Drax Group (LSE:DRX) has been given the green light from the government to install carbon capture technology at its north Yorkshire biomass power plant.
Energy secretary Claire Coutinho approved plans on Tuesday to retrofit two of Drax’s four wood-burning biomass units to house the technology at an estimated cost of £2 billion.
According to Drax, the new technology will prevent eight million tonnes of carbon being emitted each year from the site, which provides around 4% of the UK’s power.
Despite being generated by burning wood pellets, this energy is classed as renewable on the idea that the fuel absorbs and emits a neutral amount of carbon over its lifecycle.
This has been disputed, however, with Drax’s power station being the UK’s largest emitter of carbon dioxide in 2020 - a year after the company switched to burning wood rather than coal.
Funding for the project, dubbed 'bioenergy with carbon capture and storage' by Drax, is yet to be determined.
Speculation has built that the government is set to unveil a new subsidy scheme to support power generation at Drax’s plant, with hundreds of millions of pounds in public funds already being sent to the company annually.
New public support for Drax could cost as much as £1.7 billion a year, climate group Ember found in a report published on Tuesday, which would be added to bills.
Drax disputed the report, arguing it made “misguided assumptions”, while a government spokesperson labelled the estimates as “speculative”.
“Any potential support awarded to Drax would be subject to a value for money and affordability assessment and subsidy control considerations - ensuring that any tax and bill-payer money is spent wisely,” the spokesperson added.