The UK’s Financial Conduct Authority (FCA) is to investigate Drax over its biomass sourcing, listing rules and disclosure guidance.
In a short statement, the FCA said the period under investigation runs from January 2022 to March 2024, and noted that Drax would cooperate.
Drax sources most of its wood from the US (66.7%) and Canada (23.4%) and uses third-party certification and accreditation bodies.
For biomass used at Drax Power Station, it “adheres to the UK government criteria for sustainable biomass, the Forest Europe Sustainable Forest Management criteria, and we comply with the UK Timber Regulation”.
Nonetheless, the site has faced continued probes into its sourcing and green credentials.
The BBC investigations TV programme Panorama shone the spotlight on the company’s business in ‘The Green Energy Scandal Exposed’ in 2022. It also reported in February last year that Drax received £6bn in green subsidies to burn wood “from some of the world’s most precious forests”.
Papers obtained by Panorama showed Drax took timber from rare forests in Canada it had claimed were off limits. Drax denied the claims, saying its wood pellets were sustainable and legally harvested.
In February, the UK government halved subsidies to Drax and hatched a new agreement where low carbon dispatchable power is only used “when it is really needed.”
Drax has long said it is transitioning the site into the world’s largest carbon removal facility, and two BECCS units could remove 8Mt of CO2 a year. Last year it unveiled plans to establish a new independent business focused on large-scale carbon removal.
But the environmental questions refuse to go away.
When the carbon emissions from burning wood pellets and impact on global forests and transport costs are factored in, the net benefit of these subsidies becomes questionable, wrote Geoff Riley, in a paper entitled The Carbon Dilemma: Unpacking the economics behind Drax Power Station.