemical reaction, these reactions occur again, but this time backwards, to store a new charge.

Battery charger with AA rechargeable batteries

Battery charger with AA rechargeable batteries

Using a lead-acid system, Planté’s composition was similar to that found in rechargeable batteries used in cars and motorbikes today, although the characteristics of these cells, such as their heavy weight, meant they were not convenient for many other uses.

As a result, a journey of continuous research and optimisation to decrease the size and weight of rechargeable batteries began. This includes investigation into the alternative chemical compositions found in batteries today – nickel-metal hydride and lithium-ion to name two.

Recharging in a low-carbon energy system

Just as we have seen the size and capacity of batteries bettered throughout history, the application and optimisation of modern-day lithium-ion cells looks to continue too, powering the world’s move towards a low carbon, renewable energy future.

From electric vehicle batteries with a million mile lifespan to a 200 megawatt battery farm in South Africa, lithium-ion allows reasonably large-scale energy storage. It can also play a key role in power grid stabilisation over short durations of time such as a few hours.

Tesla gigafactory

Tesla gigafactory

For the UK to run on 100% renewable electricity sources, batteries would be imperative in complimenting other flexible renewables, such as biomass and hydropower. As a support technology, batteries can help ensure a continuous supply of electricity to homes and cities, even when cloud cover and low wind prevents other sources generating.

Conversely, charging and recharging batteries can also be used to absorb and store electricity when there is more sun and wind generation than needed, avoiding surges in electric current or wasted generation.

Changing charging

Woman charging smartphone using wireless charging pad

Alongside the advancements of battery capacity and composition, the way we use them to charge is also changing. Just as Bluetooth and Wi-Fi avoid the tethering required of wired connections, wireless charging can increase mobility and remove physical limitations.

Small-scale wireless charging is in use today. Many mobile phones, toothbrushes, smartwatches and earbuds now have wireless charging pads. These use near-field charging, meaning the device must be in close proximity to the charger to receive power.

However, efficient far-field charging is in development, with companies like Energous and Ossia developing over-the-air charging solutions for wearable tech, medical products, smart homes, and industrial equipment. This would mean devices could be powered and charged from many metres away.

The implications of this are vast, for example your devices could be charged just by entering your home or office. There could be less need for invasive surgery to change the batteries for pacemakers, neurotransmitters and other implanted medical equipment.

This type of technology could also provide passive charging for electric vehicles. The UK Department for Transport has announced a trial in Nottingham, where charging plates will be placed on parts of the town’s roads allowing electric taxis to charge while waiting briefly to pick up passengers. As charging technology and speed continues to increase, this might mean vehicles could charge wirelessly not only while parked, but when stopped at traffic lights.

3d rendered illustration of an elderly man with a pace maker

As the world shifts away from fossil fuels to renewable sources, batteries, with continued improvement in performance and capacity, will be crucial in supporting our connected lives, transport systems and electrical grids.

What is renewable energy?

These differ to non-renewable energy sources such as coal, oil and natural gas, of which there is a finite amount available on Earth, meaning if used excessively they could eventually run out.

Renewable resources can provide energy for a variety of applications, including electricity generation, transportation and heating or cooling.

The difference between low-carbon, carbon neutral and renewable energy

Renewables such as wind, solar and hydropower are zero carbon sources of energy because they do not produce any carbon dioxide (CO2) when they generate power. Low-carbon sources might produce someCO2, but much less than fuels like coal.

Bioenergy that uses woody biomass from sustainably managed forests to generate electricity is carbon neutral because forests absorb CO2 from the atmosphere as they grow, meaning the amount of CO2 in the atmosphere remains level. Supply chains that bring bioenergy to power stations commonly use some fossil fuels in manufacturing and transportation. Therefore woody biomass is a low carbon fuel, when its whole lifecycle is considered.

Managing forests in a sustainable way that does not lead to deforestation allows bioenergy to serve as a renewable source of power. Responsible biomass sourcing also helps forests to absorb more carbon while displacing fossil fuel-based energy generation.

Nuclear is an example of a zero carbon source of electricity that is not renewable. It does not produce CO2,but it is dependent on uranium or plutonium, of which there is a finite amount available.

Managing forests in a sustainable way that does not lead to deforestation allows bioenergy to serve as a renewable source of power.

How much renewable energy is used around the world?

Humans have harnessed renewable energy for millions of years in the form of woody biomass to fuel fires, as well as wind to power ships and geothermal hot springs for bathing. Water wheels and windmills are other examples of humans utilising renewable resources, but since the industrial revolution fossil fuels, coal in particular, have been the main source of power.

However, as the effects of air pollution and CO2 produced from burning fossil fuels become increasingly apparent, renewable energy is gradually replacing sources which contribute to climate change.

In the year 2000 renewable energy accounted for 18% of global electricity generation, according to the IEA. By 2019, renewable sources made up 27% of the world’s electrical power.

Why renewable energy is essential to tackling climate change

The single biggest human contribution to climate change is greenhouse gas emissions, such as CO2, into the atmosphere. They create an insulating layer around the planet that causes temperatures on Earth to increase, making it less habitable.

Renewable sources of electricity can help to meet the world’s demand for power without contributing to global warming, unlike carbon-intensive fuels like coal, gas and oil.

Bioenergy can also be used to remove CO2 from the atmosphere while delivering renewable electricity through a process called bioenergy with carbon capture and storage (BECCS).

Forests absorb CO2 from the atmosphere, then when the biomass is used to generate electricity the same CO2 is captured and stored permanently underground – reducing the overall amount of CO2 in the atmosphere.

Humans have used renewable energy for millions for years, from wood for fires to wind powering boats to geothermal hot springs. 

What’s holding renewables back?

The world’s energy systems were built with fossil fuels in mind. This can make converting national grids difficult and installing new renewable energy sources expensive. However, as knowledge grows about how best to manufacture, build and operate renewable systems, the cost of deploying them at scale drops.

There are future changes needed. Renewables such as wind, solar and tidal power are known as intermittent renewables because they can’t generate electricity when there is no sun, wind or the tidal movement. For future energy systems to deliver enough power, large scale energy storage, as well as other flexible, reliable forms of generation will also be needed to meet demand and keep systems stable.

Renewable energy key facts:  

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The UK is the leader the world needs to tackle climate change

Snow on mountains near Cruachan Power Station, Scotland

December 2020 marks the fifth anniversary of the Paris Agreement. It represented a landmark moment in the global effort to combat climate change and build a better future. However, global progress is not moving at the speed it needs to in order to meet the treaty’s target of keeping global warming below 1.5-2 degrees Celsius.

Countries have set their own decarbonisation targets and many companies have laid out plans to become carbon neutral or even carbon negative – as we at Drax intend to achieve by 2030. While these leading ambitions are important for the UK and the world to meet the goals of the Paris Agreement, real action, polices and investment are needed at scale.

We have a clearer view of the path ahead than five years ago. We know from the recent 6th Carbon Budget that renewable energy, as well as carbon capture, usage and storage (CCUS) are essential for the UK to reach its target of net zero carbon emissions by 2050.

In that detailed, 1,000-page report, the Climate Change Committee (CCC) was clear that progress must be made immediately – the country as a whole must be 78% of the way there by 2035. By investing where it’s needed, the UK can lead the world in a whole new industry. One that may come to define the next century.

Leading the world in decarbonisation

It was a combination of resource and ingenuity that enabled the UK to launch the Industrial Revolution some 250 years ago. Today the country is in a similar position of being able to inspire and help transform the world.

As a country – one that I moved to over 20 years ago now – we have decarbonised at a greater pace than any other over the past decade. Investing in renewable generation such as wind, solar and biomass has allowed the UK to transform its energy systems and set ambitious targets for net zero emissions.

To remain resilient and meet the increased electricity demand of the future, power grids will require vastly increased support from energy storage systems such as pumped hydro – as well as flexible, reliable forms of low and zero carbon power generation.

However, the urgency of climate change means the UK must go beyond decarbonisation to implementing negative emissions technologies (which remove more carbon dioxide (CO2) from the atmosphere than they emit). The CCC, as well as National Grid’s Future Energy Scenarios report have emphasised the necessity of negative emissions for the UK to reach net zero, by removing CO2 not just from energy but other industries too.

The UK can build on its global leadership in decarbonisation to invest in the cutting-edge green technology that can take the country to net zero, establishing it as a world leader for others to follow.

Creating an industry, exporting it to the world

When the Paris agreement was signed, I was just joining Drax. I had been impressed by the power station’s transformation from coal to biomass – Europe’s largest decarbonisation project – supporting thousands of jobs in the process.

Five years on and I’m excited for the next stage: delivering negative emissions. By deploying bioenergy with carbon capture and storage (BECCS) we can permanently remove CO2 from the atmosphere while producing renewable electricity.

Drax has successfully piloted BECCS and is ready to deploy it at scale as part of our Zero Carbon Humber partnership.

I’m confident the partnership with other leading energy, industrial and academic organisations can act as a revitalising force in a region that has historically been under-invested in, protect 55,000 jobs and create 50,000 new opportunities.

Developing the supply chain surrounding a world-leading zero-carbon cluster in the Humber could deliver a £3.2 billion economic boost to the wider economy as we emerge from the COVID-19 pandemic.

I believe we can establish a new industry to export globally. The Humber’s ports have a long history of trade and we can build on this legacy. The machinery, equipment and services needed to develop BECCS and Zero Carbon Humber will be an essential export as the rest of the world races to decarbonise.

Unloading sustainable biomass wood pellets destined for Drax Power Station from a vessel at the port of Immingham

Unloading sustainable biomass wood pellets destined for Drax Power Station from a vessel at the port of Immingham

By providing training and partnering with educational institutions we can increase scientific and technical skills. Net zero industrial clusters can enable more in society the opportunity to have rewarding and fulfilling engineering, energy and environmental careers.

This model can reach around the world – positioning people and businesses to help countries to reach the collective goals of Paris Agreements.

The economic benefits for such achievements far outweigh the costs of failing to stem global warming and we are ready to invest in the technologies needed to do so. With robust government policies in place, a net zero future could cost as little as 1% of GDP over the next 30 years.

Countering climate change is a once-in-a-lifetime challenge for the world, but also a once-in-a-lifetime opportunity to build a sustainable future with sustainable jobs, improved standards of living, health and wellbeing. The UK has a responsibility to use its expertise and resources, setting in place the structures that can allow companies like mine – Drax – to lead the world to reaching the Paris Agreement’s targets and beyond.

Find out how our cutting-edge carbon removal technologies will help the UK, and the world, hit net zero. Explore the future here.

Committing to a net zero power system as part of COP26

Dear Prime Minister, Chancellor, COP26 President and Minister for Energy and Clean Growth,

We are a group of energy companies investing tens of billions in the coming decade, deploying the low carbon infrastructure the UK will need to get to net zero and drive a green recovery to the COVID-19 crisis.

We welcome the leadership shown on the Ten Point Plan for a Green Industrial Revolution, and the detailed work going on across government to deliver a net zero economy by 2050. We are writing to you to call on the Government to signal what this will mean for UK electricity decarbonisation by committing to a date for a net zero power system.

Head of BECCS inspects pilot plant within Drax Power Station's CCUS Incubation Unit

Head of BECCS Carl Clayton inspects pipes at the CCUS Incubation Area, Drax Power Station

The electricity sector will be the backbone of our net zero economy, and there will be ever increasing periods where Great Britain is powered by only zero carbon generation. To support this, the Electricity System Operator is putting in place the systems, products and services to enable periods of zero emissions electricity system operation by 2025.

Achieving a net zero power system will require government to continue its efforts in key policy areas such as carbon pricing, which has been central in delivering UK leadership in the move away from coal and has led to UK electricity emissions falling by over 63% between 2012 and 2019 alone.

It is thanks to successive governments’ commitment to robust carbon pricing that the UK is now using levels of coal in power generation last seen 250 years ago – before the birth of the steam locomotive. A consistent, robust carbon price has also unlocked long term investment low-carbon power generation such that power generated by renewables overtook fossil fuel power generation for the first time in British history in the first quarter of 2020.

Yet, even with the demise of coal and the progress in offshore wind, more needs to be done to drive the remaining emissions from electricity as its use is extended across the economy.

In the near-term, in combination with other policies, continued robust carbon pricing on electricity will incentivise the continued deployment of low carbon generation, market dispatch of upcoming gas-fired generation with Carbon Capture and Storage (CCS) projects and the blending of low carbon hydrogen with gas-fired generation. Further forward, a robust carbon price can incentivise 100% hydrogen use in gas-fired generation, and importantly drive negative emissions to facilitate the delivery of a net zero economy.

Next year, the world’s attention will focus on Glasgow and negotiations crucial to achieving our climate change targets, with important commitments already made by China, the EU, Japan and South Korea amongst others. An ambitious 2030 target from the UK will help kickstart the Sprint to Glasgow ahead of the UK-UN Climate Summit on 12 December.

Electricity cables and pylon snaking around a mountain near Cruachan Power Station in the Highlands

Electricity cables and pylon snaking around a mountain near Cruachan Power Station, Drax’s flexible pumped storage facility in the Highlands

2030 ambition is clearly needed, but to deliver on net zero, deep decarbonisation will be required. Previous commitments from the UK on its coal phase out and being the first major economy to adopt a net zero target continue to encourage similar international actions. To build on these and continue UK leadership on electricity sector decarbonisation, we call on the UK to commit to a date for a net zero power system ahead of COP26, to match the commitment of the US President-elect’s Clean Energy Plan. To ensure the maximum benefit at lowest cost, the chosen date should be informed by analysis and consider broad stakeholder input.

Alongside near-term stability as the UK’s carbon pricing future is determined, to meet this commitment Government should launch a consultation on a date for a net zero power system by the Budget next year, with a target date to be confirmed in the UK’s upcoming Net Zero Strategy. This commitment would send a signal to the rest of the world that the UK intends to maintain its leadership position on climate and to build a greener, more resilient economy.

To:

  • Rt Hon Boris Johnson MP, Prime Minister of the United Kingdom
  • Rt Hon Rishi Sunak MP, Chancellor of the Exchequer
  • Rt Hon Alok Sharma MP, Secretary of State for Business, Energy and Industrial Strategy and UNFCCC COP26 President
  • Rt Hon Kwasi Kwarteng MP, Minister for Business, Energy and Clean Growth

Signatories:

BP, Drax, National Grid ESO, Sembcorp, Shell and SSE

View/download letter in PDF format

 

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.

New ESG RCF and Financing Update

Landscape of trees in autumn Where: Cruachan Power Station, Scotland
RNS Number: 8002F
Drax Group PLC (Symbol: DRX)

Drax is pleased to announce that it has completed the refinancing of its revolving credit facility.

The new £300 million facility (“the Facility”) matures in 2025, with an option to extend by one year(1). The Facility replaces the current RCF which matures in 2021 and provides increased liquidity, enabling the full facility to be drawn as cash (the previous facility restricted cash drawn to support liquidity to £165 million). The Facility is currently undrawn for cash.

The Facility has a customary margin grid referenced over LIBOR, which reflects a small reduction in cost versus the current RCF and includes an embedded ESG component which adjusts the margin based on Drax’s carbon intensity measured against an annual benchmark.

Drax has also agreed a change to the Group’s £35 million term-loan facility, maturing in 2022, in order to simplify its capital structure. This facility will now rank as senior, previously super senior.

Drawing of previously agreed infrastructure facility

On 14 September 2020, Drax confirmed that it had agreed a new infrastructure term-loan agreement (the “Agreement”) that provided committed facilities of approximately £160 million with a range of maturities between 2024 and 2030(2). These facilities extended the Group’s maturity profile while also reducing the cost of debt. Drax has now drawn £28 million(2), with the balance to be drawn by February 2021.

The Agreement also included an option for a further £75 million. Under this option Drax has now agreed £53 million maturing in 2028, which will be drawn in December 2020.

Proceeds from Euro denominated bond issue and utilisation

On 4 November 2020, Drax issued €250 million of Euro denominated senior secured notes which mature in 2025. The effective Sterling-equivalent interest rate is 3.24% per annum.

The proceeds from this issuance, along with existing cash flows, are being used to redeem the Group’s £350 million 2022 Sterling bond and £125 million ESG term-loan facility.

The notes extend the Group’s debt maturity profile and reduce the overall cost of debt to approximately 3.7%.

Summary of Group debt structure at 19 November 2020

InstrumentMaturityDescription
Infrastructure facilities (2019)2024-2029£375m
Infrastructure facilities (Sept 2020)2024-2030approx.£160m (2) (£28m (2) drawn)
Infrastructure facilities (Nov 2020)2028£53m
Bonds2025$500m
Bonds2025€250m
RCF2025£300m (undrawn for cash)
Index-linked term-loan2022£35m

Enquiries:

Drax Investor Relations: Mark Strafford

+44 (0) 7730 763 949

Media:

Drax External Communications: Selina Williams

+44 (0) 7912 230 393

Website: www.drax.com

END

Jobs, skills, zero emissions – the economic need for carbon capture by Drax

Engineer working inside Drax Power Station

The Humber Estuary is one of the most distinctive features of the UK’s eastern coastline. Viewed from above, it is a crack in the land where the North Sea merges with England – it’s this connection to the sea that has defined it as a region and led to its rich industrial history.

But in recent years, as sectors such as heavy manufacturing move overseas, the Humber has begun to sink into economic decline. These challenges are now being exacerbated by COVID-19 – almost 60% of workers in the Yorkshire and the Humber construction industry were furloughed in August 2020.

Stimulation is needed to rejuvenate the Humber and prevent lasting economic scars on the region and its working-age population. Decarbonisation offers the opportunity to rebuild the region for the 2020s and decades ahead.

Technologies that have been identified as essential for the UK to reach its legally-binding commitment of net zero greenhouse gas emissions by 2050 include:

  • Carbon capture usage and storage (CCUS) – trapping, transporting and storing or recycling carbon dioxide (CO2) from industrial processes and energy generation
  • Bioenergy with carbon capture and storage (BECCS) – carbon removal from renewable, sustainable biomass power generation that leads to negative emissions
  • Hydrogen production – switching processes from natural gas to this zero-emissions fuel

Engineer working inside power stationThe Humber has unique capabilities that positions it as a hub for developing all three.

Zero Carbon Humber (ZCH), the partnership between a number of leading companies (including Drax), aims to bring together these essential technologies and create the foundations from which the region’s emissions-heavy industries can regain their competitive edge, create jobs and rejuvenate the area.

A new report by Vivid Economics for Drax investigates the potential economic impact of carbon capture and hydrogen. It concluded that nearly 48,000 jobs could be created and supported in the industrial cluster at the peak of the construction phase in 2027.

It’s a chance to not just revitalise a powerhouse of Northern England, but to collaborate with other industrial clusters and build a UK-wide green economy ready to export globally and attract international business to the region.

Rejuvenating the Humber

The North Sea has helped forge Hull’s strong industrial heritage of ship building and fishing. In the 1950s the flat lands of the south bank enabled post-war industries such as refining chemicals and steel to thrive.

“The region’s economy is built around the ports and accessibility to Europe and the North Sea,” explains Pauline Wade, Director of International Trade at the Hull and Humber Chamber of Commerce. “They are the biggest ports in the UK in terms of tonnage, and the energy and chemical industries hinge on materials coming in and going out of them.”

But these are also emissions-intensive industries, and as a result the Humber has the highest CO2 emissions of any UK industrial region – emitting 30% more than the second largest industrial cluster. Decarbonisation is vital in modernising and protecting these sectors, and the 55,000 manufacturing jobs they support.

River Humber Sunset

“Decarbonisation brings opportunities. Many businesses in this region have that target very firmly set in their business plans,” says Beckie Hart, Regional Director of the Yorkshire and the Humber CBI (Confederation of British Industry). “Many are high polluters – they know that, but they are very keen to became part of the solution.”

Developing BECCS, CCUS and hydrogen, as well as building the infrastructure needed to capture and transport CO2, offers both immediate construction jobs and long-term skilled jobs.

The main construction period of the project would run from 2024 to 2031 and support up to 47,800 new jobs at its peak in 2027, when £3.1 billion a year would be added to the regional economy. These include up to 25,200 high quality jobs in construction and operations, as well as a further 24,400 supported across the supply chain and wider economy.

These construction roles include jobs such as welders, pipe fitters, machine installers and technicians – with immediate government backing, these jobs could be available in as little as four years. Ongoing operations will also create 3,300 long term, skilled jobs in the cluster in the early 2030s.

The supply chain needed to provide the materials and parts for the region’s industrial revitalisation will also support further indirect jobs. In fact, businesses of all kinds stand to benefit – the increased spending by workers also could support further jobs across businesses ranging from cafes to professional services. These indirect jobs go on to induce further employment and spending out across more of the economy.

Overall the report suggests an annual average of more than 7,000 indirect and around 10,800 induced jobs could be supported during the construction phase, with £452 million in indirect and £581 million in induced value added to the wider economy annually on average.

However, transformation is costly and today the Humber region receives among the lowest levels of government investment in research and development in the UK. This has contributed to a pronounced skills gap in the region, as opportunities decline, and more people fall out of the workforce.

Bridging the skills gap in the Humber

Projects such as ZCH depend on availability of skilled workforces to build and operate the next generation of energy technologies. However, the Humber currently has a low proportion of school leavers with the right qualifications to take on roles with specialist technical and practical skills.

This skills gap is only expected to get worse. The Government’s Working Futures model forecasts that from 2022 key sectors such as electricity and gas, engineering and construction in the region will require higher qualifications than are currently available in the local labour market.

The skills gap is also compounded by COVID-19. As it creates economic uncertainty it pushes more people out of work and further reduces skills in the workforce. This has a particularly pronounced impact on young people who are less established in careers, threatening to create a ‘COVID-Generation’ that feel discouraged and detached from the labour market.

But this is not an inevitability.

With the right intervention from government and business, the Humber’s workforce can be upskilled and drive a green recovery.

A number of different approaches are possible: apprenticeships have historically proved a valuable means of training the next generation of workers. Companies and schools should work together to highlight the opportunities of vocational training to school leavers.

“Universities and colleges must work a lot more closely with the businesses in the region to have an honest conversation about what they need,” explains Hart. “A good example is the Ron Dearing University Technical College. It’s a business-led college that has only been open about 18 months but has had great results from the students because they offer specific courses that the region’s employers actually need.”

Engineer within Drax Power Station

For older generations of workers who have been out of the labour force for extended periods of time ‘skills vouchers’ are a timely intervention. These work by offering grants to cover the cost of flexibly retraining, meaning long-term unemployed workers of any age can ease back into new types of jobs.

Training local people for the future is key to decarbonising the Humber and creating jobs, as well as protecting industries. But a net zero industrial cluster could also have an impact beyond just the Humber.

Carbon removal in Yorkshire and the Humber

The Committee on Climate Change (CCC) has made it clear that for the UK to reach net zero by 2050 CCUS and negative emissions from BECCS are essential, as is hydrogen as a zero-carbon source of fuel. These will be needed at scale across the UK, and in the Humber. They are already underway.

Engineer at BECCS pilot project within Drax Power Station

Engineer at BECCS pilot project within Drax Power Station

Drax Power Station is piloting BECCS technology and has proven it can deliver negative emissions. Generating electricity using biomass from sustainably managed forests that absorb CO2 is a carbon neutral process. As part of the power generation process, adding CCUS and capturing the CO2 emitted, storing it permanently under the North Sea turns the process into a carbon negative one.

Deploying BECCS across four of Drax’s generating units would support 10,304 jobs and create £673 million in value at the peak of the construction phase. When operations get underway as early as 2027, 750 permanent operations and maintenance jobs could be created. Drax aims to operate as a carbon negative power station by 2030.

Of the 10,491 jobs supported by deploying BECCS (10,300 at the peak), 6,367 of these would be within the project’s supply chain and wider economy (9,073 in 2028).

Such supply chains needed across the North of England offer further potential to establish Yorkshire and the Humber as a hub for decarbonisation technology.

Facilities such as an Advanced Manufacturing Research Centre (AMRC) have been proven to make regions of the UK more competitive locations for advanced industries. By bringing together business with universities, they can focus on sector-specific challenges for technical industries. By creating a manufacturing hub dedicated to research and innovation in a specific industry, AMRCs also encourage ‘crowing-in investments.’ This is when private sectors investments enter into a region in the wake of government spending.

A zero carbon technology-focused AMRC in the Humber would also position the region to offer decarbonisation skills and products to other industrial clusters in the UK and further afield.

From the Humber to the world

Up the north coast from the Humber is Net Zero Teesside, a neighbouring industrial cluster with its own aims for decarbonisation. Through collaboration with clusters such as this, ZCH can offer even wider reaching benefits and enable UK-wide carbon capture, negative emissions and hydrogen.

However, for the entire UK to reach net zero, clusters all across the country must decarbonise – the report suggests as much as 190 million tonnes (Mt) CO2 could be captured and stored every year across the country.

Beyond just the clusters themselves 193,000 jobs could be created at the peak for UK deployment in 2039. These jobs would add £13.9 billion in value to the economy.

Under the Humber Bridge

Building a strong zero carbon economy based around the combined strengths of BECCS, CCUS and hydrogen can provide the UK with a world-leading export. At a time when countries across the globe all face the same decarbonisation challenges, successfully building clusters like ZCH will allow the UK to export knowledge, skilled labour, technology and services around the world.

“As a port city, Hull has always had an international influence. The chamber of commerce was set up in 1837 by the merchant adventurers who were seafaring traders. That history is inbuilt into the local DNA,” says Wade. “Today, we’re trying to create the environment for international companies to invest and locate in the Humber.”

It serves as a further example of how investing decisively in projects such as Carbon Capture by Drax and CCUS and hydrogen clusters such as Zero Carbon Humber today will bring long term economic benefits, taking the UK from a green recovery to a world-leading green industrial powerhouse.

“The Humber has evolved from the fishing industry to a generator of high-emissions products like steel, chemicals and power,” explains Hart. “Now it is keen to be the clean corner and teach everyone else how to decarbonise. There is a single vision of where we want to go and how they want to get there jointly.”

Read the full report (PDF), executive summary and press release.