Britain’s biggest power station has been plunged into crisis by a bombshell complaint to America’s financial regulator over its biggest supplier of ‘green’ fuel.
The complaint alleges that the supplier to the Drax plant in North Yorkshire, US group Enviva, used a loophole in EU and UK law to falsely claim to American investors that its wood-pellet fuel emits far less carbon dioxide than coal. It also attacks Enviva’s claims that its operations are ‘certified’ for ‘sustainability’.
In fact, the UK body responsible for such certification – chaired by Dorothy Thompson, who is also chief executive of Drax – is still auditing Enviva.
Complaint: The supplier to the Drax plant in North Yorkshire, has been accused of using a loophole in EU and UK law to falsely claim to American investors that its wood-pellet fuel emits far less carbon dioxide than coal
The power station is already reeling from a profits slump after green subsidies were cut by Chancellor George Osborne last year and growing questions over its strategy of burning ‘environmentally friendly’ wood pellets.
The complaint, signed by the managers of 34 US pension and investment funds, targets Enviva, a Maryland-based firm that has a contract to supply Drax with one million tons of pellets every year.
It will be filed tomorrow with the powerful federal watchdog, the Securities and Exchange Commission, along with a report by environmental think-tank the Partnership for Policy Integrity (PFPI).
The report says it has found ‘misleading statements by Enviva about its emissions and environmental impacts’ in its prospectus when it was floated on the New York stock exchange last April.
The report says Enviva has claimed that ‘burning wood in power plants reduces carbon emissions compared to coal’. But the study says Drax’s own data shows that while burning coal leads to emissions of 1,901lb of carbon dioxide per megawatt hour (Mwh), the figure for wood is significantly higher – 2,128lb per Mwh.
Enviva’s claim is only possible because of a UK and EU ‘policy loophole’ – which does not apply in America – classing biomass fuel such as wood pellets as ‘zero carbon’.
According to the study, Enviva has not made this clear. Its claim to the SEC that using its pellets ‘reduces’ emissions only applies to making and shipping the pellets, not burning them.
The complaint calls on the SEC to launch an investigation to ‘establish and enforce clear guidelines applicable to companies that may be claiming climate benefits’.
Drax produces eight per cent of the UK’s electricity – enough to power six million homes. Half of its six 650 megawatt (MW) generators have been converted from coal to burn wood pellets from America. Drax spokesman Andrew Brown yesterday confirmed the firm wants to adapt its remaining three furnaces.
Under EU rules, burning wood counts as ‘zero carbon’ because wood cut to make pellets will one day grow back and reabsorb the CO2 emitted from Drax’s chimneys. This means it qualifies as renewable energy – attracting subsidies for Drax that currently run to about £350 million a year.
Brown admitted that without the subsidies, Drax’s business would collapse.