MPs Urge Immediate Suspension of Drax's £2m Daily Subsidy
A coalition of 14 MPs and peers has called on Energy Minister Ed Miliband to halt subsidies worth approximately £2 million per day paid to the Drax power plant in North Yorkshire. This demand follows court documents that raise serious questions about the company's sustainability assertions regarding its wood pellet sourcing.
Deep Concerns Over Subsidy Legitimacy
In a letter exclusively obtained by the Guardian, the politicians expressed being "deeply concerned" that Drax may have received substantial billpayer subsidies while potentially concealing critical information about the environmental credentials of its wood sources. The subsidies are contingent on generating electricity from biomass pellets made from waste or low-value wood sourced from sustainable forests.
Drax, which is Britain's largest single source of carbon emissions, imports millions of tonnes of wood pellets annually from across the Atlantic. The company is projected to receive a total of £11 billion in subsidies by the end of 2027, funded by consumers through renewable energy incentives.
Explosive Tribunal Documents Reveal Internal Doubts
The letter was prompted by "explosive" employment tribunal documents that disclosed senior executives at Drax had privately raised concerns about the accuracy of the company's public sustainability claims. These allegations suggest Drax may have been burning wood from some of Canada's most environmentally significant woodlands, contrary to its public statements.
Signatories from the Labour, Liberal Democrat, and Green parties stated: "We are deeply concerned that a company should be in receipt of substantial billpayer subsidy, currently guaranteed until 2031, while it may have knowingly and consistently concealed information of material relevance to its legitimacy as a subsidy recipient."
Calls for Precautionary Action and FCA Investigation
The MPs have requested that all future UK government contracts with Drax be suspended for the duration of an ongoing investigation by the Financial Conduct Authority (FCA) into the company's historical statements about pellet sourcing. They also urged Miliband to outline steps to reassess Drax's eligibility for future subsidies if the FCA's findings substantiate the concerns.
Chris Hinchliff, one of the MPs who signed the letter, emphasized: "The 'explosive' documents suggest Drax may have misled ministers, regulators, and the public while taking billions in billpayer subsidies. That would be indefensible. With the FCA now investigating Drax's past claims, the government must suspend any future contracts until the truth is established."
Drax's Response and Regulatory Background
A spokesperson for Drax defended the company, stating: "These allegations were investigated by our regulator, Ofgem, who concluded that they did not find any evidence that we had been issued with [subsidy certificates] incorrectly or that our biomass does not meet the government's sustainability threshold. They also found no evidence of deliberate misreporting."
However, the tribunal documents reveal that internal emails and meetings among senior colleagues indicated doubts about the evidence supporting Drax's public sustainability claims. This followed allegations from Rowaa Ahmar, the former head of public affairs at Drax, who claimed she was dismissed after informing the chief executive that the company was misleading the public, government, and regulator.
Broader Implications for UK Energy Policy
Drax, with a stock market value of around £3 billion, plays a crucial role in the UK's energy supply, providing 5.3% of the nation's electricity. As the country transitions to intermittent renewable sources like wind and solar, Drax's operations have become increasingly significant. Barry Gardiner, another signatory, noted: "The scale of the Drax problem is enormous for Ed Miliband. Drax supplies 5.3% of UK electricity and is a key element of our commitment to decarbonise the entire power sector."
He added: "The directors of Drax should not fool themselves that they are too big to fail. Drax must clean up or close down." A government spokesperson responded: "We will review the independent FCA's findings when the investigation concludes. Drax will operate for less time under a clean power system and will need to use 100% sustainably sourced biomass, with not a penny of subsidy paid for anything less."
The outcome of the FCA investigation could have profound implications for Drax's future subsidies and its role in the UK's energy landscape, highlighting the tension between renewable energy goals and environmental integrity.
