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Endgame for Drax?

Friday, February 24, 2017 3:33
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Drax is a great name for a villain, and for anyone who gives a toss about the way ‘green’ subsidies are thrown about, Drax plc can certainly be cast as one of the villains of the piece.  Drax and its fellow industrial-scale wood-chip burners receive nearly £1 billion a year in subsidies for generating electricity that way, and are not required to proffer CO2 emission permits or pay the carbon tax – on the pretext that wood-burning reduces CO2 emissions.

Except, it doesn’t – it increases them, even by reference to coal (which is the obvious comparator, since it is coal-fired power generating capacity that is essentially being replaced by biomass-burning).  It’s basic physics, plus a little logic.  A perfect example of crass policy-making at its most perverse – whatever view you take on (C)(A)GW.  The way they get away with it, BTW, is under the utterly demented ‘carbon accounting rules’ which allow them to account only for the CO2 emitted in the manufacture and transportation of the wood-chips – and to ignore the CO2 emitted during actual combustion, which is nowhere recorded.  To repeat, wood-chip burning generates more CO2 than coal burning: and in answer to the riposte that eventually, if you replant the forests, it all balances out, the answer is that ‘eventually’ is several decades at best, but maybe 100 years or more.  Meantime, all this is happening by the many millions of tonnes of mostly North American forest per annum.

There have been a number of people saying this patiently for quite some time, mostly from the green side; although of course the hatchet-faced subsidy-farmers and their ‘green’ lobby the REA are all in favour.  Well, after all, a billion is a billion … 

Yesterday, the fairly universally-respected Chatham House has published what everyone knows to be the truth (here and here).  Even the Beeb has picked up on it (though silence from the Grauniad at the time of writing).  The REA’s response is risible.

Why does the government (which, by the way, knows all this too) continue to load up our electricity bills with these subsidies?  Easy.  (a) the UK depends on biomass to meet its ‘binding’ EU renewables targets; (b) in a world of windfarms and ever decreasing coal, it depends on the reliability of biomass (inter alia) to keep the lights on in winter; (c) Drax and its smaller confreres are up shit creek without the subsidies, which greatly exceed their profits.  I don’t know whether Drax – a FTSE 250 company – would go under without the subsidy (and remember, if that is withdrawn then by the same logic Drax should also be paying the carbon tax which would compound their woes).  But withdrawal of the subsidy would certainly impact massively on its fortunes.

I can’t see the status quo continuing indefinitely.



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