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Created on: 2021-09-20 09:54:22
Last update: 2022-06-28 00:00:00 BankTrack, Biofuelwatch & Environmental Paper Network
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|#AxeDrax: For Forests, Communities and the Climate!|
|Sector||Biomass Electric Power Generation|
listed on London Stock Exchange
Drax's largest shareholders are Invesco, Schroders plc, Blackrock and Orbis Holdings Ltd. See the Drax website here.
About Drax Group
Drax is an energy company focused on electricity generation and sales and pellet production and sales. Drax operates the world's largest wood-burning power plant in the UK and is the world's second largest producer of wood pellets, with 13 pellet manufacturing plants located in the Southeastern USA and Canada. The company produces wood pellets for its own use and for customers in Europe and Asia. In 2019, Drax announced that it will use Bioenergy with Carbon Capture and Storage (BECCS) technology to remove carbon dioxide from the atmosphere in an attempt to be carbon negative by 2030. It is extremely unlikely that Drax will be technologically able to fulfill this promise, but there is a risk the group will use it to secure more funds to keep burning biomass beyond 2027, when its current subsidies will run out.
Why this profile?
Biomass is classified, and subsidised, by the UK and other governments as renewable energy, but in reality it harms the climate, biodiversity, forests and communities. Drax is a heavy promoter of wood biomass energy and the false climate solution of Bioenergy with Carbon Capture and Storage (BECCS) worldwide.
Impact on human rights and communities
Environmental injustice: Wood pellet production increases air pollution, wood dust, heavy traffic and noise. Pellet mills and export facilities are often sited in communities of colour and lower income communities - who are often already exposed to other forms of industrial pollution and social exclusion. In February 2021, Drax’s Amite pellet plant in Mississippi was fined a record $2.5 million for having violated the state’s air permit for years - however, this sum is roughly equivalent to the GBP 2 million Drax is receiving every single day in 'renewable energy' subsidies from the UK government. In the Southeastern USA, Drax’s main pellet sourcing region, wood pellet plants are 50% more likely to be located in environmental justice communities (see here and here), i.e. counties where the poverty level is above the state medium, and at least 25% of the population is non-white.
Impact on climate
Drax power station is the UK’s single biggest emitter of CO2, with around 14 million tonnes of CO2 emitted in 2021, around 13.5 million tonnes of which were from burning wood. Drax claims that carbon emitted from burning wood can be ignored because new trees will eventually absorb the same amount of CO2. This flies in the face of science. In February 2021, 500 scientists wrote to world leaders, warning: “As numerous studies have shown, this burning of wood will increase warming for decades to centuries. That is true even when the wood replaces coal, oil or natural gas.” In the same month, 87 scientists and economists warned the UK government: “Forest bioenergy is adding increasingly large amounts of carbon dioxide to the atmosphere and reducing the capacity of forests to absorb atmospheric carbon dioxide, making it more difficult to reach net zero carbon as the stated goal for limiting global temperature. Adding carbon capture and storage (CCS) technology to a bioenergy plant does not resolve this issue.” In October 2021, rating agency S&P removed Drax from its Global Clean Energy Index for failing to comply with their carbon standard.
Impact on nature and environment
Forest destruction: Drax burns the equivalent of 138% of the UK’s total annual wood production. Its main sourcing regions are the Southeastern US, Canada and the Baltic States. Furthermore, since its takeover of Pinnacle Renewable Energy in 2021, Drax has become the world's second biggest producer of wood pellets. Those pellets are burned in Drax's own power station in England as well as being sold to other energy companies in the UK, Netherlands and Japan. All of Drax's existing and planned pellet plants are located in the Southeaster US and Canada.
In the US, Drax' biggest external wood pellet supplier is also the world's biggest pellet producer - Enviva. Enviva has been heavily criticised for regularly sourcing wood from clearcut coastal hardwood forests in the Southern US. As well as being home to black bears, salamanders and many bird species, these forests offer crucial protection from extreme weather events such as floods and droughts that are becoming increasingly common. While Drax and Enviva claim to use 'waste wood' and 'forest residues' for wood pellets, these terms refer primarily to the economic value of wood, and pelletising of whole trees is standard practice.
Drax owns five pellet mills in the Southeastern US with two more under development. Wood for those plants is sourced mainly from monoculture pine plantations. Across the region, such plantations have been expanded at the expense of the rich forest ecosystems that are being clearcut. According to a study commissioned by the Southern Environmental Law Center, burning pellets from US pine plantations in the UK will be worse for the climate than the UK’s average electricity for a period of at least 40 years.
Following its acquisition of Pinnacle Pellets, Drax now owns seven pellet mills in British Columbia and Alberta. Those plants are located next to some of the last stands of primary forests in British Columbia, Canada, home to endangered wildlife like caribou and among the most carbon-rich in the world. Drax admits in its 2021 Annual Report that those plants "operate in regions that include old growth forests" and that it will stop sourcing from such forests only if a provincial government review requires them to do so in future.
In Estonia and Latvia, logging volumes have been increasing sharply as demand for wood, including for wood pellets for exports, has gone up. Logging is happening even in the few remaining old-growth forests, destroying habitat of rare and endangered species including Capercaillie, Black stork and Hazel grouse. In Estonia, the number of forest birds is declining by 50,000 breeding pairs year on year. In July 2021, a report by the Centre for Research on Multinational Corporations (SOMO) commissioned by Greenpeace Netherlands, exposed “logging in high conservation value forest (HCVF) areas, logging in watersheds and logging in peatland forests” in Estonia, all of them associated with Drax’s pellet supplier Graanul Invest.
Impact on pandemics
Wood biomass is associated with high rates of deforestation as well as monocultures of various crops. There is a growing body of evidence that shows the connection between deforestation and an increased risk for disease outbreaks and pandemics. For example, monocultures like eucalyptus plantations reduce biodiversity leaving species like rats and mosquitoes, which are more likely to spread dangerous pathogens, to thrive. This biodiversity decline results in a loss of natural disease regulation and poses a risk for human, animal and environmental health.
Flawed claims around Carbon Capture and Storage: In May 2022, Drax submitted a planning application for installing carbon capture equipment at two of its biomass units. A decision on the application is expected, earliest, at the end of 2022. The National Grid plans to build a carbon dioxide pipeline which would connect Drax power station as well as various fossil fuel sits, and a consortium of oil and gas companies has already got consent to inject CO2 from that pipeline under the North Sea.
However, there are good reasons to doubt that Drax is capable of capturing large quantities of CO2 from burning biomass: there is no example that demonstrates carbon capture from biomass combustion at scale is possible. It is widely accepted that all new technologies go through several technology readiness levels, yet Drax proposes to skip several of those development stages. So far, Drax has been involved in just two small-scale carbon capture trials. In 2018, Drax partnered with a start-up company called C-Capture to trial capturing one tonne of CO2 a day from biomass burning, financed by millions of pounds in government grants. This project failed, and, in March 2021, Drax described C-Capture’s technology as not proven. In June 2020, Drax announced a new carbon capture partnership with Mitsubishi Heavy Industries (MHI) whose novel solvent Drax wants to use for capturing CO2 at scale. However, the trial so far has only captured 300kg of CO2 a day and this is not over a continous period. All CO2 that has been captured has subsequently been released into the atmosphere and no actual reuslts from the trial have been published.
Beyond this very small and unpublished trial, CO2 capture from wood combustion has not been demonstrated anywhere in the world. On a nine-stage technology readiness level ladder, the CCS from wood combustion technology has reached stage 4 or 5. Stages 5-8 are considered essential prior to full commercial application. This makes it all but inconceivable that Drax would be able to operate one, let alone two of their large biomass units with full carbon capture and storage from 2027/28, as they propose.
Campaigning groups like Biofuelwatch is concerned that the main purpose of Drax's planning application for BECCS could be to convince the UK government to grant them further subsidies once the current ones expire in 2027.
OECD watchdog advances greenwashing complaint against biomass giant Drax
A landmark complaint alleging that UK wood-burning electricity generator Drax misleads consumers about its climate impacts will proceed to the next stage of consideration, according to a decision published by the UK's National Contact Point (UK NCP). The complaint alleges that Drax’s claims to generate “carbon neutral” electricity by burning trees and other forest wood violates OECD Guidelines for Multinational Enterprises on Responsible Business Conduct.
Drax is lobbying the Californian government to allow it to build the world’s largest bioenergy with carbon capture and storage (BECCS) plant.
BECCS is a controversial and unproven technology and the news has been met with criticism from anti-biomass campaigners. Gary Hughes from Biofuelwatch argued that Drax was “riding roughshod” over concerns raised by environmental justice campaigners and said that “Drax is trying to take advantage of the policy landscape to see if the plant comes to fruition. Even though this isn’t a concrete proposal, it could prove a conceptual win for Drax,” he added. “It wants California to promote BECCS – and if it can say the ‘global climate leader’ California is on board, they think others will follow.” Read the full article here.
New study confirms harmful impacts of biomass industry
A new study, commissioned by SELC, clearly shows the environmental and climate harms the biomass energy industry inflicts on forests in North Carolina and Virginia. For the study, researchers from Clark University used satellite images to evaluate the amount of forest cover lost near four wood pellet plants owned by Enviva, the largest wood pellet manufacturer in the world and supplier to Drax in the UK. Researchers found that logging in the sourcing areas near the four pellet mills sharply increased after Enviva began operating the plants. In 2019, Forest Service data shows that more than 6.6 million green tons of forest were cut for bioenergy or fuelwood in these areas. That’s the equivalent of 71,000 acres of forests cut, with Enviva being a primary user of this wood. Furthermore, the study showed that from 2016 to 2018, Enviva’s Ahoskie, Northampton, and Southampton pellet mills consumed nearly half of the wood from hardwood forest clearings in the sourcing area. Cutting forests at this scale can degrade water quality for communities downstream and destroy wildlife habitats, further threatening at-risk species. For more information see here.
Financial institutions have financed Drax via bond and share issuances as well as through shareholdings. See below for a specified overview of financial institutions involved.
In its Annual Report (2020), Barclays, Royal Bank of Canada and JPMorgan Chase are mentioned as Drax's banker (Barclays) and brokers.