The operators of the biggest biomass plant in western Europe have called for talks with the Treasury instead of mounting a legal challenge over the Chancellor’s decision to withdraw exemption from the Climate Change Levy (CCL).
Drax Power, which currently burns waste wood pellets in three of its six boilers at the plant near Selby in Yorkshire, lost the financial support with less than a month’s notice in the latest Budget.
The company’s share price slumped by more than a quarter on the day George Osborne made the announcement that renweable energy exemption from the CCL would cease on 1 August. The firm has put the financial cost at £90m over the next two years.
On 2 September, Drax and Northampton-based landfill gas and onshore wind company Infinis said they would seek a judicial review, arguing the 24-day notice was unreasonable and citing a previous decision by Osborne in 2011 giving the combined heat and power sector two years’ notice that their plants would be similarly affected.
Drax chief executive Dorothy Thompson, left, told MRW there was legal provision for “reasonable and appropriate notice” ahead of a significant policy change.
“We had designed our forward sales on the basis of [the exemption] being there and set our whole strategy on that.
“Our request to the Government, albeit through the courts, is they give a positive consideration to a reasonable and appropriate transition period. That is all we ask. We believe it is a reasonable request.”
Because the change has already occurred, Drax is looking for an expedited legal process but Thompson hopes that will not be needed.
“We are very keen to talk to Treasury to see if it is it necessary to go through a court process,” Thompson added, although she saw no chance of the decision itself being reversed.
Drax produces up to 8% of the UK’s electricity and the biomass development makes it the UK’s largest renewable electricity generator.
The majority of the pellet feedstuff is shipped in from the United States and comprises sawmill residues, non-commercial tree thinnings and harvest residues.
Two of the original six 1970s coal boilers at Drax have been converted and a third is burning 90% biomass.