Coal news and updates

The head of the UK’s largest power station has thrown down the gauntlet to government ministers with an offer to stop using climate-warming coal in as little as three years in return for more green energy subsidies.

Dorothy Thompson, chief executive of the Drax group, told the Financial Times the company could easily beat the 2025 deadline for phasing out coal power that ministers set in November, by converting more boilers at its huge North Yorkshire power plant so they burn wood pellets instead.

“We have project plans that we could execute within three years, so you could take our coal units off the system by 2020 if not before,” Ms Thompson said in an interview ahead of Drax’s annual shareholder meeting on Wednesday.

The company has already turned its 42-year-old Selby power station into one of the world’s biggest renewable generators over the past four years, by upgrading nearly half its six coal-fired boilers to burn wood pellets, mostly imported from the US.

But it has only done this after receiving subsidies and other support worth £451.8m in 2015, or 17 per cent of revenues at the power plant, which supplies about 8 per cent of the UK’s electricity.

It is a corporate transformation that has not been for the faint-hearted.

Exposed to endless shifts in government green energy policies, Drax’s daily share price has tumbled sharply at least five times in the past two years, on one occasion by as much as 28 per cent in a day. That was on the day of last year’s July Budget, when a climate change tax was applied to renewable generators, a step Ms Thompson likens to “putting an alcohol tax on apple juice”.

The climate change tax reduced Drax’s earnings before interest, tax, depreciation and amortisation by an estimated £30m in 2015 and is expected to have double the impact this year.

Source: Next