Drax Biomass Power Station

Lord Callanan Excerpts

Monday 3rd July 2023 Lords Chamber

[Baroness Jones of Whitchurch]

To ask His Majesty’s Government what assessment they have made of the extent to which Drax biomass power station has complied with sustainability requirements; and whether they are reviewing subsidies to it.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, this is a matter for Ofgem. The regulator is the administrator for monitoring compliance with the sustainability criteria within the renewables obligation scheme. It has opened an investigation into whether Drax Power Ltd is in breach of its annual profiling reporting requirements related to the renewables obligations scheme.

[Baroness Jones of Whitchurch (Lab)]

I thank the Minister for that reply. It is estimated that we will have given Drax some £11 billion in subsidies over the different renewable energy schemes. Is the Minister concerned that Drax’s claim to be using sustainably sourced wood from Canadian forests currently lacks any detailed full-cycle carbon accounting and the audit trail that we have the right to expect for that level of subsidy? Why did Ofgem commission the technical consultancy Black & Veatch to advise on this even though the company is already working for Drax? Finally, does the Minister accept that, in order to get to the truth, independent advisers and scientists should go to Canada to check that 70% of the wood biomass being imported is actually sustainable offcuts, as our rule requires, and not from virgin forests?

[Lord Callanan (Con)]

A couple of points for the noble Baroness. First, the renewables obligation legislation was originally introduced by the last Labour Government. Secondly, Ofgem is investigating these matters. The noble Baroness is jumping to a lot of conclusions there. If it is proved that Drax is not in compliance, of course some of the value of the certificates that it has received will be withdrawn.

[Lord Birt (CB)]

Speaking of proof, has the Minister had a chance to view the devastating “Panorama” on Drax? Drax’s claims have been fatally undermined. Ancient forests have been cut down and indiscriminately turned into pellets, transported 12,000 miles by ship and incinerated in Yorkshire, emitting more CO₂ than coal did before and at gigantic cost to the taxpayer. This is not the route to net zero.

[Lord Callanan (Con)]

The noble Lord should be careful of jumping to conclusions. I have not seen the programme, but my officials have. They have engaged extensively with forestry experts and Canadian officials following the programme, and the officials’ conclusion is that the “Panorama” programme provided an inaccurate representation of practices by the forestry and biomass sector on the ground.

[Baroness McIntosh of Pickering (Con)]

My Lords, looking at renewables more broadly, does my noble friend have a view on the efficacy and morality of taking electricity that has been generated offshore in the Yorkshire and Humber region and transporting it all the way down to the West Midlands, when we could actually use that electricity locally, particularly to power up electric cars, for which there are so few charging points in rural areas?

[Lord Callanan (Con)]

I have to say that I am really not sure what the noble Baroness is talking about. There is a national grid. Electricity is transported from all parts of the country to other parts, as demand varies. That is the whole principle of a grid.

[Baroness Bakewell of Hardington Mandeville (LD)]

The emissions that occur as a result of Drax burning mature trees are not counted as CO₂ emissions; only emissions from transporting trees from forests to furnaces count. When are the Government going to wake up to this ridiculous accounting fraud and stop giving Drax green subsidies?

[Lord Callanan (Con)]

Again, the noble Baroness is jumping to conclusions before the investigation has proceeded. Based on the evidence reviewed to date, Ofgem has not established any non-compliance with the scheme. But the investigation is continuing and I would caution noble Lords to wait for the outcome from the independent regulator.

[Lord Berkeley (Lab)]

My Lords, transporting this woodchip from a forest somewhere in North America by truck or train, loading it on to a container ship, taking it to the Mersey, taking it across the Pennines in another train and then discharging it into Drax—how can that possibly be green?

[Lord Callanan (Con)]

It is because the sustainability criteria say that the biomass has to come from sustainable sources. Most of it is by-product from normal sustainable commercial forests.

[Baroness Boycott (CB)]

My Lords, a few years ago when this Question came up in the House, the noble Lord assured the noble Earl, Lord Caithness, that if Ofgem found Drax not to be meeting its sustainability criteria, the subsidies would be immediately removed. Since then, we have had the “Panorama” review and, while I accept the noble Lord’s point that the jury is still out, I would like to know whether he is still prepared to make the same commitment to the House today.

[Lord Callanan (Con)]

Yes.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, you have to admit that the “Panorama” programme had some interesting facts. In fact, a lot of that information comes from Canadian environmentalists who are on the spot and see the ancient forests being destroyed for those wood pellets. So why on earth does the Minister still persist in saying that we are jumping to conclusions when he is just burying his head in the sand?

[Lord Callanan (Con)]

As somebody famous once remarked, recollection of facts may vary. Forgive me if I do not necessarily take as absolute fact the statements of some Canadian environmentalists. Officials have looked into it. Ofgem is investigating whether the biomass is sustainable or not. Let us wait for the outcome of that investigation.

[Lord McLoughlin (Con)]

My Lords, my noble friend said in his original Answer that it was matter for the regulator. Are the Government wholly satisfied with the way regulation is working at the moment, with questions around the regulator Ofgem? Who regulates the regulators?

[Lord Callanan (Con)]

The noble Lord was probably in the other place when the regulations and laws for Ofgem were passed. It is an independent regulator; that is the whole principle of it. Until I see any evidence that it is not carrying out its job satisfactorily, I will continue to have confidence in it.

[Baroness Blake of Leeds (Lab)]

My Lords, when Ofgem opened its investigation into Drax’s biomass sustainability reporting a month ago, it made clear it would act if it found breaches of the rules—the right approach, surely, to a single case. However, what assessment have the Government made of wider compliance with reporting requirements and what steps are they taking to improve monitoring, particularly with regard to the origin of fuel sources?

[Lord Callanan (Con)]

I refer the noble Baroness to the answers I have given to previous questions. There are other biomass operations that fulfil the sustainability criteria. If any evidence is produced and if the noble Baroness has any evidence, I would be delighted to pass it on, but until then we should trust what they say.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, in answer to the excellent question from the noble Lord, Lord McLoughlin, the Minister said that officials had looked into this and that Ofgem was satisfied. But, as far as this House is concerned, it is the Minister who is responsible. What has he personally done to look into this since the programme aired so that he could have answered the Question from the noble Baroness, Lady Jones, properly?

--- Later in debate ---

[Lord Callanan (Con)]

My Lords, I have answered the Question properly. Ofgem is an independent regulator and takes these matters extremely seriously. I have spoken to the chief executive of Ofgem about it and I have spoken to officials who have investigated it, so I feel that I have discharged my duties on this one.

[Baroness Hayman (CB)]

My Lords, I declare my interests as set out in the register. The Minister was very dismissive to the noble Baroness, Lady McIntosh of Pickering, on the issues around the national grid and the use of sustainable energy. We had long debates about this, and about community energy, in the Energy Bill. Does he not accept that there is a possibility, with some of the large onshore wind turbines we now have, that we could almost avoid grid connection and go to direct supply for developments that are important?

[Lord Callanan (Con)]

That was not the question I was asked, but let me tackle the question from the noble Baroness. Of course, it is perfectly within anybody’s rights to set up a private wire supply and their own community generation if they wish, but I think the noble Baroness will find that the vast majority of those schemes also want to be connected to the national grid for cases where it does not work.