Biomass Generation

Baroness Bennett of Manor Castle Excerpts

Wednesday 12th February 2025 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I want to following on from the Minister’s response about oversight of the source of the biomass going into Drax. He said he has confidence in the independent regulator, Ofgem. He alluded to the fact that, last year, Drax agreed to pay £25 million after Ofgem found that it had submitted inaccurate data on the sourcing of wood pellets. Does the Minister acknowledge that the problem there is that it is after the event? The trees have already been cut down and burned, and then, some years later, we get a fine. But the trees are no longer there and the carbon dioxide is in the atmosphere. There was a fine of £25 million, but the noble Earl, Lord Russell, referred to what is happening with Drax’s share price. Is there not a risk that Drax just regards this as part of the cost of doing business?

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Baroness will know that Ministers do not comment on share prices at the Dispatch Box, for very good reasons.

We need to be clear that Ofgem’s investigation was thorough and rigorous. I have a great deal of trust in the work of Ofgem. The noble Baroness will know that there was no suggestion that Drax was awarded subsidies incorrectly under the existing renewables obligation or contracts for difference arrangements. It was more to with the documentation. The investigation found no evidence to suggest that Drax had been issued with subsidies incorrectly, and Ofgem was confident in its conclusions. Drax made a redress payment because there is a scheme within Ofgem for companies to do that. I must say that £25 million is substantial; I think it was a good indication to Drax that it needs to get its documents in order—and I very much hope that it has done so.

Of course, we will be looking to Ofgem to ensure that that happens, that everything is proper and that, under the new arrangements, we are satisfied that Drax can meet the criteria. This has not been an easy decision. In our debate yesterday, I was interested in the response of the noble Baroness, Lady Boycott, who essentially said that she welcomed the progress; she was not overwhelmed with the decision, but there was an acknowledgement that we are making progress and understand the sensitivities.

One has to come back to the issue of biomass and its sustainability. The UK’s Committee on Climate Change and the Intergovernmental Panel on Climate Change recognise that bioenergy can play a significant role in decarbonising economies. We support the use of sustainable biomass generators only if it meets our sustainability criteria. I have said we are going to toughen that up. At the end of the day, it is a difficult question. I think we have come to a sensible arrangement, which, after all, is a short-term arrangement in the lifetime of the generators of four years from 2027 to 2031.

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[Lord Hunt of Kings Heath (Lab)]

It is a very interesting question. If the noble Baroness, Lady Bloomfield, were here, she would say that fusion is just around the corner. We have this STEP programme. We have global leadership here and my officials and people in the industry are very excited about the potential. When I was doing this job 14 or 16 years agreement, people were telling me it would be 20 years away. I emphasise to the right reverend Prelate that there is real optimism that we are seriously going to be able to make advances. It is the same with carbon capture, usage and storage. Again, we have been talking about this for years, but the Government are putting in some serious investment. We know the technology can work and we think it has great potential.

[Baroness Bennett of Manor Castle (GP)]

My Lords, since we have time, I would like to go back to Drax. We have spoken about where the biomass comes from, in terms of the source of the trees and whether they are whole trees or trimmings. But have the Government given any consideration to what happens in wood pellet facilities, where the material is processed into pellets in the United States? There is evidence of a huge amount of harmful air pollution, including dust, particulate matter, volatile organic compounds and, particularly, toxic or hazardous pollutants such as acrolein and methanol. These can cause problems such as asthma and respiratory illnesses in nearby communities. It is worth noting that many of these facilities are located near communities of colour, who already suffer serious economic disadvantages and health problems.

We know that regulation of environmental factors and environmental health in the US has always been poor. We are seeing every indication from the new US regime that it intends to make it much poorer still. Is this something the Government have considered, are considering or will talk to Drax about and put pressure on it? I come back to a phrase we became very familiar with during the Covid pandemic: no one is safe until everyone is safe. A terrible state of public health in the US—think about what is happening with the H5N1 virus—is of concern to all of us. Are the conditions under which these pellets are produced something the Government think about?

[Lord Hunt of Kings Heath (Lab)]

Yes, it is. We do rely on regulators, both here and in other countries, but the science underpinning biomass sustainability does continue to evolve. The Government have listened to feedback from the noble Baroness, and other parliamentarians and stakeholder groups, about ways in which we can strengthen the sustainability criteria. We are going to consult separately on developing a common sustainability framework, where we plan to gather views and evidence on strengthening wider aspects of biomass sustainability. The points the noble Baroness has raised could very much be embraced within that, and I will make sure that they are.