Drax optimistic about phasing out coal

The chairman of Drax said on Wednesday that the FTSE 250 power company could beat the 2025 deadline set by ministers in November to end the use of coal generation.

In a statement ahead of the general annual meeting, Philip Cox said the group’s power station burnt 6m tonnes of coal in 2015 compared to almost 10m in 2010.

“An increase in the use of sustainably sourced biomass is the fastest, safest and most affordable means by which the UK can move away from coal and support more wind and solar generating capacity in the future.

“With the right policy frameworks we could become 100% renewable through the full conversion of our three remaining coal units and we could do this well before 2025. We will continue to work closely with the government to help them reduce the UK's reliance on coal.”

Cox said Drax takes sustainability very seriously, pointing out that the company only sources wood from countries that already have huge working forests where it provides another market for low grade material that local solid-wood industries aren't using.

In addition, the company never works in countries that lack proper regulation and requires that all suppliers pass tough screening and sustainability audits conducted by independent auditors.

Drax only takes wood from working forests that grow back and stay as forests and never sources from areas that are officially protected.

Cox said his first year as chairman had been challenging and 2015 was a tough year for any business in the energy sector.

Underlying earnings were down £60m on the previous year at £169m, but only slightly below the group’s expectations at the start of the year.

“Given the numerous challenges faced, not least the dramatic falls in commodity prices as well as the removal of the Levy Exempt Certification scheme, this was a creditable financial performance,” the company said.

Drax said the business performed strongly and it will complete its transformation to a predominantly biomass-powered generator this year.

Shares were down 0.4% to 304.30p at midday.

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