Recommendations & Conclusions
25 items
2
Recommendation
22nd Report - Government’s support for …
Deferred
DESNZ has not made clear how its plans to strengthen the sustainability rules might work in practice. In its Biomass Strategy, published in August 2023, DESNZ committed to develop and consult on a common sustainability framework which could be applied to new future biomass policies and schemes across different sectors …
Government response. The government states that providing the KPMG report (requested in point c) is not its responsibility, as the reports belong to Drax and it is up to Drax to release them. The response does not address points 'a' or 'b' …
HM Treasury
3
Conclusion
22nd Report - Government’s support for …
Rejected
We are not convinced the transitional support agreement between DESNZ and Drax provides good value for money for consumers. Government announced in February 2025 that it had agreed heads of terms for a deal to support Drax that will run from 2027 to 2031. The new support package means Drax …
Government response. The government disagrees with the recommendation, stating the proposed Drax contract prioritized secure, low-cost electricity supply over BECCS transition. It argues that including BECCS contractual requirements would expose the government to unacceptable legal and cost risks before a full assessment …
HM Treasury
4
Conclusion
22nd Report - Government’s support for …
Accepted
The deployment of BECCS has been repeatedly delayed, even though it remains a key part of the government’s plans to decarbonise the UK. The Climate Change Committee (CCC) and DESNZ both see BECCS as essential to the UK achieving its decarbonisation goals from Carbon Budget 6 (2033–37) onwards. Government initially …
Government response. The government agrees, stating it will publish a report detailing its plan to meet carbon budgets and net zero targets. Additionally, an Independent Review of Greenhouse Gas Removals has been commissioned to assess how technologies like BECCS can assist the …
HM Treasury
5
Conclusion
22nd Report - Government’s support for …
Accepted
There are number of risks to the supply of biomass that need effective management. DESNZ’s Biomass Strategy identified a number of challenges for its use in the future which it needs to manage, including making sure that it has a secure supply of biomass and that it prioritises its use. …
Government response. The government agrees and states it continuously monitors the biomass supply landscape, including regulatory changes and market dynamics. It emphasizes ongoing reliance on international pellet supply, primarily from the US, as domestic production at a comparable scale is not possible.
HM Treasury
1
Conclusion
22nd Report - Government’s support for …
Accepted
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Energy Security and Net Zero (the Department) and the Office of Gas and Electricity Markets (Ofgem) on the government’s support for biomass.1
Government response. The government agrees and is reflecting on current evaluation and audit processes to incorporate lessons into future plans, including the new Drax contract. This work will be strengthened by the forthcoming appointment of an independent sustainability advisor.
HM Treasury
6
Conclusion
22nd Report - Government’s support for …
Acknowledged
The Department for Energy Security and Net Zero (DESNZ) has overall responsibility for government’s approach to supporting biomass. In August 2023, DESNZ published its Biomass Strategy setting out the significant role it considers biomass can play in achieving net zero by 2050.6 The Office of Gas and Electricity Markets (Ofgem) …
Government response. The government acknowledges DESNZ's overall responsibility for supporting biomass.
HM Treasury
7
Conclusion
22nd Report - Government’s support for …
We also received a high number of written submissions from stakeholders.8 Particular concerns drawn to our attention included: a. the impact of biomass production on biodiversity, forest stocks and the environment more generally. b. the terms of the agreement for transitional support to Drax power station from 2027 to 2031 …
HM Treasury
8
Conclusion
22nd Report - Government’s support for …
DESNZ has set two criteria—for land use and with respect to greenhouse gases—for all the schemes that support the use of biomass which require biomass users to demonstrate that the fuel they burn comes from sustainable sources.9 Ofgem administers, on behalf of DESNZ, most of the schemes that provide financial …
HM Treasury
9
Conclusion
22nd Report - Government’s support for …
Accepted
We are concerned that the certification schemes that are intended to prove that biomass used in the UK is sustainably sourced may not be fit for purpose.12 DESNZ told us that they and Ofgem have benchmarked these third–party certification schemes to ensure that they are in line with the sustainability …
Government response. The government agrees to complete a comprehensive assessment of its approach to gaining assurance around the sustainability of biomass by Autumn 2025. They will reflect on evaluation and audit processes and incorporate lessons learned into plans for the new Drax …
HM Treasury
10
Conclusion
22nd Report - Government’s support for …
Accepted
Ofgem explained that the level of oversight is dictated by the size of the generator.17 At present, the largest recipient of financial support for biomass is Drax, the largest biomass electricity generator by some distance.18 While Ofgem did find misreporting in Drax’s 2021–22 annual returns, Ofgem told us that these …
Government response. The government states that Ofgem's investigation into Drax, leading to a £25 million payment, proves the current assurance regime is working well, as breaches are investigated and actions taken.
HM Treasury
11
Conclusion
22nd Report - Government’s support for …
Accepted
Ofgem told us that there are 104 biomass power generators with a generating capacity over 1 MW, and which therefore receive the same level of oversight as Drax.22 In the last year, Ofgem found that 17 of these 104 had breached the support scheme’s sustainability criteria.23 While these non–compliant generators …
Government response. The government believes the Ofgem investigation into Drax and the subsequent redress payment demonstrates that the current assurance regime is working well, and breaches are thoroughly investigated and action taken.
HM Treasury
12
Conclusion
22nd Report - Government’s support for …
Acknowledged
In its Biomass Strategy, published in August 2023, DESNZ committed to develop and consult on a common sustainability framework which could be applied to all new future biomass schemes across different sectors of the economy. This consultation has yet to be launched, although DESNZ assured us that it would happen …
Government response. The government has been actively assessing its approach to sustainability assurance as part of a commitment to continuous improvement and to learn from international best practice and evolving international regulatory frameworks.
HM Treasury
13
Conclusion
22nd Report - Government’s support for …
Deferred
In August 2024, Ofgem published the outcome of its investigation into Drax.30 It told us that it had reviewed over 3,000 documents as part of its investigation.31 It also reviewed a report by KPMG, commissioned by Drax, which looked at its Canadian supply chain processes and reporting practices, from the …
Government response. The government states that this is not a matter for the government to consider, and it is for Drax to decide whether they wish to release the KPMG reports, adding that Ofgem has already published significant detail.
HM Treasury
14
Conclusion
22nd Report - Government’s support for …
Acknowledged
In February 2025, the government announced it had agreed heads of terms for a deal to support Drax that will run from 2027 to 2031. As part of this deal, DESNZ has required Drax to source 100% of its fuel from sustainable sources, rather than the current 70%. DESNZ intends …
Government response. The government is working with LCCC and Ofgem to develop robust and transparent monitoring arrangements, assessing the cost and resource implications of new requirements, and ensuring Ofgem is appropriately resourced. They expect the independent sustainability advisor to play a role …
HM Treasury
15
Conclusion
22nd Report - Government’s support for …
Acknowledged
One of the key themes of the government’s Biomass Strategy concerns the future availability of biomass.39 In 2021, the UK imported 9.1 million tonnes of wood pellets for use in energy production. Around 60% came from the US, 18% from the EU and 16% from Canada.40 DESNZ describes itself as …
Government response. DESNZ officials continue to monitor the international and domestic biomass supply landscape, but state that international pellet supply will continue to be vital, as UK biomass pellet production at a comparable scale would not be possible.
HM Treasury
16
Recommendation
22nd Report - Government’s support for …
Accepted
DESNZ noted that global biomass prices would strongly influence how significant a role biomass would play and in what sectors, given that there are several areas in which it can be used.45 Higher biomass prices could encourage a growth in domestic production, but this could reduce the amount of land …
Government response. The government agrees with the recommendation and will monitor the international and domestic biomass supply landscape, ensuring that the government is abreast of changes to regulatory arrangements, market dynamics, and other factors that drive the supply of and demand for …
HM Treasury
17
Conclusion
22nd Report - Government’s support for …
Acknowledged
Importing biomass involves long supply chains, which make it difficult to be sure that it is produced from genuinely sustainable sources.50 We are also concerned that recent international developments may undermine the system of carbon accounting that underpins the current supply of 39 C&AG’s Report, para 3.2 40 C&AG’S Report, …
Government response. DESNZ officials continue to monitor the international and domestic biomass supply landscape, but state that international pellet supply will continue to be vital, as UK biomass pellet production at a comparable scale would not be possible.
HM Treasury
18
Conclusion
22nd Report - Government’s support for …
In February 2025, the Minister for Energy issued a statement confirming that the government had agreed heads of terms with Drax power station for financial support between 1 April 2027, when current support arrangements end, and 31 March 2031. The Minister set out that the extension of its support for …
HM Treasury
19
Conclusion
22nd Report - Government’s support for …
DESNZ is clear that the agreement is intended to improve on current arrangements. Firstly, Drax will play a smaller role in the power system than it currently does. This means that Drax will receive support for a maximum of 27% of the time in each year, less than half of …
HM Treasury
20
Conclusion
22nd Report - Government’s support for …
Rejected
Despite the new terms of the agreement, there are risks that the support will not offer consumers value for money. The agreement was reached through bilateral negotiations with Drax and included no element of competition.56 While the government claims that the new arrangements will reduce consumer subsidies to Drax, it …
Government response. The government disagrees, stating that the proposed contract with Drax was intended to secure electricity supply at the lowest cost without the cost of procuring this via the Capacity Market auction, and the CfD framework cannot bind generators to investment …
HM Treasury
21
Conclusion
22nd Report - Government’s support for …
An investigation conducted by Bloomberg in 2022 concluded that Drax may previously have gamed its support to the detriment of consumers. It found that Drax shut down power generation and sold wood pellets on the open market to avoid paying back £639 million of subsidies as wholesale electricity prices spiked. …
HM Treasury
22
Conclusion
22nd Report - Government’s support for …
There are other factors which cast doubt on whether the government has reached a good deal. The new support agreement with Drax reduces the level of allowed supply chain emissions for the fuel it burns, from 55.6 grams of CO2 per megajoule to 36.6 grams.60 While DESNZ said that this …
HM Treasury
23
Conclusion
22nd Report - Government’s support for …
Deferred
Combining power generation using sustainably sourced biomass with carbon capture and storage (CCUS) has the potential to generate ‘negative emissions’–i.e. it could reduce the overall amount of CO2 in the atmosphere.65 Both the government and the Climate Change Committee (CCC), which advises the government on how best to achieve its …
Government response. The government agrees that BECCS is important and states that a forthcoming report, compliant with a High Court Order and the Climate Change Act 2008, will address policies and proposals to meet carbon budgets. They have also commissioned an Independent …
HM Treasury
24
Conclusion
22nd Report - Government’s support for …
Deferred
The government had initially planned for BECCS plant to begin operating at scale in 2030 as part of its broader CCUS programme.68 However, as the first phase of the CCUS programme (known as Track 1) does not include a BECCS plant, this target date will not how be achieved.69 DESNZ …
Government response. The government acknowledges the lack of a revised target date for BECCS and states that a forthcoming report, compliant with a High Court Order and the Climate Change Act 2008, will address policies and proposals to meet carbon budgets. They …
HM Treasury
25
Conclusion
22nd Report - Government’s support for …
Acknowledged
While much of the debate around biomass has focused on Drax, we received several written submissions outlining the important role played by smaller biomass generators in the UK. There are at present 54 regional biomass power stations that are primarily fuelled by waste wood from household waste recycling plants. These …
Government response. The government notes smaller-scale biomass generators can continue to be supplied by a variety of domestically sourced feedstock, but these are not suitable for the technologies currently used by larger-scale generators.
HM Treasury