(Updated May 2014)
The Green Investment Bank (GIB) was set-up to help finance low-carbon projects, but its biggest loan to date has been to Drax coal-fired power station to help them convert half of their capacity to biomass.
In effect, this loan has enabled Drax to avoid having to shut down and meant that they can continue to burn both biomass and coal for the forseeable future. This is the opposite of the type of green project that the GIB was set up to fund.
We believe that there shouldn’t be any public finance for big biomass. Not for biomass ‘conversions’ that keep old, polluting coal power stations running and not for new biomass power stations which burn vast amounts of wood, the majority of which must be imported from forests around the world.
NOTE: The Department for Business, Innovations and Skills has asked us to publish their response to our Banking on Big Biomass campaign. Please click here to download a copy and read Biofuelwatch’s comments.
What is the Green Investment Bank?
The Green Investment Bank was created by the UK government in 2012 to help finance so-called environmentally friendly projects. It is fully owned by the UK Government and based in London and Edinburgh. GIB is allowed to receive and distribute state funds, so long as it channels them towards certain things. So far it has been given a budget of £3 billion. GIB was created with the intention of meeting carbon emission reduction targets and to accelerate the development of a “green economy.” Yet its first large loan – originally for £100 million – went to Drax, to help them convert half of their units to biomass and avoiding being shut down under an EU Directive.
Investing in false solutions
In December 2012 GIB agreed to grant Drax Plc (Europe’s 2nd biggest coal power station) a £100 million loan to convert from a coal fired power station to one that primarily burns biomass (this was later reduced to £50 million after the Government granted Drax a £75 million public loan guarantee). Secretary of State Vince Cable has since confirmed that without the loan, and without partly converting to biomass, Drax “would have closed down because it has to meet European rules on coal use and it wouldn’t have been able to survive“. This means that the GIB loan has supported large-scale coal as well as biomass burning. We estimate that GIB could grant as much as a further £500 million to biomass and biofuel projects in the next few years. This raises major environmental and social concerns.
But isn’t big biomass clean, renewable energy?
Unfortunately not, it’s actually hugely destructive and very high carbon as well as being very polluting. When we look at the full picture, we find that biomass is not the green energy solution some companies and governments would have us believe it is.
Big Biomass is a climate disaster too
Cutting down and burning trees for electricity is no better than burning coal. Burning biomass in power stations emits up to 50% more carbon dioxide than burning coal (for the same energy output). The industry says that new trees will absorb that carbon again – but it takes minutes to burn a tree and many decades for another one to grow. Turning biodiverse forests into tree plantations for power stations also releases vast amounts of carbon.
Big Biomass fuels destruction of the natural environment
Converting half of Drax to biomass will require almost 1.6 times as much wood as the UK produces, so they would have to import at least 90% of this. Native forests, rich in wildlife and carbon, are already being logged and destroyed in the U.S and Canada to meet growing biomass demands. There is strong evidence that some of the pellets burnt by Drax have come from trees from ancient swamp forests in the southern US which are being clearcut. Those pellets are certified by one of the voluntary certification schemes endorsed by Drax and the UK Government – an example of where biomass called ‘sustainable’ can come from.
Big Biomass goes hand-in-hand with human rights abuses
The GIB and government subsidies (paid for by electricity bill payers) are making biomass a hugely profitable industry. Because there are no restrictions on where wood can be sourced from, companies often go for the cheapest supplies of wood – even this means wood from clearcut ancient forests in North America.
Participate in our alert here to tell the Green Bank Chairperson Lord Smith not to Helius’ Avonmouth power station, nor any other big biomass projects! Download our Banking on Biomass flyers here: