Source · Select Committees · Public Accounts Committee
Recommendation 14
14
Acknowledged
Government agreed Drax deal requiring 100% sustainable fuel, necessitating a tighter assurance regime.
Conclusion
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 to appoint an independent sustainability adviser to support Ofgem and the Low Carbon Contracts Company to ensure that the assurance process is robust and keeps pace with the science.36 DESNZ recognised that if a target of 100% is set, a “tighter” assurance regime will be required which would require “quite extensive changes to the way we do things now”.37 DESNZ is working on exactly what these arrangements might be, and assured us that “they will be robust and we will include disincentives and penalties if sustainability requirements are not met.” 38 30 Ofgem press release Ofgem closes investigation into Drax Power Limited (29 August 2024) 31 Q 80 32 Ofgem statement Drax investigation and renewables obligation subsidies (12 March 2025) 33 Q 80 34 Ofgem press release Ofgem closes investigation into Drax Power Limited (29 August 2024) 35 Q 5; Ofgem press release Ofgem closes investigation into Drax Power Limited (29 August 2024) 36 Statement by the Secretary of State for Energy Security and Net Zero, UIN HCWS424, 10 February 2025 37 Q 14, 28 38 Q 30 12 Securing the supply of sustainable biomass
Government Response Summary
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 in ensuring the ongoing effectiveness of strengthened sustainability arrangements.
Government Response
Acknowledged
HM Government
Acknowledged
2.2 As part of the planning for the implementation of the new sustainability criteria, the department is working closely with LCCC and Ofgem to develop robust, transparent monitoring arrangements. 2.3 This includes assessing the cost and resource implications of any new or strengthened thresholds and Monitoring, Reporting and Verification (MRV) requirements, and ensuring that these are proportionate and represent value for money. In particular, the department is committed to ensuring that Ofgem is appropriately resourced to deliver its ongoing support for the assurance of biomass sustainability. 2.4 DESNZ also expects the independent sustainability advisor to play a role in ensuring the ongoing effectiveness of these strengthened sustainability arrangements.