Tag: EU

Leading the way with transparency and action

11 March 2025

Opinion

  • Voluntary reporting for Drax’s EU Taxonomy alignment shows why we must keep leading on sustainable finance
  • Our upgraded CDP scores further underline our credentials for best practice in both strategy and action

Sustainability shapes how we operate at Drax. It provides our stakeholders with the trust they need as we demonstrate how we strive to provide secure, renewable energy to millions of homes and businesses, in a responsible way.

That is why we are pleased to hit another significant milestone in our ongoing sustainability journey, with the release of our first ever EU Taxonomy Report.

The report reflects our deep commitment to sustainability and highlights our continued work towards aligning ourselves with the European Union’s sustainability goals. In terms of results, the report shows that 71% of Drax’s revenue qualifies as eligible and aligned with the Taxonomy, with 99% of that aligned revenue meeting sustainability principles.

But what is it? EU Taxonomy is a classification system that was created by the European Commission, to define which economic activities contribute to environmental sustainability. It serves as a core part of the EU’s sustainable finance framework, guiding investment flows towards activities that align with the EU’s Green Deal and its broader climate goals.

It’s essentially a roadmap for companies and investors to understand what qualifies as environmentally sustainable. For businesses like Drax, aligning with the EU Taxonomy is essential, as it reinforces our ambition to help tackle climate change while maintaining strong financial performance.

So, why is the EU Taxonomy so important in the context of Drax’s sustainability journey? It’s because the system establishes clear guidelines and benchmarks aimed at ensuring that investment is directed towards activities that contribute meaningfully to environmental sustainability.

It plays a crucial role in accelerating the transition to a green economy and helps companies like Drax with their ambitions to meet their global sustainability targets. By aiming to align what we do with the EU Taxonomy, we aim to ensure that our operations, revenue generation, and financial models support these crucial climate objectives.

The results of our first EU Taxonomy Report demonstrate how far we’ve come in our sustainability efforts. The headline figure that 99% of our eligible revenue meets the sustainability criteria is a source of pride. This is a strong affirmation of our long-term dedication to environmental stewardship and is a significant achievement.

Compared to the broader business landscape, our results are an extraordinary achievement. A 2024 report from EY, that used a sample of 307 European companies non-financial disclosures, showed that the average EU Taxonomy alignment for turnover was 10% across all sectors, with the energy and power sector rising to 37%. For Drax, this rises even further to 71%, positioning us as a leader in taxonomy-aligned sustainability principles.

The reason for this alignment is simple: Drax has made intentional and strategic decisions over the years to transition our business towards renewable energy, with the most notable being the transition from coal to biomass at Drax Power Station.

However, achieving alignment with the EU Taxonomy goes beyond just ticking the necessary boxes. We’re focused on aiming to exceed the minimum standards set out by the taxonomy. The fact that 71% of our revenue is fully aligned with the EU Taxonomy speaks to the forward-thinking strategies that we have put in place.

One of the key pillars of sustainability at Drax is our focus on forestry, specifically how we manage and source biomass. Forests are a crucial component of the global carbon cycle. As part of our commitment to achieve net zero by the end of 2040 across our value chain, we endeavour to source our biomass from sustainably managed forests and must be mindful of the impact our activities have on biodiversity, carbon sequestration, communities, and forest health.

This is where the importance of our CDP (Carbon Disclosure Project) scores come in and these act like a snapshot of a company’s performance on environmental action. Their annual reports provide valuable insights into a company’s efforts to reduce emissions and manage natural resources responsibly, using voluntarily disclosed data to provide a score based upon three main critical areas: greenhouse gas emissions, water management, and deforestation.

We have worked hard on these areas, to demonstrate our dedication and progress towards climate action to our investors and other stakeholders. We have maintained our A- CDP climate score and alongside this our CDP Forests score was upgraded to A-. For the first time this positions Drax in the highest ‘leadership’ banding of CDP scores, recognising best practice for both strategy and action, and ranking Drax in the leading group of FTSE businesses.

The upgraded CDP score for forestry reflects our ongoing efforts to aim to ensure that our biomass sourcing practices do not contribute to deforestation or degradation of ecosystems. By sourcing from responsibly managed forests, we aim to ensure that our biomass is part of a sustainable, circular process where forest health is maintained and enhanced.

We recognise that both environmental sustainability as measured by the EU Taxonomy and our evolving CDP scores will require consistent work to maintain and improve. Alongside this we have developed a new sustainability framework, in consultation with a variety of different groups including representatives from the scientific community, academics, employees, investors and environmental NGOs.

But this holistic approach must be seen as the starting point of a journey. With the climate crisis becoming an even bigger threat to our planet, we must redouble our efforts. That means open and frank conversations with internal and external stakeholders where possible and concerted efforts to decarbonise our supply chain. It also means continuing to prioritise the rigorous standards of best practice measured by mechanisms such as EU taxonomy and CDP ratings. These pillars will be the key to proving that Drax can keep the lights on for millions of people using sustainable biomass generation, responsibly.

The EU’s embrace of carbon removals

24 April 2024

Opinion

By Kasia Wilk, Head of Public Affairs and Policy, EU & Asia

The UK may no longer be part of the European Union, but the decisions taken by its institutions still impact British businesses and consumers.

What happens in Brussels matters, even if Britain no longer has a seat at the decision table. You may not notice the link to the EU at first, but often technological changes have their roots in the decisions made by the organisation’s institutions.

Take for instance something as innocuous as your mobile phone charger. In recent years USB-C charging ports have increasingly become the standard across Apple and Android devices. This is no accident, an EU directive to mandate all devices for sale on the continent must have a universal USB-C charge port by the end of this year.

This European decision has made the world’s biggest tech companies reconfigure its global designs and supply chains.

If Brussels can influence how the world charges its mobile phones, you won’t be surprised to learn its decisions on climate change policy carry significant influence too.

Nearly all the UN IPCC’s pathways to net zero by 2050 require a significant scale-up of engineered carbon removals. Their importance has led the EU to begin significant policy development in this area.

The opening months of 2024 has seen developments in the space gather at pace. In February, the EU Commission set out its proposals to reduce emissions by 90% by 2040 compared to levels in 1990. To achieve this, the Commission expects to scale-up industrial carbon removals like BECCS and DACCS alongside land-based techniques such as afforestation to 400 million tonnes of removals annually by 2040.

Released alongside the proposed target was the Industrial Carbon Management Strategy providing a roadmap for the removal and storage of millions of tonnes of CO₂ within the Union in the next three decades. This stressed the need to develop further policy options and support mechanisms for BECCS and DACCS.

With the need for large-scale carbon removals made clear, attention is now turning to how to certify and ensure credibility of removal projects. The EU institutions recently reached an agreement on the Carbon Removal Certification Framework (CRCF) which will likely become a blueprint for global for carbon dioxide removals (CDR) frameworks. This framework will create a critical foundation for scaling the voluntary market for CDRs in the EU, including BECCS.

Carbon removal companies like Drax want transparent and robust rules in the sector. It is vital that only high-quality removals, and removals that would not otherwise have taken place, are credited. The regulator also must prevent the same activity from being certified twice or using the same certificate twice. This is what the EU’s proposals aim to do, and it could be a blueprint for the UK and governments around the world. However, there remains room for improvement as the CRCF framework only covers removals within the EU’s borders, which means the international nature of the voluntary carbon removals market has not been considered.

Demand for CDRs is continuing to grow, with several high-profile international deals already announced. One example is our own memorandum of understanding with Respira which would enable the firm to buy up to 2 million metric tonnes of CDR certificates.

While progress is being made by Brussels, more policy development is needed in financially incentivising carbon removals through enhanced business models. Developments could include integrating carbon removals into compliance markets like the EU’s Emissions Trading Scheme and introducing support schemes such as a Carbon Contracts for Difference. As the sector’s costs decrease through learning and economies of scale, the support frameworks could be tapered in the long-term ensuring value for money for consumers and governments.

While it can feel daunting standing at the foot of the hill staring at the summit, we know that the climate, our communities, and businesses across the continent are worth the sharp ascent.

Around 93% of emissions take place outside of the confines of the EU, but by acting swiftly Europe can lead the world on the development of a vibrant carbon removals industry.

At Drax, our aim is to become a global leader in carbon removals. We are currently progressing plans to deliver two BECCS projects – one in the UK and one in the US – by 2030, with both projects able to permanently remove a combined volume of 7 million tonnes of carbon dioxide from the atmosphere each year.

We want to eventually be able to geologically sequester 20 million tonnes of carbon each year. Successful trials at our North Yorkshire power station in the UK enabled Drax to become the first company in the world to successfully capture carbon dioxide from the combustion of a 100% biomass feedstock.

BECCS will provide durable, high-integrity carbon removal credits and gigatonne scalability, and is the only technology that generates reliable, renewable power while removing carbon from the atmosphere.

With many Member States continuing to rely on fossil fuels to power their grids, biomass and BECCS conversions could be a vital role in making the EU’s ambition climate targets a reality. It is critical that the EU institutions continues to develop policy at pace to ensure businesses can have confidence to invest in carbon removal projects and the credits which come from them.

The EU has a remarkable opportunity to lead the world on this important area of climate policy, and it is one I hope they seize.