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Drax faces formal investigation over wood pellets burnt for power

The UK’s vitality regulator has launched a proper investigation into energy firm Drax over whether or not the wooden pellets burnt to generate electrical energy in its plant breached sustainability guidelines.

Ofgem final yr started analyzing whether or not Drax had complied with the UK’s biomass sustainability guidelines, and escalated the probe into an investigation introduced on Wednesday. Shares in Drax fell about 5 per cent by noon.

“We’re investigating whether or not Drax Energy Restricted is in breach of annual profiling reporting necessities regarding the renewables obligations scheme and different associated issues,” the regulator stated.

The probe started after a BBC documentary raised questions on whether or not the wooden that Drax had procured from Canada was sustainably sourced.

Opinion is split amongst scientists over whether or not burning woody biomass for vitality is an environmentally sustainable and low-emissions various to fossil fuels. Advocates say the carbon dioxide emitted from burning wooden is offset by that absorbed by the timber as they develop.

Ofgem seeks to keep away from launching formal investigations, however can escalate audits and different regulatory exercise if no decision to a difficulty has been discovered and it’s involved about potential wrongdoing.

Drax stated the opening of an investigation “doesn’t suggest any discovering of non-compliance” and stated it could “co-operate absolutely all through this course of”.

It additionally stated it had appointed an unnamed third occasion to confirm the accuracy of its biomass sustainability knowledge final yr, however declined to share the findings. “Drax is assured within the compliance of its biomass,” it stated.

Drax has maintained that the wooden it makes use of is sustainable, and says it solely takes residual wooden from different industries and doesn’t harvest forests itself.

As a part of its preliminary inquiry, Ofgem commissioned a 3rd occasion, US-based consulting group Black and Veatch, to audit Drax’s woody biomass, which it notified the ability firm about in February. B&V was additionally chosen by Drax in 2021 to assist the corporate with analysis, engineering and technical help over a three-year interval.

Beneath the UK guidelines, not less than 70 per cent of an influence generator’s woody biomass consignment have to be categorized as sustainable. Compliance is demonstrated by way of trade certification schemes such because the Sustainable Biomass Program, or by means of the gathering of proof that demonstrates the principles have been met.

Will Gardiner, Drax chief government, was a board member of the SBP till this yr. Kyla Cheynet, Drax’s director of sustainability for its US operations, is listed as sitting on the SBP’s technical committee, whereas David McCallum has served as each the SBP’s and Drax’s firm secretary.

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