Business, Energy and Industrial Strategy Committee
Oral evidence: Decarbonisation of the UK power sector, HC 283
Tuesday 22 November 2022
Ordered by the House of Commons to be published on 22 November 2022.
Members present: Darren Jones (Chair); Bim Afolami; Tonia Antoniazzi; Alan Brown; Ruth Edwards; Mark Jenkinson; Andy McDonald; Charlotte Nichols; Mark Pawsey; and Alexander Stafford.
Questions 137 to 195
Witnesses
II: Will Gardiner, Chief Executive Officer, Drax Group; Dr David Quiggin, Senior Research Fellow, Chatham House; Dr Nina Skorupska CBE, Chief Executive, Association for Renewable Energy and Clean Technology; Sandy Hore-Ruthven, Chief Executive Officer, Severn Wye.
Examination of witnesses
Witnesses: Will Gardiner, Dr Daniel Quiggin, Dr Nina Skorupska, and Sandy Hore-Ruthven.
Q137 Chair: We are going to now move to panel 2. We will be welcoming to the top table Dr Daniel Quiggin, who is a senior research fellow at Chatham House; Dr Nina Skorupska, who is the chief executive of the Association for Renewable Energy and Clean Technology; Sandy Hore-Ruthven, who is the chief executive officer for Severn Wye Energy Agency; and Will Gardiner, who is the CEO of Drax.
Thank you, all four of you, for coming. This is a panel where we are looking at biomass. To start us off, I would quite like it if those of you with particular companies could explain what you do. Then I will ask the other representatives to expand on what other people do, just so we know what we are talking about, because it is quite a broad term. Will Gardiner from Drax, would you explain what you do?
Will Gardiner: My name is Will Gardiner. I am the CEO of Drax. Our purpose is to enable a zero-carbon, lower-cost energy future. We currently provide about 12% of the UK’s renewable energy output, which is about 7% of the overall power mix. The way we have done that is that the Drax Power Station is a six-unit, 4-gigawatt power station in Yorkshire.
Over the course of 2005 to 2015, we converted four of the generating units from coal to biomass and built all the infrastructure around that to enable that to happen. That is where we get our renewable energy output.
Q138 Chair: Could you explain the biomass bit for me? Do you use a particular type?
Will Gardiner: We use primarily woody biomass. We use a small amount of agricultural residues, maybe 5%. We get most of our woody biomass from North America, about 60% of it from the south-east of the US, about 20% from Canada. I am sure we can talk more about why that makes sense. Fundamentally, we like to get our biomass from places that are well-regulated and have healthy forest products industries. Frankly, we would love to get more from the UK, but the forest products industry here is not so large to enable that.
When we talk about BECCS, we have a project or a plan to convert or add carbon capture and storage to two of those biomass generating units. That would enable us to remove 8 million tonnes of CO2 permanently from the atmosphere every year and store it under the North Sea as part of the East Coast Cluster, which you have all been talking about on the prior panel.
If we think about the future of biomass, the CCS piece is quite important, because it is a unique and, potentially, low-cost and efficient way for the UK to move to adding removals to its mix. That is part of the overall climate plans that the country has.
Q139 Chair: Sandy, from the Severn Wye Energy Agency perspective, what do you do and what materials do you use?
Sandy Hore-Ruthven: We are a charity in fact, rather than a company, so we tackle fuel poverty and climate change. We have a sustainable technology team and, relevant to this meeting, we are building a pyrolysis plant in Warrington, just metres away from Charlotte’s constituency, that should be up and running next year.
Pyrolysis is a technology that can use almost any kind of organic waste, from dried sewage sludge through to woodchip, verge cuttings and that kind of thing. Fundamentally, it is a process that burns the feedstock in a very low-oxygen environment. That has a triple benefit. First, it produces very high-grade heat, which can be put into a heat network or can be used to generate electricity. Secondly, it captures the carbon. Rather than the carbon that would have been released back into the atmosphere by the degradation of that organic waste, it captures it and turns into an inert product called biochar, which is also a product in itself that can be used in animal feedstock and to improve soil nutrient retention. It can even be used in the concrete industry.
We are building a mid-sized—so half a tonne of biomass per hour—system up in Warrington that should be open by the middle of next year. We are going to experiment with it, to see what sort of power we can produce. We think we will be producing about 11 gigawatts over a year of heat energy and capturing about 2,500 tonnes of carbon.
Q140 Chair: Nina Skorupska, we have heard about wood and sludge. Is there anything else we need to be thinking about today?
Dr Skorupska: There are lots of forms of different biogenic material that make up biomass. We are hearing about the woody nature, but we also have the biogenic in waste and other aspects from farming enterprises, such as anaerobic digestion, so taking a bacteria that breaks down farm waste or energy crops to create biomethane and other various forms of gas. Also, there is the general waste and food waste collection, which can also be used in anaerobic digestion and other forms of advanced conversion technologies.
As the REA, we represent all the forms of renewable energy, so we are not here to just pitch one particular form of renewables. We look at progressing the sector to decarbonise power, heat and transport, paying due regard to circular bioresources as well.
Q141 Chair: Daniel Quiggin, the Climate Change Committee said that the Government need to rapidly phase out all bioenergy if there is not a form of carbon capture on the end of it. Why do you think they said that?
Dr Quiggin: I will introduce myself. I am Daniel Quiggin, Chatham House senior research fellow, working on a variety of things, including climate impacts.
The main reason why they have said that is that lots of the supply chains embody quite high supply chain emissions. In many of the decarbonisation pathways, in order to stay below 1.5 or even 2 degrees, there is a high reliance on negative emissions. Negative emissions are really only possible in a number of different forms.
Those main ones, in terms of engineered removals, are DAC, so direct air capture, and BECCS, so bioenergy with carbon capture and storage. Without the application of CCS as applied to the burning of biomass, you are not going to get your negative emissions. Due to the high reliance of those decarbonisation pathways on negative emissions, CCS as applied to the burning of biomass is incredibly important.
I am sat here today as one of those people who are concerned about the externalities and trade-offs of BECCS, which are numerous. I recognise that, when we are looking into the future, we are always gazing into a crystal ball. My main concern is really around the scale at which we are relying, globally, not just within the UK, on BECCS particularly. The IPCC, for instance, has a median estimate of needing 2.75 gigatonnes of sequestration by 2050 through BECCS.
Based on current woody biomass supply chains, that is going to require a scale-up of around 30 times our current global supply of woody biomass wood pellets. If it was purely based on waste and residues, it would probably be around about 70 times scale-up.
When you put those sorts of scale-up pressures on supply chains, any suboptimal functioning of them presently is only going to be exacerbated and get worse. I am sure that, as we go through the inquiry, we will talk about some of those concerns.
Q142 Mark Pawsey: I want to follow on that point that Daniel is making. How can people judge which feedstock is the most and least sustainable? I wonder whether, when you are talking to us about that, you can talk to us about the carbon debt and carbon payback periods, and which materials prove best under both of those classifications.
Dr Quiggin: If you look at Ofgem data, Ofgem requires that all producers of biomass report their supply chain emissions to Ofgem and you can look at the trends in that Ofgem data. If you compare 2016-17 to, I think—do not quote me on this—2019-20, each supply chain is decarbonising. The supply chain emissions of every single biomass feedstock are decarbonising. The problem is that we are moving to more and more high-emission feedstocks as the overall composition of the portfolio of all feedstocks.
The highest-emission feedstocks tend to be woody biomass, down to the lowest-emission feedstocks being waste and residues. If you derived that feedstock from waste, residue and agricultural residue—Will mentioned that earlier as composing about 5% of their supply chain—because it is a waste or residue, the emissions associated with it are a lot lower than would otherwise be the case.
The point about carbon debt is that it takes a very long time for a tree to grow—it could take, hypothetically, 100 years for that tree to grow. Many of the trees that Drax and others burn are not growing for 100 years. There are a much shorter rotation than that. Whatever that period is, it is going to take that long to pay back the carbon. If you take a tree, combust it and sequester that CO2 underground, it can only be a negative emission at the point that that CO2 has been replaced by new tree growth of an equivalent size.
If it takes 20 years to regrow that tree, that negative emission should not be counted as a negative emission until those 20 years have passed. If, unfortunately, we are extending out beyond 27 years, which is the length of time we have until we get to 2050, given that we want to be carbon neutral and net zero by 2050, any negative emission that is created now where a tree takes more than 27 years to grow should not be counting toward our 2050 net-zero target.
Q143 Mark Pawsey: That sounds like a good opportunity to turn to Will. I have plenty of constituents who will ask me, “How does it make sense taking these wood pellets that are shipped all the way across the Atlantic Ocean and then burnt? How on earth can that be helping achieve our climate objectives?”
Will Gardiner: If we start from the fundamental premise of where we came from, we swapped out of using coal to using biomass. If I think about how we have ended up in this climate situation that we are in, the primary reason for that is that we bought a lot of the CO2 out of the rocks and put it into the atmosphere.
Moving from fossil CO2 to biogenic CO2 is a very positive move. In the UK, when we were using coal, we were emitting about 20 million tonnes. Now, effectively, we are emitting less than 3 tonnes. The first point I would say is that it has enabled a swap from fossil carbon to biogenic carbon.
On the issue of supply chains, as Daniel rightly pointed out, the emissions are there. That is something we absolutely need to deal with and we are reducing them over time. If you think about the emissions that come from creating a megawatt hour of electricity from coal, it is about a tonne of CO2. The emissions in our supply chain are about 100 kilograms. It is a real number and something we are working on, but it has come down from about 140 kilograms to 100 kilograms over the time period we have been talking about. We are working on bringing that down further, but it is a smaller number than people might think.
Q144 Mark Pawsey: All your comparisons are comparing with burning fossil coal. It is not comparing with other forms of sustainable energy generation. How do you stand against other renewables?
Will Gardiner: The major benefit of biomass relative to wind and sun is that it is a dispatchable product. Effectively, we can run the power station when we choose, whereas, on wind and solar, that fundamentally is not possible to do. That 11% of renewable power that we generate is power that is available in the peaks. When we think about where the energy security issues are currently in the UK, gas is the most readily available alternative and we can deliver that for significantly less cost and CO2 than gas in those peak periods.
Q145 Mark Pawsey: Daniel, you have heard what Will has had to say. I know that, in your report of 2019, you said that, if US-sourced wood pellets, which are responsible for 13 million to 16 million tonnes of CO2 were included, that would add between 22% and 27% to the emissions from UK electricity. Is it a plausible thing for us to continue burning these wood pellets?
Dr Quiggin: I think that you are actually referencing my colleague Duncan Brack’s report, but that is absolutely fine; I am fairly au fait with his report. This all comes down to the definition of carbon neutrality. To be fair to the biomass industry—I will start with “to be fair” and then I will move on to my concern—if we were to be counting the combustion emissions at point source, so in the case of Drax, into the overall carbon inventory, we would potentially be double counting. You have to chop down the trees, or another form of biomass, and produce that. There is another sector, called the land use sector, so that sector should be reporting those emissions, in terms of the biogenic CO2, to the UNFCCC. To then report it again at the point of combustion would be double counting.
However, that entire system is contingent on the country that is producing that biomass robustly and accurately just reporting those land use change emissions to the UNFCCC. We have no enforcement capacity over another country to robustly and accurately report those land use change emissions to the UNFCCC. The vast majority, in the case of Drax’s supply chain, comes from imports. We are reliant, therefore, for the claim of carbon neutrality, on the exporting country correctly reporting those emissions, which they do not always do.
Q146 Mark Pawsey: Will, to be fair to him, said that they went out of their way to secure their feedstock from a reputable country where we could rely on its reporting.
Dr Quiggin: I know Drax no longer sources from Russia, but it did up until very recently. Will may want to correct me on that; that is fine. But there are lots of countries that do not report accurately.
Q147 Mark Pawsey: Will, is everything coming from the US?
Will Gardiner: It is not everything, but we do not source from Russia. We have not sourced from Russia.
Q148 Mark Pawsey: Which other countries do you source from?
Will Gardiner: There is a little bit from the Baltics and a little from Portugal. At times, we have had something from southern Brazil, but it is primarily Canada and the US.
There is one other point that I wanted to make that I think is important. When done right, the biomass pellets that we use are fundamentally an integral part of the forest products industry. They come from by-products of the primary reason that those forests are being harvested, which is for saw logs and lumber. Effectively, about 40% of our business’s pellets come from sawmill residues. As for the question of carbon debt on a sawmill residue, that might be a year or two.
Q149 Mark Pawsey: A bit like Sandy’s material, it is something that would otherwise not be used.
Will Gardiner: It is might otherwise not be used; it might otherwise be burnt at roadside. That is a significant piece. We also use thinnings, for example. In the south-east of the US, when an owner of a plot of land plants for trees, he will plant more than he needs with the idea that, at the end of 10 years—and this was, say, a 30-year rotation—he will thin out the ones that are less healthy. Historically, those might have gone to the pulp market, but, as that has declined, it is an important outlet for that farmer. This is a key point. If he can get good economic value for those, it will incentivise that owner to continue to plant trees.
Q150 Mark Pawsey: I wonder if I might talk to Nina now and ask you about the Government’s legislative landscape here. Is the position clear enough for people to understand what is happening and the benefits that Will is claiming he is achieving?
Dr Skorupska: We are still waiting for the Government’s biomass strategy. The last such document was published back in 2012.
Q151 Mark Pawsey: There has been nothing from Government since 2012?
Dr Skorupska: No. The REA produced its own biomass strategy in 2019. We have given evidence to your good selves in the past of the important role of sustainable biomass in delivering and contributing towards net zero. We would urge Government to work with us to get this strategy out. It is supposed to be due this year.
Q152 Mark Pawsey: Do you have confidence it will be delivered this year?
Dr Skorupska: We have had an extraordinary three or four months. I hope it would be by the end of this year, but I suspect it will probably be 2023.
Q153 Mark Pawsey: Tell us why the past three or four months have been extraordinary from the biomass perspective.
Dr Skorupska: One of the areas in growing a renewable energy and clean technology sector is to have clarity on policy and regulation. All this has been stalled over the last three or four months. We are engaged across a number of areas to help the Government deliver net zero. You discussed REMA; you discussed hydrogen. There are all of those areas. Certain articles, Bills, are not going through, so everything has stalled.
Q154 Alexander Stafford: Will, according to Friends of the Earth, you import 7 million tonnes of wood pellets. How many ships do you use and what do you do to abate the emissions from shipping, which is notoriously one of the most damaging sectors? According to my calculations, you must be in the tens of bulk carriers, up to 70 bulk carriers each year, each emitting carbon. How much carbon do they emit and what do you do to offset that carbon?
Will Gardiner: That is a very good and important question. We have a very extensive supply chain. It is as many as three ships a week coming to the UK, so it is absolutely a big issue. We have done work with our shipping partners on things such as whether we can add wind power to that. How could we help to decarbonise that sector? That is absolutely something that we are committing and will commit to working on. It is a challenging sector, but absolutely something we need to work on.
Q155 Alexander Stafford: What are you actually doing now? Do you offset? What do you do for all those 150 ships?
Will Gardiner: We are not offsetting today. We are working on our supply chain as a whole, as I mentioned before. The shipping piece of that, if I take that 100 kilograms per megawatt hour number, is about maybe 40%, so a big piece of it, but it is also not the majority of it. Working on how we decarbonise our pellet plants is key. Working on how we decarbonise the electricity that we use in them is also key. We actually have a project that we are working on this year, how we develop an ultra-low-carbon pellet plant, for example. To your point, more work needs to be done on shipping and we are committed to working on that.
Sandy Hore-Ruthven: We are talking about huge global supply chains. For me, biomass works well in a much more decentralised grid. If we are talking about decarbonising the grid, it works much better where you are close to your feedstock and close to where you can distribute your product, in our case biochar.
There is a really good example in Stockholm, where they use the grass cuttings from their parks and that kind of thing. They put it through the pyrolysis plant and then the biochar is used as fertiliser back on to their trees and things locally. For me, biomass works well when it is in a localised grid where there is a local supply chain, rather than the very long global one that we are talking about here.
Dr Quiggin: On the international shipping, I am going to be quite fair on Drax and say that, in the overall supply chain emissions, for them international shipping is not a massive component. If you add all those things up, the carbon efficiency, if BECCS were to be implemented at Drax, would come out at about 76%.
I wanted to make a point on the waste and residues bit and reiterate what I have already said. Scaling up waste and residues of wood pellets would need to be 72-fold to meet international targets of that 2.75 gigatonnes. I know I have said it before, but this is really important. For BEIS specifically—to be transparent, I used to work for BEIS on EU exit, so I know this well—there was a push, and I believe there still is, to export BECCS around the world.
If the UK wants to be an exporter of BECCS, it has to be cognisant of those scale-up implications. It is the scale-up implications specifically in relation to carbon debt that are really important—more so, with all respect, than the international shipping component.
Q156 Andy McDonald: Mr Gardiner, is Drax the UK’s single largest emitter of carbon in the country?
Will Gardiner: There is no question but that CO2 still comes out of the power station. The accounting system is the one that the UK uses to determine its carbon emissions and it is based on the IPCC framework. Effectively, as Daniel mentioned earlier, those emissions are accounted for in the sector where the actual wood was originally harvested from.
Q157 Andy McDonald: Has that argument not been criticised?
Will Gardiner: The argument has been criticised, but I would also say that the IPCC is the world’s leading body of international scientists—thousands of them. For me, the fundamental position that Drax is in is that we operate within the framework that the UK Government set and that the IPCC has set as well.
Q158 Andy McDonald: It warned that the approach of not including these bioenergy emissions in the energy sector total should not be interpreted as a conclusion about the sustainability or carbon neutrality of bioenergy. That is what the IPCC said about that.
Will Gardiner: There is no question but that the sustainability of what we do depends upon a series of factors, including how the forests are managed. That is primarily the issue—that the forests where we source our biomass are managed in a sustainable way.
It is important to recognise that the UK has, equal with Europe, the world’s most stringent sustainability standards, which we are obligated to comply with, to show that we do not source material from areas where there is deforestation and, equally, that there is due consideration for biodiversity et cetera. Making sure that those things happen, which we have to certify and are independently audited on, is critical to the sustainability story, as you say.
Dr Quiggin: The point you made in relation to the IPCC and carbon neutrality is really important. I wanted to read you another statement from the IPCC’s AR6 report. This is in relation to BECCS: it “may not prove as effective as expected, and its large-scale deployment may result in ecological and social impacts, suggesting it may not be a viable carbon removal strategy in the next 10 to 20 years”.
Q159 Andy McDonald: The RSPB and the OECD complain that Drax is misleading consumers by claiming its woody biomass is carbon neutral. Can you explain to me how the emissions from biomass plants compare to those from the very coal plants they replace, just burning coal?
Will Gardiner: The emissions actually coming out of the stack are broadly quite similar, but the key point again is that the terminology used there is consistent with international accounting frameworks and descriptions. It is the system we are operating within, as opposed to something we have created ourselves.
Dr Quiggin: It comes back to this whole thing about whether you count them in the land use sector or the energy sector. It is a very thorny, difficult issue. I have sympathy with that OECD complaint that RSPB has put forward. From the consumer’s perspective, when they are told, “This is carbon neutral”, a consumer takes that at face value and says, “It is carbon neutral then”, but that is not the case. As you are pointing out, the stack emissions are fairly similar to coal’s.
Q160 Andy McDonald: Can I challenge you on the wood that is being used? That “Panorama” documentary revealed that 89% of the wood could be used for other purposes and only 11% of the logs delivered to Drax plants were classified as the lowest quality. What issue does this raise for the sustainability of this industry?
Dr Quiggin: My understanding is that grade 6 and grade Z logs—I am just quoting from “Panorama”—as you say, constituted 11% of the wood going into that specific mill. The problem with that is that, if that wood can be used for another product, like building timber of furniture, you are locking it away without having to combust it and rely on CCS in order to capture and store it. Therefore, it should be used for that product. We know that it is a much lower-cost carbon sequestration method than building expensive CCS technology on top of a biomass power station.
If we continue to see that sort of a trend, as we scale up by 30 to 70 times the amount of woody biomass that we need for wood pellets for BECCS, that 11% trend is going to get worse and worse over time, unless the Government put very specific and well-enforced regulations and standards around it. Those are, evidently, unenforceable when we rely on international trade in order to supply those wood pellets. I will refer you back to David Joffe’s comments from the CCC when he was in front of the EAC a year or so ago. He said that relying on imported biomass should not be continued, precisely for this unenforceability reason.
Q161 Andy McDonald: Specifically, what do you do to make sure that the wood you use is low grade and residual?
Will Gardiner: The specific point made by “Panorama” is not representative of the overall situation of Drax. We publish the information about what we source in Canada. It is 80% sawmill residuals, 20% low‑grade round wood. It is very important to put it in context. The “Panorama” documentary cited some specific cases that I would say, in most cases, are not representative of the whole. There is much more I could say about that.
To answer the question more specifically, the way the biomass pellet supply chain works is that the saw millers will harvest. They will then choose the lumber that they want and use the grades that are useful for timber, sawlogs et cetera. That is their choice, not ours. The value of those sawlogs will be five times what we might be able to pay for the wood that we use. The next player in line might be a pulp mill and it might pay, let us say, 40% of the value for whatever might remain. Then what remains would come to us.
By definition, economically, we are using things that other people do not want. There are cases, if there is no pulp mill there and the sawmill has done the harvest, that we might take things that otherwise would have gone to a pulp mill.
Q162 Andy McDonald: Does that describe the low-grade round wood?
Will Gardiner: Yes.
Q163 Andy McDonald: Is there anything else that would fall under there that could be used somewhere else for another purpose?
Will Gardiner: It could be diseased or misshapen. The key point for me is that, if someone else wanted to use it, they would have done so.
Q164 Chair: Can I check a couple of points? Ember, which was with us on panel 1, submitted evidence where it has looked at the full lifecycle emissions for biomass using the EU’s emissions trading scheme data. It has noted that, in the EU ETS, combustion is considered carbon neutral at the point of combustion. Even on that basis, it has listed Drax as being the fourth largest carbon dioxide emitter in the EU. Do you agree with that?
Will Gardiner: I have not seen that data, but I absolutely do not agree with that. Our scope 1, 2 and 3 emissions are roughly 3 million tonnes. We have actually decarbonised our business more quickly than any other power company in Europe.
Q165 Chair: Yes, but from coal. That is not difficult, right? You need to be going further. You cannot just say, “We are better than coal. That is good enough”.
Will Gardiner: I would love to have a discussion around BECCS, but absolutely, yes. It is very important to recognise that the achievement that the UK has made on coming off coal is very impressive, but also quite unusual.
Q166 Chair: I understand that. Basically, your response to this suggestion that Drax is the fourth largest carbon emitter in Europe is, I think, that you do not calculate the full lifecycle of your carbon emissions. You just look at what comes into your power plant and what you burn. The fact that someone, whether it is a company you own or someone else, is cutting down trees is irrespective. Is that right?
Will Gardiner: There are two things I would say about that. One is that the numbers I have quoted you are based on IPCC and accounting methodologies, so it is not a function of what we were to decide or otherwise.
The other thing is that how one accounts for what is happening in forest relative to biomass is a very complicated and open subject. The forests where we operate in the south-east of the US have 50% more carbon stock in them today than they had in the 1950s. That is an increase, not a decrease. If you take the full lifecycle, you can make the opposite argument to what Ember is making.
Q167 Chair: Let us have a look at your own accounts on that basis, if we cannot agree with the whole calculation. In your own company accounts for the year 2020, you reported that Drax emitted 13.3 megatonnes of carbon dioxide. You presumably agree with that if it is in your own accounts.
Will Gardiner: I do, yes.
Q168 Chair: The second largest emitter in the UK was a gas power station owned by RWE, which was 4.3 megatonnes of carbon dioxide. You are by far the biggest emitter of carbon dioxide in the UK.
Will Gardiner: The key point for me—hopefully, this will be helpful—is the question of whether CO2 is biogenic or fossil. That is quite important. As I mentioned in my introduction, if one thinks about how we ended up in the situation we are in now in the first place, it is because the world has pulled up trillions of tonnes of CO2 out of the rock.
Q169 Chair: I understand the argument. I am just asking about the carbon emissions. To be fair, I understand the difference between coal and wood. You can grow wood; you cannot grow coal. I understand that. I do not need that point repeated. I am just looking at pure carbon dioxide emissions. You are still the biggest.
Will Gardiner: All I would say is that we publish our data, in a spirit of open transparency, and that is what comes out of the power station. The way it is categorised and accounted for by the UK Government and others is as I have described.
Q170 Chair: Sure, but you are still the biggest. Are you disputing that calculation in your own annual accounts—13 megatonnes?
Will Gardiner: I am disputing your characterisation of our business.
Q171 Chair: I do not have time to go round the houses, but in your accounts you have put 13 megatonnes of carbon dioxide.
Will Gardiner: Yes, that number is in the accounts.
Q172 Chair: If I compare that to other power stations in the UK, you are the biggest. Do you recognise that point?
Will Gardiner: We have printed what is in the accounts and that is very clear. I recognise that it is a different type of emission and that needs to be recognised as important.
Q173 Chair: How much did you get from the Government in terms of subsidy in the last year?
Will Gardiner: It was in the order of £800 million.
Q174 Chair: From 2012 projected up to 2027, it has been estimated that you will receive £11 billion in subsidies for being renewable, even though you are the largest carbon emitter in the country. That is a problem, is it not?
Will Gardiner: We have operated within the UK renewable obligation system as well as under a CfD regime as part of the UK’s desire to decarbonise its economy. As we have been through in the discussions so far, we have been very successful at doing that.
We have reduced the emissions from 20 million tonnes or more to around 3 million. That is a significant achievement for the UK and we have contributed to the decarbonisation, effectively using the system that the Government have designed.
Q175 Chair: Until the Government change the design of the system, you are happy to keep receiving the money.
Will Gardiner: We have a contract with the Government to do that. It is a helpful thing. As I mentioned before, we produce 11% of the UK’s renewable power. We are a critical component when the wind is not blowing and the sun is not shining. We have some extremely exciting plans to invest further in order to take CO2 permanently out of the environment in the UK using carbon capture and storage.
Q176 Chair: Am I missing the point here? It seems odd to me that the largest carbon emitter in the country receives £11 billion of subsidy for renewable energy.
Dr Quiggin: No, you are not missing the point. It is utterly bizarre. I wanted to go back to this reoccurring comparison between wood and coal, and the overused phrase “biogenic carbon”.
Let us be clear: coal is derived from organisms. Organisms exist, millennia ago. They fall to the bottom of the sea, get compressed over time and through heat and pressure end up turning into coal. You could say the same thing—that, if we burn coal, if enough time passes and we form new coal, it could be carbon neutral, because enough millennia have passed for coal to replace.
That is a carbon payback period, or a carbon debt, in the same way that wood is. It is just that wood is on a shorter timescale. The important thing is the timescale and we have set a 2050 target. If that carbon payback period extends out over 2050, we have a problem.
The point here is that this definition of carbon neutrality around the reporting of those land use change emissions in the US, or wherever it is, is not flawed. It just has a really rather large loophole in it that, without saying names, some companies use. That is where your confusion is coming from and I have absolute sympathy with your confusion.
Q177 Chair: I want to move on to carbon capture storage. Nina Skorupska, we talked about carbon capture and storage quite a lot in the first panel. My understanding of it is that you have a power station, you have a stack, you put some kit in the stack and it captures the carbon when you are burning something. Is that the same thing for bioenergy carbon capture storage?
Dr Skorupska: I will gladly answer that question in a moment, but I must admit that I have been sat here really twitching around the emphasis here. We have 6,700 bioenergy plants operating in the UK, all working to the tightest sustainability criteria, all recognising that use of biomass is displacing the use of fossil fuel. I find it really incredible to compare it to the carbon that has been trapped in fossil fuels.
Previously, the Committee has argued that we have to wean ourselves off gas as well. Allowing this debate on burning biomass in a sustainable way is really detrimental to the climate change efforts that all our members are playing to.
Q178 Chair: It is the “sustainable way” bit that is the important part of the debate.
Dr Skorupska: The sustainability criteria is really important, and all our members work really hard to be at the leading edge of that. They work with friendly Governments such as Canada, the US and the eastern Baltics. Of course it can be done better. Of course we should have improved tracks and traces, but we signed a Glasgow agreement at COP 26, hosted by this Government, to ensure that sustainable forestry is at the leading edge and led by the UK. I do not know what more we need to say.
The carbon cycle is a real, living, breathing carbon cycle. Trees are growing continuously and less than 0.1% of the Canadian forestry comes to be used, if we want to focus on the “Panorama” programme, at Drax. It is about making sure that the UK Government—and I will work closely with the Departments—and all our members, all of them that play their part in it, deliver a sustainable solution.
Q179 Chair: That is understood. For clarity, is Drax a member of your trade body?
Dr Skorupska: Yes, of course.
Q180 Chair: Okay, and could you answer the question on carbon capture and storage please?
Dr Skorupska: Yes, it is the same. It is about capturing the exhaust flue gases and extracting the CO2 emissions out of it by chemical means, pressure means or a membrane system. There are multiple opportunities to collect it. It is about extracting it, forming it into CO2, either liquefied or in a gaseous state, and storing it permanently or utilising it in other beneficial processes.
Q181 Chair: Sandy, just to check, your pyrolysis process and your biochar is also a form of carbon capture and storage, but it is different to putting something in the stack to catch the carbon.
Sandy Hore-Ruthven: Yes. You do not have to put anything in the stack. Because it burns in a low-oxygen environment, it captures the carbon as it burns and produces this stuff, biochar, that looks a bit like charcoal, but is inert, so you can then use it in various ways. It captures that carbon in perpetuity.
Q182 Chair: You do not need all the stuff in the Energy Bill that the previous panel told us about, in terms of the pipes, the logistics, the undersea storage—none of that. You are good to go.
Sandy Hore-Ruthven: No, none of that. It creates a product that is then usable. There is a market for it. It is used in horticulture and agriculture. It can even be used to lower the carbon footprint of the concrete industry.
Q183 Bim Afolami: Dr Quiggin, the Climate Change Committee assumes that the BECCS facilities capture 90% to 95% of the carbon dioxide emitted. How effective is BECCS currently, today, at capturing and storing carbon emissions? Contained within that answer, presumably there is a trade-off between the amount of power generated and the percentage of carbon emissions. You could game the stats, so to speak, if you produced only a small amount of power, perhaps. Could you give the Committee a sense as to how effective BECCS is in those terms?
Dr Quiggin: It is really important to say that there are a lot of commercial interests in the development of CCS and particularly CCS in relation to BECCS. There are a lot of R&D trials being done that have not published into the public domain. It is quite difficult, sat behind the wrong side of the paywall, as it were, to truly understand how effective it is. Theoretically, it is possible to capture 90% or 95% of the emissions.
The issues becomes, as thermodynamics tells us, that separating a diffuse gas from a diffuse gas requires lots of energy. Essentially, in post-combustion capture, in the different types of CCS, CCS uses a solvent to bind the CO2 molecules to that solvent. Then you have to apply heat to the solvent to release the CO2 such that you compress it, pipe it, transport it, put it underground.
The question becomes how much heat you need to put in to that solvent to release that CO2 such that you can capture it and where that heat comes from. You are diverting heat away from the biomass that you have burnt, which would otherwise turn water into steam to generate your electricity. Rather, you are diverting some of that heat to your CCS process. Exactly how much gets diverted is still in the R&D phase. We do not know what that energy penalty will be.
I can refer you back to the comments or the evidence that I gave at the EAC last year as to what I thought that energy penalty would be. At the time I calculated it, based on a report produced by Baringa, commissioned by Drax, to be around 15 percentage points. If you do the maths, basically Drax’s power efficiency would fall from around about 36% down to 21%. To be fair on Drax, it submitted written evidence to the EAC that contradicted what I was saying. It was saying that it was going to fall from around about 40% down to around about 29%. There is some dispute there. It is saying an 11% percentage point fall in power production efficiency. I am saying around about 15%.
Let us not worry about splitting hairs there. Lower power revenues will mean a higher cost to the consumer, the taxpayer or an industry participant that wants to buy that negative emission offset. The question is whether these carbon emission offsets, the negative emissions, are going to be really costly. If you have this big power production fall, that CO2 being sequestered into the ground that Drax is going to have to charge someone for is going to become more expensive.
Ember did really great work trying to work out what sort of subsidy Drax may require. If I have my memory correct, it is around £31.7 billion over 25 years for BECCS. My understanding of Ember’s calculation is that it does not include a big energy penalty—a big reduction in power efficiency. The bigger that reduction in power efficiency, the higher that £31.7 billion is going to go.
I have grave concerns as to how much this technology is going to cost us when—let us be clear about it—there are other means of doing this. One alternative to BECCS, which is incredibly important for us to consider, is lower energy consumption. In the West in particular, we consume so much. We consume so much energy. At the time when energy prices are rising and rising, surely we need to consider more reducing our demand for energy while also decarbonising supply.
That could go a long way to meeting that emissions gap. It would not rely on expensive supply side technologies that come with all the trade-offs and risks, such as increased food prices and so on.
I will read you one statement from the IPCC. It says, “Decent living standards…are achievable at lower energy use than previously thought (high confidence). Mitigation strategies that focus on lower demands for energy and land-based resources exhibit reduced trade-offs and negative consequences for sustainable development relative to pathways…with high consumption and emissions that are ultimately compensated by large quantities of BECCS”.
Q184 Bim Afolami: Mr Gardiner, how effective is BECCS?
Will Gardiner: The best way to respond to Daniel’s points is to focus on how we are going to get to net zero. Currently, the world has a carbon budget remaining to maintain the planet within 1.5 degrees of about 400 billion tonnes. That is basically 10 years, given where we are going. The world is increasingly recognising that carbon removal technology is critical. The two scale-possible carbon removal technologies we have—and I am not dismissing the biochar space, but it is smaller, as my colleague has pointed out—are direct air capture, which is extremely expensive, and BECCS, which is significantly less.
You asked the question of how confident we are. This also plays importantly into how the business models will work. The expectation we have is that, if we end up with a carbon plus power CfD from the Government, which is the business model that is on the table, we will effectively make the investment ourselves in doing this on the order of a billion per unit. We will, effectively, get some compensation with that, if and when we deliver at that 95% efficiency level and if and when we deliver the megawatt hours of power that we said that we need to deliver.
The point is that the risk is on the company, as opposed to the taxpayer or consumer. They will not pay if it does not happen. If you take where the price of power is today—I will not give you the precise numbers because we are in the middle of commercial discussions; we submitted our proposal to be a BECCS track 1 project—but we can deliver a megawatt hour of power. Daniel likes to use the words “energy penalty”. It takes power to deliver carbon removal, but, at the end of the day, I would not call that a penalty. That is the input cost of delivering something that will have very significant value.
Dr Quiggin: Could I be clear? It is not what I call it. It is what academics call it. It is just called the energy penalty.
Will Gardiner: The key point for me is that the efficiency implies that it is less efficient, obviously, when actually the fact is that the power is being used for another purpose. It is being used to remove the CO2 permanently from the atmosphere and store it underground.
To finish my point, we estimate that the cost of doing that is significantly lower than the cost of just generating 1 megawatt hour of power today. Effectively, you get the power, which is also renewable, and the carbon removal as well.
Q185 Bim Afolami: My last point is to Dr Quiggin. Your point was very eloquently and powerfully made. I would gently say that, when you come to energy consumption, when you think of a global basis, you are not going to be worried about the West. You are going to be worried about developing countries where their demand is going up at a rate of knots, where they have very high populations.
I am not talking about China, in fact. China is much further along the curve on this. I am talking about sub-Saharan Africa, India and other countries. That is almost a bigger issue than worrying about the West, where we are already at a very high level, comparatively. That is what I would suggest.
Dr Quiggin: I completely agree. It is an incredibly important point that you are making. That is even more reason why we have to go further and faster now, which needs to include demand reduction, and not rely on future technologies that may or may not work as effectively. Whenever we look into the future, it is always crystal ball gazing. I can make a prediction about the future; Drax can make a prediction about the future; some academic can make a prediction about the future. It is always, to a degree, crystal ball gazing.
In our control right now, we have the ability to deploy solar, deploy wind and manage our demand. If we are worried about rising consumption and therefore emissions in developing countries, which should be allowed to industrialise and have a higher standard of living, we need to be even more cognisant and focus even more on our consumption and emissions now. That is why demand in the West needs to be on the table now.
It is not a dichotomy. It is not like we do demand reduction now and do not do BECCS in the future. We can do more demand reduction now, more solar, more wind and look at BECCS, to see how it develops. Baking in overreliance is risky and, in my view, quite insane actually. There is one study that shows that an overreliance on BECCS and other GGRs—let us be fair—could lead to an additional temperature rise of 1.4 degrees just on its own through delayed and deterred efforts now.
Sandy Hore-Ruthven: I am well aware that we are talking about decarbonising the grid and the role that therefore biomass can play in that, bearing in mind that the tailings and the fuel or feedstock that is used, if it is not used, will sit and rot, and release carbon into the atmosphere anyway. That is worth bearing in mind.
For me, biomass should play a role in the decarbonisation of the grid. We should not get distracted by a single issue, which is currently Drax. It works very well in a local and decentralised grid. It works where it is close to its feedstock, as the lady was saying. There are many biomass energy generators across the country. It is worth bearing in mind. I would be fearful, through being distracted by the Drax issue, that we dismiss biomass as a means for decarbonising the grid and playing its part in that.
Will Gardiner: It is very important that the Committee does not get the impression that BECCS is in some way a technology that is out there and not mainstream. If you take the US, the UK, the state of California, the EU, they all have targets for BECCS within their plans. It is clearly something in the future, but a lot of places think it is important.
Q186 Alan Brown: To continue with Will Gardiner, earlier on you confirmed that you do not source wood from Russia, but your 2021 report shows you imported wood from Brazil and Belarus, two countries that your own director of sustainability says have poor forest governance regimes. Why were you importing from Brazil and Belarus?
Will Gardiner: We have a small supplier in the south of Brazil, and we manage that carefully and to the same sustainability criteria as we do with everybody else. In Belarus, we do not source from a supplier there, but some Belarus fibre ends up in our supply chain in mills that are across the border in the Baltics. We have removed that from our supply chain.
Q187 Alan Brown: You are continuing with Brazil even though you think it has poor forest governance.
Will Gardiner: As long as we are comfortable about what is happening, which we must be, and that what is being managed there is done properly, that is what we do. We are very conscious of the issues in Brazil and we manage that quite carefully.
Q188 Alan Brown: Did Drax have to settle claims on air pollution in Louisiana and a fine for similar reasons in Mississippi?
Will Gardiner: That is correct. To give you the context of what happened there, when we first built our pellet plants in the mid-teens, there was scope for a certain level of VOC within our emissions controls, which we thought would be sufficient. As we built and scaled those plants up and started to run them, we discovered that they were not sufficient. Importantly, this is a function of biomass being a new industry. To be honest, we got that wrong. We self-reported that to those states. As a result, we have now reinvested tens of millions to fix that problem, as you have noted.
Q189 Alan Brown: How much will your BECCS facility cost the UK taxpayer or UK billpayer?
Will Gardiner: Given the way the business model is organised and what we want to do, we will make the investment ourselves as a company, so we will actually build it and run it. The intention of the business model is to have a CfD—effectively, a guaranteed price for the power and the carbon removal. What that would be is to be determined. As I mentioned before, given where power prices are today, it is significantly lower cost than where power is today. Obviously we do not know how long that will continue.
The other important point I would like to make is that we have had some work done by Baringa, which says that, if you use a BECCS programme, or BECCS at Drax, it will be £26 billion less expensive for the UK economy to get to net zero by 2050, relative to other ways of decarbonising.
Q190 Alan Brown: In terms of actual cost, Ember, which was here earlier, has estimated £32 billion in subsidies over the lifetime. Is that the right ballpark?
Will Gardiner: I do not recognise that number.
Q191 Alan Brown: What would your estimate be on the revenue stream over the lifetime for BECCS?
Will Gardiner: As I just said to you now, if the price of energy is where it is today, effectively we would be paying the Government, not the reverse.
Q192 Alan Brown: You would be paying Government money. How much do you think?
Will Gardiner: It depends on where the price of power is over time. It also depends on, ultimately, where our costs are. It needs to be worked through. The important thing for me is that, relative to the price of energy, relative to where gas prices are today, you have renewable power and carbon removal at quite an efficient price.
Q193 Alan Brown: Dr Daniel Quiggin, do you think that sounds realistic that, if gas prices remain high and dominate the market, we are going to be in a position where Drax is actually paying money to the Government, rather than a subsidy?
Dr Quiggin: That is a very difficult but important question, which I cannot answer. However, the one take-home from that statement for me is that energy prices are high now. The fuel poor and the vulnerable are suffering. They are unable to heat their homes. They are unable to afford power. If Drax is relying on such a high power price that it is pushing people further into poverty in order to make BECCS work, that does not seem right to me.
Going back to the reference you used in relation to the £32 billion, I think Ember was estimating a strike price of around about £181 per megawatt hour. I have not done that math before. The thing that concerns me in all this is that energy penalty bit again. The higher your capture rate, the more expensive your power is going to be. It is probably going to be more expensive than proven low-cost technology, such as wind and solar. It is going to be expensive.
Q194 Alan Brown: Mr Gardiner, do you think that strike rate that was quoted there is the right kind of ballpark?
Will Gardiner: We are working through the numbers. We have submitted a proposal to BEIS. I am hesitant to comment on that. When that comes to light, I am happy to share that with the Committee.
The other thing that it is important to point out is that it is not appropriate to compare what we are doing to wind and solar, because we are a carbon negative technology. It is a carbon removal. We are generating power, but also removing CO2. The proper comparison for us is with a direct air capture facility, which uses a lot of power to permanently sequester CO2. The prices of that are $500 or $600 a tonne, as observable today, which is significantly higher than what we are talking about for BECCS.
Q195 Alan Brown: When do you think you will be able to share the approximate strike rate that you are negotiating with the Government?
Will Gardiner: To be honest, we are not in that phase of the process yet. I am very pleased that the Government have moved forward with the power BECCS programme. They are planning to determine the companies that will be track 1 projects by the end of the year and then we will go into that negotiating phase.
Dr Quiggin: I think that the last UK Government estimation by BEIS in 2021 was £179 per megawatt hour, so it is £2 cheaper than Ember’s estimation.
Chair: We could clearly go on much longer and there is more detail that we are going to need to try to get into, but I really must call the sitting to an end. If there is anything that you have not been able to contribute today that you want to, specifically what you might like to see in the biomass strategy, please can you write to me afterwards so that we have that informal evidence? Thank you, all of you, for your contributions. We will no doubt speak to you again soon.