Drax power station

Soaring profits for Drax calls government subsidies into question

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Energy giant Drax has announced a doubling of its profits in 2022, driven by the energy crisis, with its earnings up 84 per cent over the previous 12 months to £731m. However, public opinion of the substantial government subsidies that help support the self-styled sustainable bioenergy company has nosedived.

Drax receives the majority of the government’s billions in subsidies towards bioenergy, receiving a total of £893m in 2021. Without these subsidies, the company is likely to have suffered significant losses.

Now, research commissioned by the Cut Carbon Not Forests coalition, looking into the UK government’s approach to biomass, has found that the majority (62 per cent) of British people oppose the UK government giving bioenergy industry players such as Drax £1bn every year.

Additionally, 59 per cent of survey respondents, on learning that Drax is the UK’s single-biggest source of CO2, said they do not think the government should be subsidising the burning of wood if it wants to tackle climate change.

The survey of 2,005 general respondents in the UK, conducted by Censuswide at the end of January this year, found that only 3 per cent of the public believe the government should use billpayers' money to support burning wood from other countries’ forests.

Asked how they would feel towards a company that was cutting down trees, burning them and calling it ‘low-carbon’ or ‘green’, only 6 per cent were trusting and 7 per cent were supportive.

The UK is the biggest subsidiser of bioenergy in Europe, giving £1.8bn in subsidies to the industry in 2021 – a 70 per cent increase since 2015. The vast majority of these subsidies are given to Drax, whose critics have labelled the firm the UK’s single-biggest source of CO2. Drax is known to burn wood taken from primary forests in Canada, the US and Estonia, among other nations.

Matt Williams, campaigner for Cut Carbon Not Forests and senior advocate for NRDC, said: "Drax's enormous profits are propped up by enormous renewable energy subsidies. This is money for nothing: burning the world's forests isn't low carbon at all and it takes money from struggling families by raising their energy bills.

"The public are waking up to this with our polling showing 62 per cent don't support these billions in subsidies for bioenergy, making them twice as unpopular as fracking. They'd much prefer to see this money spent on technologies like insulation or wind that bring down their bills and cut carbon without cutting forests.

"It's not hard to see why the vast majority of the public don't trust claims that burning trees in power stations is environmentally friendly. In its 'Net Zero Review', the government has a chance to redirect the billions wasted on polluting bioenergy to home insulation, wind and heat pumps – technologies that will bring down energy bills and actually cut carbon, without cutting forests."

Pauline Latham, Conserative MP for Mid-Derbyshire, said: "The government pays significant sums in renewable energy subsidies to bioenergy companies making sizeable profits, despite it releasing huge amounts of greenhouse gases and harming forests’ ability to absorb carbon. This directly costs billpayers and families through their energy bills.

“In the context of the cost of living crisis, the government should be looking into these subsidies and ensuring they are used for proven renewable energy sources and energy-efficiency measures, rather than harming nature.”

Tommy Sheppard MP, SNP, said: “It’s clear that the British public aren’t falling for the myth that biomass is carbon neutral, no matter how many greenwashing PR stunts companies like Drax pull to convince people otherwise.

“Taxpayer money should be spent on real emission-free energy sources, not on technology that pumps more carbon into the atmosphere and destroys forests worldwide. Burning tees on an industrial scale for electricity does the latter. It’s time the UK government listened to the public and end wasteful biomass subsidies.”

Other key findings of the research included strong negative feelings towards a company that was cutting down trees, burning them and calling it ‘low-carbon’; support for the government to use billpayer money to support efforts to tackle climate change for energy efficiency, and nearly one in four (22 per cent) of respondents "furious" to learn that the UK gives over £1bn every year to large biomass-burning power stations – more than any other country in the world.

Frances Sleap from Fuel Poverty Action said: “As our energy costs soar, UK billpayers are footing a huge bill to subsidise Drax shipping in and burning trees. This is pushing crippling energy bills up even further, without delivering environmental benefits. What we need is insulation to keep us warm, and renewables that don’t burn anything to power our future.”

Responding to Drax's profit announcement, Greenpeace UK’s head of UK climate, Mel Evans, said: “It’s maddening to see Drax announcing record profits while its workers strike to avoid a real-terms pay cut and its customers suffer fuel poverty.

“Meanwhile, Drax’s biomass power is built on deforestation, environmental racism and questionable carbon accounting.

“The government needs to end the subsidies supporting this unsustainable business, claw back these massive profits and use the money to insulate people’s homes and scale-up real renewable energy like onshore and offshore wind and solar.”

Evans was referencing the planned strike action at the Drax site in Yorkshire. Multiple dates have been announced, as the power station's workers strike over pay. Unite said its members at the Drax site in Yorkshire would walk out on 20 and 27 February, 6, 13, 20 and 27 March, and 4, 10 and 17 April.

The union said around 180 workers have rejected an 8 per cent pay offer, but the company said the deal was worth 10 per cent.

Unite general secretary Sharon Graham said: “This is a classic case of greed by a company which is already generating eye-watering profits. Drax is cynically seeking to boost its bonanza profits further by forcing workers to take a real-terms pay cut.

“Unite is now totally focused on the jobs, pay and conditions of its members and the workers at Drax will be receiving the union’s complete support.”

A Drax spokesperson said: “We have put forward a generous full and final pay settlement which rewards our valued colleagues with a significant pay rise worth 10 per cent and a £2,000 lump sum.

“We are deeply disappointed that Unite is planning to go forward with this unnecessary action, which will see colleagues lose money instead of securing a significant pay rise. Drax remains open to dialogue with Unite to avoid industrial action.

“There are three trade unions representing colleagues at Drax Power Station and this offer has been accepted by Prospect, while GMB has stated it will not be taking industrial action.”

In a related announcement today, Unite confirmed that Drax Hydro energy workers operating power stations across Scotland have voted for strike action in a dispute over pay. Around 50 Unite members including engineers, plant controllers, as well as mechanical and electrical craft workers, covering Stonebyres (Lanark), Cruachan (Loch Awe) and Glenlee (Castle Douglas) power stations, voted near-unanimously to the strike action.

In December 2020, E&T reported on the conflicts surrounding biomass energy, with increased demand for biomass pellets in the UK meaning that subsidy schemes would continue to help British biomass operators to burn cut wood in sustainable power plants, directly driving tree-felling rates in countries such as Estonia.

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