The economic impact of Drax in the U.K., U.S. and Canada
Chapter 1:
Executive Summary
Drax Group (Drax) is the global leader in the production, generation, and supply of renewable power from sustainably sourced biomass, and a pioneer in carbon removal technology. Its purpose is to enable a zero carbon, lower cost energy future.
Drax plays a key role in the British energy market, generating and supplying low-carbon energy, and providing energy solutions to industrial and business consumers across the country. It is the U.K.’s largest source of renewable power by output, with its portfolio of sustainable bioenergy, hydro-electric, and pumped storage hydro assets spread across England and Scotland.
Drax also has 17 operational and development pellet production sites across North America supplying sustainable biomass to power companies throughout Europe and Asia. Wood fiber used in pellet production is a by- product of sustainable forest management and the manufacture of solid wood products. Since acquiring Pinnacle Renewable Energy in 2021, it has expanded its footprint across North America and transformed into a truly international business.
In the medium-term, Drax plans to be the first power company in the world to capture carbon from 100% biomass feedstock, removing carbon from the atmosphere and creating ‘negative emissions’. Drax has an ambition to capture 12 MtCO2 a year by 2030 globally (including 8MtCO2 at the Drax Power Station in Yorkshire), to support the rapid decarbonisation of the global power sector.
Reflecting the international nature of Drax’s businesses, this study investigates its economic impact in the U.K., U.S., and Canada. It considers Drax’s own operations, the economic activity supported by its procurement spending and the impact of the wage payments to employees.
Drax Power Station, North Yorkshire
A summary of the key findings of the report
Drax sustains a sizeable contribution to the economies of the U.K., U.S., and Canada.
Drax supported 35,600 jobs in total across the U.K., U.S., and Canada in 2021. The company directly employed around 3,200 workers across its sites in the three countries. A further 21,800 jobs were supported along its supply chain by its procurement spend. The wage-induced spending of its employees and those employed in its supply chain sustained a further 10,600 jobs.
By country, Drax supported a total of 17,800 jobs across the U.K. in 2021. These jobs were spread throughout the U.K.’s nations and regions, with the most jobs, some 3,450, supported in the Yorkshire and The Humber region.
Fig. 1: Total employment supported by Drax in 2021 [click to view/download]
The company’s operations also supported a total of 7,400 jobs in the United States. A significant share of these jobs were sustained in the states in which the company’s operations are focused, including 2,700 jobs in Louisiana, 2,000 jobs in Alabama, and 1,200 jobs in Mississippi.
We estimate that Drax supported a total contribution of £3.1 billion in 2021 across the U.K., U.S. and Canada. This is the sum of three channels of impact. Some £0.6 billion was generated by the company itself—its direct impact. The company’s sizeable procurement spending with external suppliers stimulated a further £1.7 billion contribution to GDP—its indirect impact. And the payment of wages by Drax, and the firms in its supply chain, supported a further £0.8 billion contribution to GDP—its induced impact.
Fig. 2: Total contribution to GDP supported
by Drax in 2021 [click to view/download]
In addition, Drax supported nearly £700 million in tax revenues to the countries’ authorities in 2021. The majority of this total was supported in the U.K., with some nearly £400 million in tax payments to the U.K. Exchequer associated with Drax, across the three channels of impact. A further £161 million (CA$277 million) in tax payments were supported in Canada, and £130 million ($180 million) in the U.S.
