UK halves subsidies for Drax and says it must use 100% sustainable wood
The UK government has halved subsidies for the Drax power station and ordered it to use 100% sustainable wood after sustained criticism over its business model.The large power plant in North Yorkshire would play a “much more limited role” in future, operating less than half as often as it currently does, the government said.The plant is an important generator of electricity for the UK but has been criticised for burning wood pellets sourced from forests in the US and Canada.The government has agreed a new deal with the power producer that will halve subsidies between 2027 and 2031, saying that Drax will provide power only when it is “really” needed.It estimates that this will save consumers £170m a year.
However, the company said it was targeting underlying profits of £100m to £200m a year over that period, and its shares rose almost 5% before easing slightly to a near 4% rise.Greenpeace said continuing to subsidise biomass imports was a “dirty compromise with past failures”.The energy minister Michael Shanks said in a statement: “We believe that they [subsidies] simply did not deliver a good enough deal for bill payers and enabled Drax to make unacceptably large profits.“This government will do whatever it takes to deliver energy security and protect bill payers now and into the future.”Drax, Britain’s largest renewable power generator by output, has converted four coal units to use biomass, and also runs hydro projects.
Its plants account for about 6% of the UK’s electricity supply,The company shut its final coal plant after 50 years of coal-fired generation at the site near Selby in 2023,Under the new agreement, the company will have to switch to using 100% woody biomass from sustainable sources, up from the current level of 70%,The government threatened “substantial penalties” if Drax does not comply,Green campaigners had feared that ministers would award unrestricted subsidies to the power station, which has already received billions in subsidies despite strong concerns that burning trees to produce electricity is bad for the environment.
The government’s statement said: “Our central projections show that, on the right terms and in a much more limited role than today, biomass generation at Drax is the lowest cost option, including when compared to gas-fired power stations, for bill payers during this period,”Will Gardiner, the chief executive of Drax, said: “Under this proposed agreement, Drax can step in to increase generation when there is not enough electricity, helping to avoid the need to burn more gas or import power from Europe, and when there is too much electricity on the UK grid, Drax can turn down and help to balance the system,”Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionDoug Parr, the policy director at Greenpeace UK, said: “Continuing to subsidise huge biomass imports is not a step on the road to a cleaner future, but a dirty compromise with past failures,Trees should be left to grow and not be burnt in a major subsidy-fuelled bonfire,“The UK’s commitment to Drax has become an albatross, a supposed asset that is looking more and more stranded as the energy market develops.
“The new criteria should, hopefully, limit the damage done both by restricting its operations and reforming its supply chain, but the government is still far too trusting of big polluters asking for big subsidies to decarbonise.We have cheap, clean power sources available, and we shouldn’t be left to gamble on schemes like this any more.”Last year, Drax agreed to pay £25m after the energy industry regulator for Great Britain, Ofgem, found it had submitted inaccurate data on the sourcing of wood pellets.The government hopes to decarbonise the electricity grid by 2030.Meeting this target will require a large increase in renewable energy, such as wind and solar, as well as projects that store energy for when there is insufficient wind or sun.
The government is also turning to more nuclear power to achieve its carbon goals.Last week, Keir Starmer vowed to “rip up the rules” of the nuclear industry by allowing a new breed of mini reactors to be built for the first time in the UK.The move to encourage fresh investment in small modular reactors could allow new nuclear projects to spring up across England and Wales – not only on the country’s eight designated nuclear sites.
Canada calls Trump metals tariffs ‘totally unjustified’ as Hong Kong to file complaint with WTO – business live
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy, as reaction to the latest US tariffs comes in.Donald Trump announced 25% tariffs on foreign steel and aluminum on Monday, ramping up his controversial bid to boost the US economy by hiking taxes on imports from overseas.The modified US duties will be enforced “without exceptions or exemptions”, the president declared, dashing the hopes of countries that hoped to avoid them.Asked about the possibility of other countries retaliating against US tariffs, Trump said: “I don’t mind.”Canada’s industry minister said the US tariffs were “totally unjustified”, with Canadian steel and aluminum supporting key US industries including defense, shipbuilding, energy and autos
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Australia’s major pay TV service Foxtel has moved to assure subscribers that key American sports content will remain available on its platforms following the latest blow in the country’s sports streaming brawl.Disney announced on Tuesday that ESPN’s slate of Australian and international sports programmes – including live local and US basketball and American football, as well as their continuous 24/7 channels – will soon be available on all Disney+ plans.The content has been available to Australians through delivery partners Fetch TV and Foxtel/Kayo, and concerned users posted on social media in the wake of the announcement fearing that they might soon lose access to ESPN.Foxtel issued a statement on Tuesday saying there would be no changes to their programming.“We enjoy a long-standing relationship with Disney/ESPN and expect this to continue,” a Foxtel Group spokesperson said
Government officials ‘more pessimistic’ about financial health of rugby union
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