Yahoo Finance Why Britain is burning North American forests to keep the lights on
Wood, the fuel that British industry thought it had left behind more than a century ago, is staging a comeback.
Powering the resurgence is Drax Group, owner of the controversial Drax power station that recently posted a 10-fold increase in its latest yearly profits.
Its plant in Yorkshire, Britain’s largest and most controversial power station, generated around 6pc of the country’s electricity in 2023 by burning 6.4 million tonnes of wood. In context, it is the equivalent of 27 million trees.
The idea of a Britain powered partially by wood may seem shocking to some, but for Drax it forms the basis of a sustainable and renewable future.
For years Drax has invested in tree-fired electricity that it describes as a key source of green energy and bosses are now planning to go further.
After announcing on Thursday that pre-tax profits hit £796m in 2023, up from £78m the year before, chief executive Will Gardiner said he wants to build more wood-fired power stations, primarily in the US.
Those power stations will be supported by new wood pellet plants, enabling Drax to double production to eight million tonnes by 2030.
It means Drax will be supplying wood-fired power stations around the world, not just in Yorkshire.
For Mr Gardiner, who was appointed Drax chief executive in 2018, the latest surge in profits validates his company’s strategy.
“We remain the single-largest provider of renewable power by output in the UK,” he told investors.
“We have created a business which plays an essential role in supporting energy security, providing dispatchable, renewable power for millions of homes and businesses, particularly during periods of peak demand when there is low wind and solar power.”
Others disagree. Environmentalists argue that cutting down forests to generate electricity destroys the environment rather than protecting it – a view supported by some high-ranking politicians.
Leading Conservative MP Sir Peter Bottomley, father of the House of Commons, yesterday sent a letter to Prime Minister Rishi Sunak demanding Drax be shut down.
“Burning trees in the UK is not a justifiable way of preventing climate change,” he said. “Drax power station incinerates 27 million trees a year. Our New Forest only has 46 million trees.
“The wood Drax burns is imported, mostly from North America on freighters powered by diesel. And setting light here to trees from North America is costly.”
Sir Peter’s reference to cost relates to the taxpayer subsidies that Drax receives for producing green energy, which amounted to £617m in 2022 and £587m in 2023.
The Drax plant itself has a long and varied history. The site was initially built as a coal-fired power station in the 1960s, operated by the now-defunct Central Electricity Generating Board.
After expansion in the 1980s to produce four gigawatts of power, enough for several million homes, Drax emerged as the largest coal-fired power station in Western Europe.
Almost from the start, however, it sparked environmental concerns as well as electricity.
Most of the early scrutiny revolved around sulphur and other emissions linked to acid rain.
By the 2000s the concerns had progressed to broader issues around climate change, which prompted Britain’s move to shut down its coal-fired power stations.
Drax, however, chose a different path, announcing in 2012 that it would convert four of its six units to burn biomass.
By 2018 the conversion was complete and coal was gone – creating what its owners claimed was the UK’s largest renewable energy power station.
Despite this, there remains controversy around Drax’s “green energy” because of its reliance on wood, with questions often raised about where it is sourced from.
Last year alone Drax imported 4.6 million tonnes of wood from the US and another 760,000 tonnes from Canada, with further deliveries coming from Brazil, Latvia and Russia.
Its dependence on North American wood has led to Drax pursuing plans to build 18 new wood plants across the country, which will boost production to eight million tonnes a year.
According to Mr Gardiner, the forests that Drax burn are not simply ecosystems but a source of fuel for the future – while also being ideal sites for new power stations.
Criticism of Drax’s operations will come as no surprise to the chief executive, but he is now deploying a fresh defence as he says Drax’s operations are indispensable to the UK’s energy security.
The power produced by Drax, he points out, is essential for combating the intermittency of other renewables such as wind and solar.
Drax’s latest annual report makes that clear: “The UK’s plans to achieve net zero by 2050 will require the electrification of sectors such as heating and transport systems, resulting in a significant increase in demand for electricity.
“We believe that intermittent renewable and inflexible low-carbon energy sources – wind, solar and nuclear – could help meet this demand. However, this will only be possible if other power sources can provide the power required to ensure security of supply.”
It is those “other power sources” that Drax want to account for, with the company among a raft of leading electricity generators that benefit from lucrative government subsidies.
Taxpayer support has also recently led to Drax winning permission from Energy Secretary Claire Coutinho to bolt two carbon capture plants onto Drax’s generating units.
The idea behind its carbon capture scheme is that the trees they grow absorb carbon dioxide from the air via photosynthesis.
If that CO2 is then captured by burning trees and burying them permanently under the North Sea, as Drax proposes, then the process removes CO2 from the atmosphere altogether.
Drax believes this “carbon negative” strategy can save it from the critics – but it has one more battle to win.
That revolves around the firm’s subsidies, which expire in 2027 but are crucial to the plant’s viability.
Up until last autumn, it looked set to lose the fight that fight but Drax has regained momentum amid Britain’s push to boost its domestic energy supplies.
Regardless, Gardiner is adamant that burning trees will be a crucial tool in saving the planet, potentially even helping the forests Drax is responsible for cutting down.
“Our ambition is for 20 million tonnes of CO2 removal,” he says. “We believe our operations can help sustain more working forests.”
