Tag: decarbonisation

How to build a business model for negative emissions

10 May 2021

Carbon capture
Watching a biomass train as it prepares to enter Drax Power Station's rail unloading building 2 (RUB2)

In brief

  • Policy intervention is needed to enable enough BECCS in power to make a net zero UK economy possible by 2050

  • Early investment in BECCS can insure against the risk and cost of delaying significant abatement efforts into the 2030s and 2040s

  • A two-part business model for BECCS of carbon payment and power CfD offers a clear path to technology neutral and subsidy free GGRs

The UK’s electricity system is based on a market of buying and selling power and other services. For this to work electricity must be affordable to consumers, but the parties providing power must be able to cover the costs of generating electricity, emitting carbon dioxide (CO2) and getting electricity to where it needs to be.

This process has thrived and proved adaptable enough to rapidly decarbonise the electricity system in the space of a decade.

With a 58% reduction in the carbon intensity of power generation, the UK’s electricity has decarbonised twice as fast as that of other major economies. As the UK pushes towards its goal of achieving net zero emissions by 2050, new technologies are needed, and the market must extend to enable innovation.

Bioenergy with carbon capture and storage (BECCS) is one of the key technologies needed at scale for the UK to reach net zero. Yet there is no market for the negative emissions BECCS can deliver, in contrast to other energy system services.

BECCS has been repeatedly flagged as vital for the UK to reach its climate goals, owing to its ability to deliver negative emissions. The Climate Change Committee has demonstrated that negative emissions – also known as greenhouse gas removals (GGRs) or carbon removals – will be needed at scale to achieve net zero, to offset residual emissions from hard to decarbonise sectors such as aviation and agriculture. But there is no economic mechanism to reward negative emissions in the energy market.

For decarbonisation technologies like BECCS in power to develop to the scale and within the timeframe needed, the Government must implement the necessary policies to incentivise investment, and allow them to thrive as part of the energy and carbon markets.

BECCS is essential to bringing the whole economy to net zero

The primary benefit of BECCS in power is its ability to deliver negative emissions by removing CO2 from the atmosphere through responsibly managed forests, energy crops or agricultural residues, then storing the same amount of CO2 underground, while producing reliable, renewable electricity.

Looking down above units one through five within Drax Power Station

Looking down above units one through five within Drax Power Station

A new report by Frontier Economics for Drax highlights BECCS as a necessary cornerstone of UK decarbonisation and its wider impacts on a net zero economy. Developing a first-of-a-kind BECCS power plant would have ‘positive spillover’ effects that contribute to wider decarbonisation, green growth and the UK’s ability to meet its legally-binding climate commitments by 2050.

Drax has a unique opportunity to fit carbon capture and storage (CCS) equipment to its existing biomass generation units, to turn its North Yorkshire site into what could be the world’s first carbon negative power station.

Plans are underway to build a CO2 pipeline in the Yorkshire and Humber region, which would move carbon captured from at Drax out to a safe, long-term storage site deep below the North Sea. This infrastructure would be shared with other CCS projects in the Zero Carbon Humber partnership, enabling the UK’s most carbon-intensive region to become the world’s first net zero industrial cluster.

Developing BECCS can also have spillover benefits for other emerging industries. Lessons that come from developing and operating the first BECCS power stations, as well as transport and storage infrastructure, will reduce the cost of subsequent BECCS, negative emissions and other CCS projects.

Hydrogen production, for example, is regarded as a key to providing low, zero or carbon negative alternatives to natural gas in power, industry, transport and heating. Learnings from increased bioenergy usage in BECCS can help develop biomass gasification as a means of hydrogen production, as well as applying CCS to other production methods.

The economic value of these positive spillovers from BECCS can be far reaching, but they will not be felt unless BECCS can achieve a robust business model in the immediate future.

With a 58% reduction in the carbon intensity of power generation, the UK’s electricity has decarbonised twice as fast as that of other major economies. As the UK pushes towards its goal of achieving net zero emissions by 2050, new technologies are needed, and the market must extend to enable innovation.

Designing a BECCS business model

The Department for Business Energy and Industrial Strategy (BEIS) outlined several key factors to consider in assessing how to make carbon capture, usage and storage (CCUS) economically viable. These are also valid for BECCS development.

Engineers working within the turbine hall, Drax Power Station

Engineers working within the turbine hall, Drax Power Station

One of the primary needs for a BECCS business model is to instil confidence in investors – by creating a policy framework that encourages investors to back innovative new technologies, reduces risk and inspires new entrants into the space. The cost of developing a BECCS project should also be fairly distributed among contributing parties ensuring that costs to consumers/taxpayers are minimised.

Building from these principles there are three potential business models that can enable BECCS to be developed at the scale and in the timeframe needed to bring the UK to net zero emissions in 2050.

  1. Power Contract for Difference (CfD):
    By protecting consumers from price spikes, and BECCS generators and investors from market volatility or big drops in the wholesale price of power, this approach offers security to invest in new technology. The strike price could also be adjusted to take into account negative emissions delivered and spillover benefits, as well as the cost of power generation.
  2. Carbon payment:
    Another approach is contractual fixed carbon payments that would offer a BECCS power station a set payment per tonne of negative emissions which would cover the operational and capital costs of installing carbon capture technology on the power station. This would be a new form of support, and unfamiliar to investors who are already versed in CfDs. The advantage of introducing a policy such as fixed carbon payment is its flexibility, and it could be used to support other methods of GGR or CCS. The same scheme could be adjusted to reward, for example, CO2 captured through CCS in industry or direct air carbon capture and storage (DACCS). It could even be used to remunerate measurable spillover benefits from front-running BECCS projects.
  3. Carbon payment + power CfD:
    This option combines the two above. The Frontier report says it would be the most effective business model for supporting a BECCS in power project. Carbon payments would act as an incentive for negative emissions and spillovers, while CfDs would then cover the costs of power generation.
Cost and revenue profiles of alternative support options

Cost and revenue profiles of alternative support options based on assuming a constant level of output over time.

 Way to go, hybrid!

Why does the hybrid business model of power CfD with carbon payment come out on top? Frontier considered how easy or difficult it would be to transition each of the options to a technology neutral business model for future projects, and then to a subsidy free business model.

By looking ahead to tech neutrality, the business model would not unduly favour negative emissions technologies – such as BECCS at Drax – that are available to deploy at scale in the 2020s, over those that might come online later.

Plus, the whole point of subsidies is to help to get essential, fledgling technologies and business models off to a flying start until the point they can stand on their own two feet.

The report concluded:

  • Ease of transition to technology neutrality: all three options are unlikely to have any technology neutral elements in the short-term, although they could transition to a mid-term regime which could be technology neutral; and
  • Ease of transition to subsidy free: while all of the options can transition to a subsidy free system, the power CfD does not create any policy learnings around treatment of negative emissions that contribute to this transition. The other two options do create learnings around a carbon payment for negative emissions that can eventually be broadened to other GGRs and then captured within an efficient CO2 market.

‘Overall, we conclude that the two-part business model performs best on this criterion. The other two options perform less well, with the power CfD performing worst as it does not deliver learnings around remunerating negative emissions.’

Assessment of business model options

Assessment of business model options. Green indicates that the criteria is largely met, yellow indicates that it is partially met, and red indicates that it is not met.

Transition to a net zero future

Engineer inspects carbon capture pilot plant at Drax Power Station

Engineer inspects carbon capture pilot plant at Drax Power Station

Crucial to the implementation of BECCS is the feasibility of these business models, in terms of their practicality in being understood by investors, how quickly they can be put into action and how they will evolve or be replaced in the long-term as technologies mature and costs go down. This can be improved by using models that are comparable with existing policies.

These business models can only deliver BECCS in power (as well as other negative emissions technologies) at scale and enable the UK to reach its 2050 net zero target, if they are implemented now.

Every year of stalling delays the impact positive spillovers and negative emissions can have on global CO2 levels. The UK Government must provide the private sector with the confidence to deliver BECCS and other net zero technologies in the time frame needed.

Go deeper

Explore the Frontier Economics report for Drax, ‘Supporting the deployment of Bioenergy Carbon Capture and Storage (BECCS) in the UK: business model options.’

Global collaboration
is key to tackling
the climate crisis

Will Gardiner, Chief Executive Officer, Drax Group

22 April 2021

Opinion

Leaders from 40 countries are meeting today, albeit virtually, as part of President Joe Biden’s Leaders’ Summit on Climate. The event provides an opportunity for world leaders to reaffirm global efforts in the fight against climate change, set a clear pathway to net zero emissions, while creating jobs and ensuring a just transition.

Since taking office President Biden has made bold climate commitments and brought the United States back into the Paris Agreement. Ahead of the two-day summit, he announced an ambitious 2030 emissions target and new Nationally Determined Contributions. The US joins other countries that have announced significant reduction goals. For example, the EU committed to reduce its emissions by at least 55%, also South Korea, Japan and China have all set net-zero targets by mid-century.

Here in the UK, Prime Minister Boris Johnson this week outlined new climate commitments that will be enshrined in law. The ambitious new targets will see carbon emissions cut by 78% by 2035, almost 15 years earlier than previously planned. If delivered, this commitment which is in-line with the recommendations of the Climate Change Committee’s sixth carbon budget will put the UK at the forefront of climate action, and for the first time the targets include international aviation and shipping.

What makes climate change so difficult to tackle is that it requires collaboration from many different parties on a global scale never seen before. As a UK-North American sustainable energy company, with communities on both sides of the Atlantic, at Drax we are keenly aware of the need for thinking that transcends borders, creating a global opportunity for businesses and governments to work together towards a shared climate goal. That’s why we joined other businesses and investors in an open letter supporting the US government’s ambitious climate actions.

Collaboration between countries and industries

It’s widely recognised that negative emissions technologies will be key to global efforts to combat climate change.

At Drax we’re pioneering the negative emissions technology bioenergy with carbon capture and storage (BECCS) at our power station in North Yorkshire, which when up and running in 2027 will capture millions of tonnes of carbon dioxide (CO2) per year, sending it for secure storage, permanently locking it away deep under the North Sea.

Experts on both sides of the Atlantic consider BECCS essential for reaching net zero. The UK’s Climate Change Committee says it will play a major role in removing CO2 emissions that will remain in the UK economy after 2050 from industries such as aviation and agriculture that will be difficult to fully decarbonise. Meanwhile, a report published last year by New York’s Columbia University revealed that rapid development of BECCS is needed within the next 10 years in order to curb climate change and a recent report from Baringa, commissioned by Drax, showed it will be a lot more expensive for the UK to reach its legally binding fifth carbon budget between 2028 and 2031 without BECCS.

A shared economic opportunity

Globally as many as 65 million well-paid jobs could be created through investment in clean energy systems. In the UK, BECCS and negative emissions are not just essential in preventing the impact of climate change but will also be a key component of a post-Covid economy.

Government and private investments in clean energy technologies can create thousands of well-paid jobs, new careers, education opportunities and upskill workforces. Developing BECCS at Drax Power Station, for example, would support around 17,000 jobs during the peak of construction in 2028, including roles in construction, local supply chains and the wider economy. It would also act as an anchor project for the Zero Carbon Humber initiative, which aims to create the world’s first net zero industrial cluster. Developing a carbon capture, usage, and storage (CCUS) and hydrogen industrial cluster could spearhead the creation and support of tens of thousands of jobs across the Humber region and more than 200,000 around the UK in 2039.

Under the Humber Bridge

Additional jobs would be supported and created throughout our international supply chain. This includes the rail, shipping and forestry industries that are integral to rural communities in the US South and Western Canada.

A global company

As a British-North American company, Drax embodies the positive impact that clean energy investments have. We directly employ 3,400 people in the US, Canada, and the UK, and indirectly support thousands of families through our supply chains on both sides of the Atlantic. Drax is strongly committed to supporting the communities where we operate by investing in local initiatives to support the environment, jobs, education, and skills.

From the working forests of the US South and Western Canada to the Yorkshire and Humber region, and Scotland, we have a world-leading ambition to be carbon negative by 2030. At Drax, we believe the challenge of climate change is an opportunity to improve the environment we live in. We have reduced our greenhouse gas emissions by over 80% and transformed into Europe’s largest decarbonisation project. Drax Power Station is the most advanced BECCS project in the world and we stand ready to invest in this cutting-edge carbon capture and removal technology. We can then share our expertise with the rest of the world – a world where major economies are committing to a net zero future and benefiting from a green economic recovery.

If we are to reach the targets set in Paris, global leaders must lock in this opportunity and make this the decade of delivery.

The world’s leading sustainable biomass generation and supply business

Will Gardiner, Chief Executive Officer, Drax Group

13 April 2021

Opinion

Today we completed a transformational deal – our acquisition of Canadian biomass pellet producer Pinnacle Renewable Energy.

I’m very excited about this important acquisition and welcoming our new colleagues to the Drax family – together we will build on what we have already achieved, having become the biggest decarbonisation project in Europe and the UK’s largest single site renewable power generator as a result of us using sustainable biomass instead of coal.

The deal positions Drax as the world’s leading sustainable biomass generation and supply business – making us a truly international business, trading biomass from North America to Europe and Asia. It also advances our strategy to increase our self supply, reduces our biomass production costs and creates a long-term future for sustainable biomass – a renewable energy source that the UN’s IPCC says will be needed to achieve global climate targets.

It’s also an important milestone in Drax’s ambition to become a carbon negative company by 2030 and play an important role in tackling the global climate crisis with our pioneering negative emissions technology BECCS.

That’s because increasing our annual production capacity of sustainable biomass while also reducing costs helps pave the way for our plans to use bioenergy with carbon capture and storage (BECCS) at Drax.

Negative emissions from BECCS are vital to address the global climate emergency while also providing the renewable electricity needed for a net zero economy, supporting jobs and clean growth in a post-Covid recovery.

Inside a Pinnacle pellet mill

Inside a Pinnacle pellet mill

We already know Pinnacle well – it is one of our key suppliers and the company is a natural fit with Drax.

Our new colleagues have a wealth of operational and commercial expertise so I’m looking forward to seeing what we can achieve together.

We will benefit from Pinnacle’s scale, operational efficiency and low-cost fibre sourcing, that includes a high proportion of sawmill residues. In 2019, Pinnacle’s production cost was 20% lower than Drax’s.

Completing this deal will increase our annual production capacity to 4.9 million tonnes of sustainable biomass pellets at 17 plants in locations across Western Canada and the US South – up from 1.6Mt now.

It also expands our access to three major North American fibre baskets and four export facilities, giving us a large and geographically diversified asset base, which enhances our sourcing flexibility and security of supply.

This positions us well to take advantage of the global growth opportunities for sustainable biomass. The market for biomass wood pellets for renewable generation in Europe and Asia is expected to grow in the current decade, principally driven by demand in Asia.

Biomass wood pellet storage dome, Drax Power Station

Biomass wood pellet storage dome, Drax Power Station

We believe that with increasingly ambitious global decarbonisation targets, the need for negative emissions and improved understanding of the role that sustainably sourced biomass can play, will result in continued robust demand.

Pinnacle is already a key supplier of wood pellets to other markets with C$6.7 billion of long-term contracts with high quality Asian and European customers, including Drax, and a significant volume contracted beyond 2027.

Drax aims to leverage Pinnacle’s trading capability across its expanded portfolio. We believe that the enlarged supply chain will provide greater opportunities to optimise the supply of biomass from its own assets and third-party suppliers.

The transport and shipping requirements of the enlarged company will provide further opportunities to optimise delivery logistics, helping to reduce distance, time, carbon footprint and cost.

Train transporting biomass wood pellets arriving at Drax Power Station

Importantly – there will also be opportunities to share best practice and drive sustainability standards higher across the group.

We recognise that the forest landscape in British Columbia and Alberta is different to the commercially managed forests in the south eastern US where we currently operate.

In line with our world leading responsible sourcing policy, Drax will work closely with environmental groups, Indigenous First Nation communities and other stakeholders and invest to deliver good environmental, social and climate outcomes in Pinnacle’s sourcing areas.

We are determined to create a long-term future for sustainable biomass and deliver BECCS –  the negative emissions technology that will be needed around the world to meet global climate targets. The acquisition of Pinnacle takes us a big step forward in achieving our goals.

Read press release: Drax completes acquisition of Pinnacle Renewable Energy Inc.

 

Standing together
against climate
change

Will Gardiner, Chief Executive Officer, Drax Group

27 January 2021

Opinion
Global leadership illustration

Tackling climate change requires global collaboration. As a UK-US sustainable energy company, with communities on both sides of the Atlantic, we at Drax are keenly aware of the need for thinking that transcends countries and borders.

Joe Biden has become the 46th President of my native country at a crucial time to ensure there is global leadership and collaboration on climate change. Starting with re-joining the Paris Agreement, I am confident that the new administration can make a significant difference to this once-in-a-lifetime challenge.

This is why Drax and our partners are mobilising a transatlantic coalition of negative emissions producers. This can foster collaboration and shared learning between the different technologies and techniques for carbon removal that are essential to decarbonise the global economy.

Biomass storage domes at Drax Power Station in North Yorkshire at sunset

Biomass storage domes at Drax Power Station in North Yorkshire

Whilst political and technical challenges lie ahead, clear long-term policies that spur collaboration, drive innovation and enable technologies at scale are essential in achieving the UK and US’ aligned targets of reaching net zero carbon emissions by 2050.

Collaboration between countries and industries

What makes climate change so difficult to tackle is that it requires collaboration from many different parties on a scale like few other projects. This is why the Paris Agreement and this year’s COP26 conference in Glasgow are so vital.

Sustainable biomass wood pellets being safely loaded at the Port of Greater Baton Rouge onto a vessel destined for Drax Power Station

Our effort towards delivering negative emissions using bioenergy with carbon capture and storage (BECCS) is another example of ambitious decarbonisation that is most impactful as part of an integrated, collaborative energy system. The technology depends upon sustainable forest management in regions, such as the US South where our American communities operate. Carbon capture using sustainable bioenergy will help Drax to be carbon negative by 2030 – an ambition I announced at COP25, just over a year ago in Madrid.

Will Gardiner at Powering Past Coal Alliance event in the UK Pavilion at COP25 in Madrid

Will Gardiner announcing Drax’s carbon negative ambition at COP25 in Madrid (December 2019).

Experts on both sides of the Atlantic consider BECCS essential for net zero. The UK’s Climate Change Committee says it will play a major role in tackling carbon dioxide (CO2) emissions that will remain in the UK economy after 2050, from industries such as aviation and agriculture that will be difficult to fully decarbonise. Meanwhile, a report published last year by New York’s Columbia University revealed that rapid development of BECCS is needed within the next 10 years in order to curb climate change.

A variety of negative emissions technologies are required to capture between 10% and 20% of the 35 billion metric tonnes of carbon produced annually that the International Energy Agency says is needed to prevent the worst effects of climate change.

We believe that sharing our experience and expertise in areas such as forestry, bioenergy, and carbon capture will be crucial in helping more countries, industries and businesses deploy a range of technologies.

A formal coalition of negative emissions producers that brings together approaches including land management, afforestation and reforestation, as well as technical solutions like direct air capture (DAC), as well as BECCS, would offer an avenue to ensure knowledge is shared globally.

Direct air capture (DAC) facility

Direct air capture (DAC) facility

It would also offer flexibility in countries’ paths to net zero emissions. If one approach under-delivers, other technologies can work together to compensate and meet CO2 removal targets.

As with renewable energy, working in partnership with governments is essential to develop these innovations into the cost-effective, large scale solutions needed to meet climate targets in the mid-century.

A shared economic opportunity

I agree whole heartedly that a nation’s economy and environment are intrinsically linked – something many leaders are now saying, including President Biden. The recently approved US economic stimulus bill, supported by both Republicans and Democrats in Congress and which allocates $35 billion for new clean energy initiatives, is a positive step for climate technology and job creation.

Globally as many as 65 million well-paid jobs could be created through investment in clean energy systems. In the UK, BECCS and negative emissions are not just essential in preventing the impact of climate change, but are also a vital economic force as the world begins to recover from the effects of COVID-19.

Engineer inside the turbine hall of Drax Power Station

Government and private investments in clean energy technologies can create thousands of well-paid jobs, new careers, education opportunities and upskill workforces. Developing BECCS at Drax Power Station, for example, would support around 17,000 jobs during the peak of construction in 2028, including roles in construction, local supply chains and the wider economy.

Additional jobs would be supported and created throughout our international supply chain. This includes the rail, shipping and forestry industries that are integral to rural communities in the US South.

We are also partnered with 11 other organisations in the UK’s Humber region to develop a carbon capture, usage and storage (CCUS) and hydrogen industrial cluster with the potential to spearhead creating and supporting more than 200,000 jobs around the UK in 2039.

The expertise and equipment needed for such a project can be shared, traded and exported to other industrial clusters around the world, allowing us to help reach global climate goals and drive global standards for CCUS and biomass sustainability.

Clear, long-term policies are essential here, not just to help develop technology but to mitigate risk and encourage investment. These are the next crucial steps needed to deploy negative emissions at the scale required to impact CO2 emissions and lives of people.

Engineer at BECCS pilot project within Drax Power Station

At Drax we directly employ almost 3,000 people in the US and UK, and indirectly support thousands of families through our supply chains on both sides of the Atlantic. Drax Power Station is the most advanced BECCS project in the world and we stand ready to invest in this cutting-edge carbon capture and removal technology. We can then share our expertise with the United States and the rest of the world – a world where major economies are committing to a net zero future and benefiting from a green economic recovery.

What is renewable energy?

17 December 2020

Sustainable bioenergy

These differ to non-renewable energy sources such as coal, oil and natural gas, of which there is a finite amount available on Earth, meaning if used excessively they could eventually run out.

Renewable resources can provide energy for a variety of applications, including electricity generation, transportation and heating or cooling.

The difference between low-carbon, carbon neutral and renewable energy

Renewables such as wind, solar and hydropower are zero carbon sources of energy because they do not produce any carbon dioxide (CO2) when they generate power. Low-carbon sources might produce someCO2, but much less than fuels like coal.

Bioenergy that uses woody biomass from sustainably managed forests to generate electricity is carbon neutral because forests absorb CO2 from the atmosphere as they grow, meaning the amount of CO2 in the atmosphere remains level. Supply chains that bring bioenergy to power stations commonly use some fossil fuels in manufacturing and transportation. Therefore woody biomass is a low carbon fuel, when its whole lifecycle is considered.

Managing forests in a sustainable way that does not lead to deforestation allows bioenergy to serve as a renewable source of power. Responsible biomass sourcing also helps forests to absorb more carbon while displacing fossil fuel-based energy generation.

Nuclear is an example of a zero carbon source of electricity that is not renewable. It does not produce CO2,but it is dependent on uranium or plutonium, of which there is a finite amount available.

Managing forests in a sustainable way that does not lead to deforestation allows bioenergy to serve as a renewable source of power.

How much renewable energy is used around the world?

Humans have harnessed renewable energy for millions of years in the form of woody biomass to fuel fires, as well as wind to power ships and geothermal hot springs for bathing. Water wheels and windmills are other examples of humans utilising renewable resources, but since the industrial revolution fossil fuels, coal in particular, have been the main source of power.

However, as the effects of air pollution and CO2 produced from burning fossil fuels become increasingly apparent, renewable energy is gradually replacing sources which contribute to climate change.

In the year 2000 renewable energy accounted for 18% of global electricity generation, according to the IEA. By 2019, renewable sources made up 27% of the world’s electrical power.

Why renewable energy is essential to tackling climate change

The single biggest human contribution to climate change is greenhouse gas emissions, such as CO2, into the atmosphere. They create an insulating layer around the planet that causes temperatures on Earth to increase, making it less habitable.

Renewable sources of electricity can help to meet the world’s demand for power without contributing to global warming, unlike carbon-intensive fuels like coal, gas and oil.

Bioenergy can also be used to remove CO2 from the atmosphere while delivering renewable electricity through a process called bioenergy with carbon capture and storage (BECCS).

Forests absorb CO2 from the atmosphere, then when the biomass is used to generate electricity the same CO2 is captured and stored permanently underground – reducing the overall amount of CO2 in the atmosphere.

Humans have used renewable energy for millions for years, from wood for fires to wind powering boats to geothermal hot springs. 

What’s holding renewables back?

The world’s energy systems were built with fossil fuels in mind. This can make converting national grids difficult and installing new renewable energy sources expensive. However, as knowledge grows about how best to manufacture, build and operate renewable systems, the cost of deploying them at scale drops.

There are future changes needed. Renewables such as wind, solar and tidal power are known as intermittent renewables because they can’t generate electricity when there is no sun, wind or the tidal movement. For future energy systems to deliver enough power, large scale energy storage, as well as other flexible, reliable forms of generation will also be needed to meet demand and keep systems stable.

Renewable energy key facts:  

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Committing to a net zero power system as part of COP26

30 November 2020

Carbon capture

Dear Prime Minister, Chancellor, COP26 President and Minister for Energy and Clean Growth,

We are a group of energy companies investing tens of billions in the coming decade, deploying the low carbon infrastructure the UK will need to get to net zero and drive a green recovery to the COVID-19 crisis.

We welcome the leadership shown on the Ten Point Plan for a Green Industrial Revolution, and the detailed work going on across government to deliver a net zero economy by 2050. We are writing to you to call on the Government to signal what this will mean for UK electricity decarbonisation by committing to a date for a net zero power system.

Head of BECCS inspects pilot plant within Drax Power Station's CCUS Incubation Unit

Head of BECCS Carl Clayton inspects pipes at the CCUS Incubation Area, Drax Power Station

The electricity sector will be the backbone of our net zero economy, and there will be ever increasing periods where Great Britain is powered by only zero carbon generation. To support this, the Electricity System Operator is putting in place the systems, products and services to enable periods of zero emissions electricity system operation by 2025.

Achieving a net zero power system will require government to continue its efforts in key policy areas such as carbon pricing, which has been central in delivering UK leadership in the move away from coal and has led to UK electricity emissions falling by over 63% between 2012 and 2019 alone.

It is thanks to successive governments’ commitment to robust carbon pricing that the UK is now using levels of coal in power generation last seen 250 years ago – before the birth of the steam locomotive. A consistent, robust carbon price has also unlocked long term investment low-carbon power generation such that power generated by renewables overtook fossil fuel power generation for the first time in British history in the first quarter of 2020.

Yet, even with the demise of coal and the progress in offshore wind, more needs to be done to drive the remaining emissions from electricity as its use is extended across the economy.

In the near-term, in combination with other policies, continued robust carbon pricing on electricity will incentivise the continued deployment of low carbon generation, market dispatch of upcoming gas-fired generation with Carbon Capture and Storage (CCS) projects and the blending of low carbon hydrogen with gas-fired generation. Further forward, a robust carbon price can incentivise 100% hydrogen use in gas-fired generation, and importantly drive negative emissions to facilitate the delivery of a net zero economy.

Next year, the world’s attention will focus on Glasgow and negotiations crucial to achieving our climate change targets, with important commitments already made by China, the EU, Japan and South Korea amongst others. An ambitious 2030 target from the UK will help kickstart the Sprint to Glasgow ahead of the UK-UN Climate Summit on 12 December.

Electricity cables and pylon snaking around a mountain near Cruachan Power Station in the Highlands

Electricity cables and pylon snaking around a mountain near Cruachan Power Station, Drax’s flexible pumped storage facility in the Highlands

2030 ambition is clearly needed, but to deliver on net zero, deep decarbonisation will be required. Previous commitments from the UK on its coal phase out and being the first major economy to adopt a net zero target continue to encourage similar international actions. To build on these and continue UK leadership on electricity sector decarbonisation, we call on the UK to commit to a date for a net zero power system ahead of COP26, to match the commitment of the US President-elect’s Clean Energy Plan. To ensure the maximum benefit at lowest cost, the chosen date should be informed by analysis and consider broad stakeholder input.

Alongside near-term stability as the UK’s carbon pricing future is determined, to meet this commitment Government should launch a consultation on a date for a net zero power system by the Budget next year, with a target date to be confirmed in the UK’s upcoming Net Zero Strategy. This commitment would send a signal to the rest of the world that the UK intends to maintain its leadership position on climate and to build a greener, more resilient economy.

To:

  • Rt Hon Boris Johnson MP, Prime Minister of the United Kingdom
  • Rt Hon Rishi Sunak MP, Chancellor of the Exchequer
  • Rt Hon Alok Sharma MP, Secretary of State for Business, Energy and Industrial Strategy and UNFCCC COP26 President
  • Rt Hon Kwasi Kwarteng MP, Minister for Business, Energy and Clean Growth

Signatories:

BP, Drax, National Grid ESO, Sembcorp, Shell and SSE

View/download letter in PDF format

 

COP26: Will countries with the boldest climate policies reach their targets?

30 October 2020

Carbon capture

To tackle the climate crisis, global unity and collaboration are needed. This was in part the thinking behind the Paris Agreement. It set a clear, collective target negotiated at the 2015 United Nations Climate Change Conference and signed the following year: to keep the increase in global average temperatures to well below 2 degrees Celsius above pre-industrial levels.

In November 2021, COP26 will see many of the countries who first signed the Paris Agreement come together in Glasgow for the first ‘global stocktake’ of their environmental progress since its creation.

COP26 will take place at the SEC in Glasgow

Already delayed for a year as a result of the pandemic, COVID-19 and its effects on emissions is likely to be a key talking point. So too will progress towards not just the Paris Agreement goals but those of individual countries. Known as ‘National Determined Contributions’ (NDCs), these sit under the umbrella of the Paris Agreement goals and set out individual targets for individual countries.

With many countries still reeling from the effects of COVID-19, the question is: which countries are actually on track to meet them?

What are the goals?

The NDCs of each country represent its efforts and goals to reduce national emissions and adapt to the impacts of climate change. These incorporate various targets, from decarbonisation and forestry to coastal preservation and financial aims.

While all countries need to reduce emissions to meet the Paris Agreement targets, not all have an equally sized task. The principle of differentiated responsibility acknowledges that countries have varying levels of emissions, capabilities and economic conditions.

The Universal Ecological Fund outlined the emissions breakdown of the top four emitters, showing that combined, they account for 56% of global greenhouse gas emissions. China is the largest emitter, responsible for 26.8%, followed by the US which contributes 13.1%. The European Union and its 28 member states account for nine per cent, while India is responsible for seven per cent of all emissions.

These nations have ambitious emissions goals, but are they on track to meet them?

China

Traffic jams in the rush hour in Shanghai Downtown, contribute to high emissions in China.

By 2030, China pledged to reach peak carbon dioxide (CO2), increase its non-fossil fuel share of energy supply to 20% and reduce the carbon intensity – the ratio between emissions of CO2 to the output of the economy – by 60% to 65% below 2005 levels.

COVID-19 has increased the uncertainty of the course of China’s emissions. Some projections show that emissions are likely to grow in the short term, before peaking and levelling out sometime between 2021 and 2025. However, according to the Climate Action Tracker it is also possible that China’s emissions have already peaked – specifically in 2019. China is expected to meet its non-fossil energy supply and carbon intensity pledges.

United States

The forecast for the second largest emitter, the US, has also been affected by the pandemic. Economic firm Rhodium Group has predicted that the US could see its emissions drop between 20% and 27% by 2025, meeting its target of reducing emissions by 26% to 28% below 2005 levels.

However, President Trump’s rolling back of Obama-era climate policies and regulations, his support of fossil fuels and withdrawal from the Paris Agreement (effective from as early as 4 November 2020), suggest any achievement may not be long-lasting.

The United States’ Coronavirus Aid, Relief, and Economic Security Act, known as the CARES Act, does not include any direct support to clean energy development – something that could also change in 2021.

European Union

CCUS Incubation Unit, Drax Power Station

Carl Clayton, Head of BECCS at Drax, inspects pipework in the CCUS area of Drax Power Station

The European Union and its member states, then including the UK, pledged to reduce emissions by at least 40% below 1990 levels by 2030 – a target the Climate Action Tracker estimates will be achieved. In fact, the EU is on track to cut emissions by 58% by 2030.

This progress is in part a result of a large package of measures adopted in 2018. These accelerated the emissions reductions, including national coal phase-out plans, increasing renewable energy and energy efficiency. The package also introduced legally binding annual emission limits for each member state within which they can set individual targets to meet the common goal.

The UK has not yet released an updated, independent NDC. However, it has announced a £350 million package designed to cut emissions in heavy industry and drive economic recovery from COVID-19. This includes £139 million earmarked to scale up hydrogen production, as well as carbon capture and storage (CCS) technology, such as bioenergy with carbon capture (BECCS) – essential technologies in achieving net zero emissions by 2050 and protecting industrial regions.

India

India, the fourth largest global emitter, is set to meet its pledge to reduce its emissions intensity by 33% to 35% below 2005 levels and increase the non-fossil share of power generation to 40% by 2030. What’s more, the Central Electricity Agency has reported that 64% of India’s power could come from non-fossil fuel sources by 2030.

Wind turbines in Jaisalmer, Rajasthan, India

Along with increasingly renewable generation, the implementation of India’s National Smart Grid Mission aims to modernise and improve the efficiency of the country’s energy system.

It is promising that the world’s four largest emitters have plans in place and are making progress towards their decarbonisation goals. However, tackling climate change requires action from around the entire globe. In addition to NDCs, many countries have committed to, or have submitted statements of intent, to achieve net zero carbon emissions in the coming years.

Net zero target

CountryTarget Date Status
Bhutan 🇧🇹Currently carbon negative (and aiming for carbon neutrality as it develops; pledged towards the Paris Agreement)
Suriname 🇸🇷Currently carbon negative
Denmark 🇩🇰2050In law
France 🇫🇷2050In law
Germany 🇩🇪2050In law
Hungary 🇭🇺2050In law
New Zealand 🇳🇿2050In law
Scotland 🏴󠁧󠁢󠁳󠁣󠁴󠁿2045In law
Sweden 🇸🇪2045In law
United Kingdom 🇬🇧2050In law
Bulgaria 🇧🇬2050Policy Position
Canada 🇨🇦2050Policy Position
Chile 🇨🇱2050In policy
China 🇨🇳2060Statement of intent
Costa Rica 🇨🇷2050Submitted to the UN
EU 🇪🇺2050Submitted to the UN
Fiji 🇫🇯2050Submitted to the UN
Finland 🇫🇮2035Coalition agreement
Iceland 🇮🇸2040Policy Position
Ireland 🇮🇪2050Coalition Agreement
Japan 🇯🇵2050Policy Position
Marshall Islands 🇲🇭2050Pledged towards the Paris Agreement
Netherlands 🇳🇱2050Policy Position
Norway 🇳🇴2050 in law, 2030 signal of intent
Portugal 🇵🇹2050Policy Position
Singapore 🇸🇬As soon as viable in the second half of the centurySubmitted to the UN
Slovakia 🇸🇰2050Policy Position
South Africa 🇿🇦2050Policy Position
South Korea 🇰🇷2050Policy Position
Spain 🇪🇸2050Draft Law
Switzerland 🇨🇭2050Policy Position
Uruguay 🇺🇾2030Contribution to the Paris Agreement

While the COVID-19 pandemic has disrupted short-term plans, many see it as an opportunity to rejuvenate economies with sustainability in mind. COP26, as well as the global climate summit planned for December of this year, will likely see many countries lay out decarbonisation goals that benefit both people’s lives and the planet.

What is carbon dioxide?

18 September 2020

Carbon capture

What is CO2?

Carbon dioxide (or CO2) is a colourless and odourless naturally occurring gas in the earth’s atmosphere which is made up of one carbon atom and two oxygen atoms.  As a greenhouse gas (GHG), it traps heat, making sure the planet isn’t uninhabitably cold. However, fast rising levels of CO2 and other long-lasting GHGs in the atmosphere are currently causing global warming to occur at an alarmingly rapid rate.

What is the carbon cycle?

Carbon is the basis of all life on earth – it is a key ingredient in almost everything on the planet. As the earth has a closed atmosphere, there has always been the same amount of carbon on the earth, but it is in a constant state of change, transitioning from gas to solid to liquid and moving between the atmosphere and the earth. This process is called the carbon cycle, and it is key to ensuring the earth is capable of sustaining life. CO2 forms one part of this process and makes up the largest available source of carbon on earth.

How is CO2 made?

Carbon is stored in oceans, soil, and living things and is released from this storage into the atmosphere in the form of CO2. CO2 is created when one carbon atom meets two oxygen atoms, which join together through a number of processes, including the decay of organic matter, the combustion of materials such as wood, coal and natural gas, through the breathing of humans and animals, and from events such as volcanic eruptions.

How does CO2 affect the planet?

An abundance of CO2 in the earth’s atmosphere means more heat gets trapped, which in turn contributes to a rise in global temperatures and climate change. This acceleration in carbon entering the atmosphere began during the Industrial Revolution around the 1800s, when fossil fuels were mined and burned to create energy, which released long-stored carbon into the atmosphere in the form of CO2.

From the beginning of the Industrial Revolution until today, the amount of carbon in the atmosphere has increased from 280 parts per million, to 387 parts per million, which constitutes a 39% increase. Today, CO2 levels are the highest they’ve been in 800,000 years.

CO2 is created when one carbon atom meets two oxygen atoms, which join together when organic materials containing carbon are burned: wood, coal, and natural gas.

How can countries reduce CO2 in the atmosphere?

According to the Paris Climate Agreement, nations must work to limit warming of the globe to be well under two degrees Celsius above pre-industrial levels. In the first half of 2015, the earth registered a one degree Celsius rise in global temperatures above pre-industrial levels, which means drastic and meaningful action must be taken to decarbonise within the next few years.

There are many ways to reduce the earth’s carbon footprint, including reforestation and using alternative ways to generate energy that don’t rely on fossil fuels. For example, wind, solar, biomass and hydro can all provide sustainable, carbon-neutral and low carbon sources of electricity.

Technology such as carbon capture and storage (CCS) can capture carbon permanently storing CO2 from industries in which some CO2 emissions remain. By combining CCUS with biomass energy (bioenergy with carbon capture and storage, or BECCS) it is even possible to generate negative emissions, where more CO2 is removed from the atmosphere than is emitted.

CO2 fast facts

  • In the 1960s, the growth of CO2 occurred at 0.6 parts per million per year. In the last 10 years, the rate has been 2.3 parts per million per year
  • The average human breathes out 93 kilograms of CO2 per year – however, our breathing only contributes 0.65 billion tonnes of carbon returned to the atmosphere, which is 0.01% of the amount released by fossil fuels each year
  • Trees absorb CO2 in the atmosphere and release it in the form of oxygen, making them vitally important in the world’s fight against climate change. In the US alone, forests absorb 13% of the nation’s carbon output

There are many ways to reduce the earth’s carbon footprint, including using alternative ways to generate power.

Go deeper

 

How to count carbon emissions

Iain Staffell, Imperial College London

31 August 2020

Opinion

Reduced demand, boosted renewables, and the near-total abandonment of coal pushed last quarter’s carbon emissions from electricity generation below 10 million tonnes.

Emissions are at their lowest in modern times, having fallen by three-quarters compared to the same period ten years ago.  The average carbon emissions fell to a new low of 153 grams per kWh of electricity consumed over the quarter.

The carbon intensity also plummeted to a new low of just 18 g/kWh in the middle of the Spring Bank Holiday.  Clear skies with a strong breeze meant wind and solar power dominated the generation mix.

Together, nuclear and renewables produced 90% of Britain’s electricity, leaving just 2.8 GW to come from fossil fuels.

The generation mix over the Spring Bank Holiday weekend, highlighting the mix on the Sunday afternoon with the lowest carbon intensity on record

National Grid and other grid-monitoring websites reported the carbon intensity as being 46 g/kWh at that time.  That was still a record low, but very different from the Electric Insights numbers.  So why the discrepancy?

These sites report the carbon intensity of electricity generation, as opposed to consumption.  Not all the electricity we consume is generated in Britain, and not all the electricity generated in Britain is consumed here.

Should the emissions from power stations in the Netherlands ‘count’ towards our carbon footprint, if they are generating power consumed in our homes?  Earth’s atmosphere would say yes, as unlike air pollutants which affect our cities, CO2 has the same effect on global warming regardless of where it is produced.

On that Bank Holiday afternoon, Britain was importing 2 GW of electricity from France and Belgium, which are mostly powered by low-carbon nuclear.  We were exporting three-quarters of this (1.5 GW) to the Netherlands and Ireland.  While they do have sizeable shares of renewables, they also rely on coal power.

Britain’s exports prevented more fossil fuels from being burnt, whereas the imports did not as they came predominantly from clean sources.  So, the average unit of electricity we were consuming at that point in time was cleaner than the proportion of it that was generated within our borders.  We estimate that 1190 tonnes of CO2 were produced here, 165 were emitted in producing our imports, and 730 avoided through our exports.

In the long-term it does not particularly matter which of these measures gets used, as the mix of imports and exports gets averaged out.  Over the whole quarter, carbon emissions would be 153g/kWh with our measure, or 151 g/kWh with production-based accounting.  But, it does matter on the hourly timescale, consumption based accounting swings more widely.

Imports and exports helped make the electricity we consume lower carbon on the 24th, but the very next day they increased our carbon intensity from 176 to 196 g/kWh.

When renewable output is high in Britain we typically export the excess to our neighbours as they are willing to pay more for it, and this helps to clean their power systems.  When renewables are low, Britain will import if power from Ireland and the continent is lower cost, but it may well be higher carbon.

Two measures for the carbon intensity of British electricity over the Bank Holiday weekend and surrounding days

This speaks to the wider question of decarbonising the whole economy.

Should we use production or consumption based accounting?  With production (by far the most common measure), the UK is doing very well, and overall emissions are down 32% so far this century.  With consumption-based accounting it’s a very different story, and they’re only down 13%*.

This is because we import more from abroad, everything from manufactured goods to food, to data when streaming music and films online.

Either option would allow us to claim we are zero carbon through accounting conventions.  On the one hand (production-based accounting), Britain could be producing 100% clean power, but relying on dirty imports to meet its entire demand – that should not be classed as zero carbon as it’s pushing the problem elsewhere.  On the other hand (consumption-based accounting), it would be possible to get to zero carbon emissions from electricity consumed even with unabated gas power stations running.  If we got to 96% low carbon (1300 MW of gas running), we would be down at 25 g/kWh.  Then if we imported fully from France and sent it to the Netherlands and Ireland, we’d get down to 0 g/kWh.

Regardless of how you measure carbon intensity, it is important to recognise that Britain’s electricity is cleaner than ever.

The hard task ahead is to make these times the norm rather than the exception, by continuing to expand renewable generation, preparing the grid for their integration, and introducing negative emissions technologies such as BECCS (bioenergy with carbon capture and storage).

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Front cover of Drax Electric Insights Q2 2020 report

Electric Insights Q2 2020 report [click to view/download]