Drax fined £25m after lying about wood pellets: Watchdog says there are ‘no excuses’
Drax, the owner of Britain’s largest power station, was fined £25 million for failing to provide accurate data on the wood pellets it burns to generate electricity.
Regulator Ofgem said there were “no excuses” for admitting that requirements were not being met.
The company has controversially received billions of pounds in government subsidies for renewable energy despite emitting millions of tonnes of greenhouse gases from its biomass plant.
Polluting: Drax burns wood pellets at its North Yorkshire power station (pictured) and qualifies for subsidies based on the process being carbon neutral
Campaigners want the government to stop giving taxpayers’ money to Drax. But analysts at RBC said the conclusion of the investigation now cleared the way for Drax to receive further subsidies after 2027.
The £25m fine is likely to be absorbed without jeopardising the target of an underlying profit of £995m for the year, the authorities said.
Shares fell 0.4 percent, or 2.5p, to 653p, but are up a third in 2024.
Drax burns wood pellets at its previously coal-fired power station in North Yorkshire and is eligible for renewable energy subsidies because the process is carbon neutral.
The argument is that the carbon dioxide that growing trees absorb cancels out the emissions they produce when they are cut down and burned.
Ofgem launched a 15-month investigation after Drax was accused of using unsustainable sources of wood and alleged it sourced wood from rare forests in Canada.
An investigation was conducted into whether there had been a breach of the ‘annual profiling reporting requirements in relation to the renewable energy obligations scheme’ and concluded that Drax did not have the necessary ‘governance and controls’ in place.
This means Drax incorrectly reported data submitted to Ofgem for the year ending March 2022, and the company failed to substantiate its claims about the origin of the imports.
Promise: Drax boss Will Gardiner (pictured) says the company will invest to improve future reporting
Drax is investing £25m in a fund to help charities support vulnerable energy customers.
Jonathan Brearley, chief executive of Ofgem, said: ‘Energy consumers expect all businesses, particularly those receiving millions in government subsidies each year, to comply with legal requirements.
‘There is no excuse for Drax’s admission that it failed to meet its obligation to provide Ofgem with accurate and reliable data on the exact type of Canadian timber it uses.’
Drax chief executive Will Gardiner said: ‘We recognise the importance of maintaining a strong evidence base and continue to invest to build confidence in future reporting.’
Matt Williams of the Natural Resources Defence Council in the US said: ‘This shows how difficult it is to prove that burning wood from forests is good for the environment.
There is one simple reason for that: it isn’t. £25 million is a drop in the ocean compared to the billions they are asking for in subsidies.’
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