Windfall Drax
Tree burning , Issue 1635 Old Sparky writes… IF tree-burning power station Drax is to continue generating after 2027 when its vast subsidies run out, it wants even more billions in bungs for its future biomass schemes.

Even though the scientific evidence suggests its plans do nothing for decarbonisation but prolong the false "carbon accounting" on which Drax depends (Eyes passim), civil servants have drawn up contracts to give it the new types of bungs it demands.

Everything hinges on energy secretary Ed Miliband's decision, due this month. Miliband is a tree-burning sceptic, even though persisting with Drax's "zero carbon" fallacy is vital to his claim, purely on paper, that decarbonisation is feasible by his fanciful 2030 target (Eye 1630).

But chancellor Rachel Reeves, whose constituency isn't far from Drax and who wants growth and investment at any price, has told him he's to give Drax whatever it asks for. It'll fall on electricity bills, not her budget.

Preparing to fail?
Having brazened out a recent £25m Ofgem fine for poor record-keeping and an adverse report from the National Audit Office (Eyes 1616 and 1632), Drax might now seem to be on the brink of triumph. But insiders report that company executives fear the whole game might come down and are even preparing the lifeboats. There's plenty for them to worry about.

Top of the list are the many Drax staff fed up with supporting the deceptions on which Drax's claim on a "renewables" subsidy is based – the trickery that allows Drax to claim it emits no net CO2. This is intrinsic to its business model but has a corrosive effect on many staff, whose increasing attempts to blow the whistle internally are being ignored.

Chris Rawlinson, regional union organiser for Unite, was escorted off the premises with the threat of dire consequences if he pursues whistleblower cases. The unions, like Reeves, are mainly concerned for the jobs Drax represents.

Skeletons in closets
In particular, some former civil servants whom Drax hired to help with policy work soon found themselves at odds with the company when they realised what they had signed up for; one who was let go is pursuing legal action. Two embarrassing issues could emerge when their lawyers demand document disclosure.

Last week the Financial Times mentioned anonymous internal Drax emails making it clear the company knew it had screwed up. The Eye has been told they were from Claire Sedgwick, a senior Drax lawyer involved in certifying its biomass sources. She was investigating whether Drax had grounds to sue the BBC for its 2022 Panorama programme which revealed the unsustainability of some of Drax's sources of trees.

Drax didn't sue.

Secondly, insiders suggest that the fuel costs Drax claimed on tax returns relating to the energy profits levy on windfalls made during the energy crisis, could be open to challenge.

Drax produces much of its own fuel, in a market for wood pellets of limited price transparency (unlike the markets for gas and electricity): the scope for HM Revenue & Customs to query its cost reporting is considerable. Drax, of course, has already been fined by Ofgem for shoddy fuel reporting.

Duty of candour
Government decision-making on Drax's demands for more subsidies leaves it open to judicial review. Drax has benefited from partisan support in Whitehall, even though last week the Tories belatedly came out against future bungs for tree-burning.

The "duty of candour" governing judicial reviews will force ministers, civil servants and Ofgem to acknowledge what they know about the very strong case against tree-burning producing zero carbon, which Whitehall blithely ignores, and Drax's efforts to obscure the facts.

Will to survive
Litigation arising from whatever cause would likely see thin-skinned chief executive Will Gardiner called to the stand. Drax staff say Gardiner "wets himself" whenever he is called before even a select committee: a court appearance would be torture.

To avoid any of the above potential disasters, Gardiner (who has dual US-UK citizenship) and other senior Drax suits have set up Elimini, a "lifeboat" company which could take Drax know-how – including the carbon accounting tricks – to exploit tree-burning opportunities in the US and elsewhere.

Law firm Mishcon de Reya is circling the leaking ship, assessing whether Gardiner et al could also be sued for misleading Drax shareholders. The US might be a more comfortable place to be when any of this hits the turbine blades.

Time surely for Miliband to give his decision on prolonging the Drax farce.