Drax is in a rush to establish a lifeline for its £2 billion carbon capture project

After Drax’s £2 billion carbon capture biomass project was rejected for Track-1 status by Energy Secretary Grant Shapps, the owner of the UK’s largest power station is urgently seeking a lifeline.

Following the announcement, Drax’s shares fell by up to 12% on Thursday morning but later rose by 5.4% after the company was invited to participate in “formal bilateral discussions” with the government.

The UK government plans to release its biomass strategy by the end of June, which will outline how the technology can be implemented.

During a parliamentary session, energy minister Graham Stuart emphasized that Drax and its carbon capture technology are “critically important” to the country. Drax plans to invest £2bn in fitting the Bioenergy with Carbon Capture and Storage (BECCS) technology to some of the units at its Selby plant in North Yorkshire, which could create up to 10,000 jobs.

CCS, which stands for carbon capture and storage, is a technique that involves capturing and storing carbon dioxide prior to its release into the atmosphere. This technology can capture up to 90% of the CO2 emissions that result from the combustion of fossil fuels in activities like electricity generation and cement manufacturing.

After capturing CO2 emissions, the gas is compressed into a liquid state and can be transported by ship, pipeline, or road tanker. The CO2 can then be pumped underground into depleted oil and gas reservoirs or coal beds for storage. According to Will Gardiner, the CEO of Drax, the implementation of BECCS at the Drax power station will play a significant role in helping the UK achieve its net zero targets, create jobs across the north, and ensure the country’s long-term energy security.

Mr. Gardiner confirmed that the government has verified their project’s deliverability and remains committed to achieving 5Mtpa of engineered greenhouse gas removals by 2030, a goal that cannot be accomplished without BECCS at Drax Power Station.

Therefore, Drax will enter formal discussions with the government to move the project forward. However, concerns were raised in Whitehall this month that Drax may shift its £2bn carbon capture investment to the US after Joe Biden’s green subsidy package, which provides subsidies and tax credits worth about $370bn (£309bn) for a range of green technologies.

According to Mr. Gardiner, if the UK government does not continue to move forward at a rapid pace, the investment may shift to other countries, including the US, and the UK may become less of a priority over time.

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