Drax Group (LSE:DRX) chief executive Will Gardiner disputed the power company’s position as the UK’s largest emitter of carbon dioxide as he faced questioning from ministers.
Gardiner was questioned over the coal-turned-biomass burning company’s own reports that showed it emitted 13.3 megatons of CO2 in 2020, far higher than German generator RWE (ETR:RWE) AG’s 4.3 megatons that gave it the spot of second worst offender, during a Business, Energy and Industrial Strategy (BEIS) Committee evidence session earlier this week.
When asked if he acknowledged that FTSE 250-listed Drax as the “biggest emitter,” the chief executive replied: “I am disputing the characterisation of our business.”
He also stated: “I think the key point for me is that the question of whether carbon dioxide is biogenic or fossil, I think it’s quite important, right?
“Because if one thinks about how we ended in the situation, we are in now in the first place, it’s because the world has pulled up trillions of tonnes of carbon dioxide out of the rock.”
His defence refers to the contentious ‘green’ credentials of burning wood and other biomass, which UK regulations consider to be carbon neutral because while doing so causes carbon emissions, replacing the trees that provided the wood will see more CO2 soaked up.
Companies like the Yorkshire-based power generator also hope to generate “negative carbon emission” by burning wood pellets and then using carbon-capture technology to trap the emissions and store them under the North Sea – though this has been called flawed by some researchers.
Drax, which has in recent years moved from its coal-burning past to focus more on biomass, but has continued to burn coal at the request of the UK government amid power shortages in recent winters, was found by the BBC to be cutting down “environmentally important” forests in Canada.
Darren Jones, BEIS chairman, topped off his grilling of Drax by pointing to projections that show the company will receive subsidies worth £11bn for its renewable energy production between 2012 to 2027, even despite its place as the largest emitter in the UK.
The session was part of a BEIS inquiry into government plans for decarbonising the UK’s power sector, following the Energy Security Strategy which outlined how an emphasis will be placed on increasing electricity supply from nuclear and hydrogen technology.
Aside from environmentally focussed scrutiny, electricity generators are facing a temporary 45% windfall tax on profits, announced in last week’s Autumn Statement, but are able to save 91p worth of tax for every £1 worth of investments they make.