DECC’s latest renewable electricity subsidy guarantees threaten forests, communities and climate

Logs going to Enviva Pellet mill supplying Drax (N Carolina)

Photo: Dogwood Alliance

+ Drax have been guaranteed subsidies for converting a second of their six coal power station units to biomass.  Each converted unit will require pellets made from 5.5 million tonnes of wood [1] – that is wood from slow-growing whole trees, the only type of biomass that can be burned in converted power stations [2].  They are already in receipt of subsidies for their first converted unit – £190 million a year at full capacity – and now they have been guaranteed at least £250 million a year for converting another unit.

+ RWE Npower have been guaranteed subsidies for converting the 420 MW Lynemouth Power Station to biomass.  This woud require pellets made from 3.3 million tonnes of wood a year.  RWE bought Lynemouth Power Station, complete with planning permission to convert, in late 2012;

+ MGT Power have been guaranteed around £190 million a year in subsidies for building a planned new 295 MW biomass power station at Teesport.  This would burn around 3 million tonnes of wood a year.  DECC and MGT Power class the proposed plant as ‘Combined Heat and Power’, even though no large heat customer has been confirmed, MGT has no plans to invest in district heating and the plant may not achieve more than 35% efficiency levels.

Altogether, the new subsidy guarantees translate into burning an extra 11.8 million tonnes of wood a year – more than the UK’s entire annual wood production, which is around 10 million tonnes a year.  They will rely on imports, most likely from the southern US and Canada, two regions where highly biodiverse and carbon rich forests are being clearcut and converted into monoculture tree plantations.  The new pellet demand is making this trend even worse.

Why is Drax suing the government over this announcement?

Drax has announced a lawsuit against the government for not guaranteeing subsidies for a third unit conversion at this stage, i.e. a further £250 million for burning anotther 5.5 million tonnes of wood a year.  They feel entitled to this because several months ago, DECC published a short-list for Contracts for Difference that included two rather than one more unit conversions by Drax, as well as the conversion of Eggborough Power station (which has not been awarded a Contract for Difference at this stage either).  If Drax were to win the case, this might force the Government to also award CfDs to Eggborough, which would mean burning nearly 12 million tonnes additional wood a year.  DECC has not actually ruled out CfDs for another unit at Drax or for Eggborough in the long-term – they just haven’t awarded any during the first funding round.  Still, this is unacceptable to Drax, who seem to be taking government generosity, if not favouritism, for granted: In addition to guaranteed long-term subsidies of £480 million tonnes, they  have also been awarded a £75 million public loan guarantee and a £50 million cheap loan from the government-owned Green Investment Bank – as well as government support expected to lead to a £250 million EU grant for a new coal power station with carbon capture and storage (CCS) capacity – with ‘storage’ likely to mean pumping CO2 into old North Sea oil wells so that even more oil can be burned, too!


[1] All tonnage figures are for green wood, not dried or processed wood.

[2] See here for a technical report by Drax confirming that biomass other than wood from slow-growing trees with a low bark content causes the boilers to corrode.  Sawmill residues generally have a high bark content, which makes them unsuitable.  The same would apply to any converted pulverised fuel coal power station.  All UK coal power stations and most worldwide are pulverised fuel plants.