Drax Loses Major Subsidy Battle in the UK

On August 7th, the UK Court of Appeal ruled in favor of the Department of Energy and Climate Change (DECC) in its decision to deny Drax major subsidies for the conversion of one of its coal burning units to biomass at its power station in North Yorkshire. Drax officials have stated that they will not appeal the decision.

This decision could have major implications for future investment in biomass conversion in the UK, and consequently wood pellet production development in the Southern US and around the world. Drax’s stock immediately dropped 10% in value.

This important decision sends a strong signal of caution to the marketplace and US and European governments that the biomass and wood pellet market may not be a wise investment. At a time when we can and must reduce our climate impact, why would we support an industry that is increasing carbon emissions? We need to increase investment in truly renewable energy like wind and solar and it seems that DECC and UK Court of Appeal agree.

All of this news comes to light as a new report emerged from the Intergovernmental Panel on Climate Change (IPCC) that deep emission cuts are needed to limit climate change by 2050. The agency estimates that cuts of 40-70% will be needed in order to stave off the deadliest impacts.

The latest science is showing that burning wood from electricity in most scenarios releases more greenhouse gases than coal and natural gas. Prominent scientists from across the US have urged the European Commission, DECC and the US EPA to highly regulate this burgeoning market.

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