YORKSHIRE, England ― The vast Drax power station in north Yorkshire helps keep Britain’s lights on.  The Labour government is just the latest administration to pour subsidies worth billions of pounds into the plant, which burns tons of imported wood pellets every year to generate a big slice of the power the country needs ― a crucial role after global energy markets were upended by Vladimir Putin’s invasion of Ukraine. Drax’s bosses also claim that, because their biomass operations are deemed climate-friendly, ministers will miss their net zero goals without it.   Yet its critics are growing in number and volume.  Climate campaigners shout greenwashing. Senior politicians who once backed Drax now trash its impact on the environment. The idea of relying on biomass long-term is “dangerous,” says one Labour backbencher.  All the while, Drax is locked in talks with the government over even more financial support, this time for upgrades which would secure its future and ensure its compatibility with stringent climate goals. At the same time, the U.K.’s leading financial watchdog is digging deep into its operations — an investigation which could lead to a hefty fine and another dent to the plant’s reputation.   POLITICO went inside.  INSIDE THE FACTORY  The Drax Power Station covers a sprawling 1,250 acre site near the Yorkshire village of Selby. Once a bastion of coal power, it is now the U.K.’s leading source of biomass, shipping in wood pellets from trees harvested in North America.   The plant consists of 12 cooling towers with chimneys taller than the London Eye. Its four biome domes are 65 meters high, each vast enough to house the Royal Albert Hall. These power its four biomass terminals, which meet 8 percent of all the U.K.’s energy demands. The pellets are moved around the site on a 25-carriage train, decorated with the Drax logo.   POLITICO navigated the narrow walkways above the factory’s giant terminals, wearing ear protectors to block out sounds of the factory floor, and squeezed into clanking elevators. Hi-viz workers dragged wheelbarrows of material around the site.  Successive Conservative and Labour governments have decided Drax is essential to the U.K. energy supply. Crucially, watchdogs and ministers also treat biomass as a renewable power source (because emissions are offset through planting new trees) — giving Drax a central role as the government strives to hit stringent targets on reducing emissions (known as carbon budgets.)  “It does help keep the lights on as a really big chunk of capacity. It is the single biggest potential point source of negative emissions in a country, making it very appealing when connected to carbon capture and storage,” said Adam Bell, former head of energy at the old Department for Business, Energy and Industrial Strategy, now director of policy at the Stonehaven consultancy.   “By itself it could make achieving carbon budgets considerably easier, which is why [the Department for Energy Security and Net Zero] like keeping it in play.” Money has flowed in.  Conservative ministers handed Drax an estimated £6 billion in subsidies between 2012 and 2024. Their Labour successors earlier this year unveiled £2 billion in fresh support.  Drax critics are growing in number and volume. | Lab Ky M/Getty Images The latest tranche of cash is designed to back Drax’s operations between 2027 and 2031, as it negotiates with government over upgrading the plant with carbon capture technology (CCS) which would catch and safely dispose of the carbon it emits.  “The situation that we inherited from the last government meant that we had to consider matters such as security of supply and how we could secure the best deal for bill payers. That is what we did,” Energy Secretary Ed Miliband told MPs in March.  “I’ve taken many a minister around the power station,” said Richard Gwilliam, Drax’s director of future operations. Miliband, for now at least, has not taken up the offer.   FROM RIGHT AND LEFT   But as ministers continue to strike deals with Drax, its critics are circling.  At the point of generation, green campaigners argue, Drax’s burning of wood pellets is more emissions-intensive than coal. The climate think tank Ember reckons the Yorkshire plant was the U.K.’s single largest source of CO2 emissions in 2024 — producing 13.3 million tons.  “Relying on millions of tons of imported wood to keep the lights on is dangerous,” Labour MP Alex Sobel wrote in The Guardian this summer, backing tighter government terms on the subsidies and slamming biomass as an alternative to clean energy like solar and wind farms. Former environment minister and fellow Labour MP Barry Gardiner is campaigning for the energy regulator to reopen investigations into Drax’s financial reporting.  Polly Billington, a Labour MP and member of parliament’s Energy Security and Net Zero Committee, says she backs government efforts to introduce a “much stricter regime by tightening sustainability requirements, reducing the overall subsidy and closing profit loopholes.”  On the right, Conservative Shadow Energy Secretary Claire Coutinho, who approved Drax’s expansion plans  when she was in office in 2024, is now among its fiercest critics. “Going green by burning trees is absurd,” she said last month.   Reform UK’s Energy Spokesperson Richard Tice says his party would end the subsidies, calling the environmental damage “scandalous.”  But Drax insists that biomass, combined with carbon capture upgrades, is the only way for the U.K. to hit its green goals.   “If this country wants to meet its climate targets, I can’t see a way to do it without large scale carbon removal. That’s not [just] me, that’s the committee on climate change,” Gwilliam said. Last year Will Gardiner, Drax’s chief executive, warned the government’s 2030 decarbonization goal is in jeopardy if the company does not get its CCS in place.  The Climate Change Committee, in its seventh carbon budget, said: “While its role is limited to sectors where there are few, or no, alternatives, we cannot see a route to net zero that does not include CCS.”   Conservative Shadow Energy Secretary Claire Coutinho, who approved Drax’s expansion plans  when she was in office in 2024, is now among its fiercest critics. | Ian Forsyth/Getty Images “I think we can find common ground on the economic value these projects can bring,” Gwilliam said. He has talked with other companies in the Humber about the value of local industrial jobs, he said. “These are highly skilled, good quality industrial jobs, which are being repurposed towards a sort of greater role than carbon intensity.” MEET THE REGULATORS  Away from the political pressure, the City regulator is also gunning for Drax. In August, it opened an investigation into statements the company has made about its biomass sourcing and the compliance of recent annual reports with listing and transparency rules.  In a separate probe, energy regulator Ofgem slapped the company with a £25 million fine last year, after finding the firm breached reporting requirements for its green subsidies.  Gwilliam twice declined to comment on the FCA’s ongoing investigation, instead referring POLITICO to Drax’s initial statement confirming its cooperation with the watchdog.   The FCA can impose regulatory sanctions including public censure and financial penalties. This year it has fined Barclays around £40 million and Monzo Bank £21 million for breaches.  Meanwhile, Drax executives are locked in talks with the government over long-term financial guarantees, mirroring those already available to wind and solar developers, to back the CCS upgrade plans, known as BECCS. Shareholders have been briefed to expect a decision by the end of the year. A green light would lock the U.K. in to supporting its power station for generations — to the horror of some Whitehall insiders.  “Giving it a BECCS upgrade would be a scandalous waste of money and will feed the net zero backlash more oxygen,” warned one former DESNZ official. “The company and supply chain is always going to be investigated for something or other because the business model and green credentials are fundamentally nonsense.”  But Drax remains bullish. “I hope we don’t see an erosion of the U.K.’s lead as a climate champion, and I think projects like this [BECCS] can be the poster child for the positive impact net zero can have on local economies,” Gwilliam said. A government spokesperson said that “sustainable biomass contributes to our decarbonization efforts.” They added: “Drax will operate for less time under a clean power system and will need to use 100 percent sustainably sourced biomass, with not a penny of subsidy paid for anything less. There will be substantial penalties for any failure to meet these strict criteria, protecting both consumers and the environment.”

Prime minister’s questions: a shouty, jeery, very occasionally useful advert for British politics. Here’s what you need to know from the latest session in POLITICO’s weekly run-through. What they sparred about: Conservative Leader Rishi Sunak had plenty to go on as speculation swirls in Westminster about budget tax-hikes — and as Keir Starmer’s government continues to bat away questions on freebies. But Sunak opted for a curveball, picking global affairs as Foreign Secretary David Lammy prepares for a China trip. Will Lammy use his visit to condemn China over aggressive exercises in the crucial Taiwan strait? Critical friend? Starmer said Beijing’s activity in the strait is “not conducive to peace and stability.” But he trotted out a familiar refrain, balancing co-operation on issues like climate change while vowing to challenge China on human rights. Bookmark this page and see if it actually happens. Pressed on China’s detention of Hong Kong publisher Jimmy Lai, Starmer agreed the jailing was “politically motivated” — and answered in the affirmative when grilled on whether the government will sanction any Chinese business involved in Russia’s invasion of Ukraine. Lobbying rumble: Sunak pressed the PM on why Britain’s overseas lobbying register, meant to shield the U.K. from interference from foreign states has been “halted” under the new government. The set-up has been years in the making and was supposed to put the U.K.’s rules into line with allies like Australia and the U.S. But the Home Office said last month that it is “no longer expected that the scheme’s requirements will come into force in 2024.” But but but: Starmer said the claim was “not correct.” Sunak insisted his question was indeed correct. So that’s all sorted then. One for intrepid lobby journalists to dig into. Back to normal: The Tory leader then further cheered up his diminished band of backbenchers by going after the PM on a subject dear to their hearts: freedom of speech on campus. “British universities are increasingly a rich feeding ground for China to exert political influence,” Sunak said, and asked why the government had ditched Tory legislation on the subject. Starmer shot back: “I really don’t think party political points on national security are at all appropriate.” Party political points at PMQs? Never! Nothing new under the sun: If any further proof was needed that PMQs is scripted, Starmer’s final answer saw him happily trot some … party political points on how Labour will — all together now — “fix the foundations” to “grow our economy” and “rebuild our country.” Helpful intervention of the week: Labour’s Teesside MP Luke Myer celebrated investment in carbon capture and claimed to have met normal people applauding the government’s plans. That let Starmer bang on about his big investment summit earlier this week. Unhelpful gaffe of the week: He’s only been doing this for 100 days now, but you’d think Keir Starmer might have learned he’s actually in charge. In an unfortunate slip of the tongue, however, Starmer called Sunak “prime minister.” Totally unscientific scores on the doors: Starmer 6/10 … Sunak 8/10. Sunak just edged it. Although he studiously avoided the open goal of Labour’s pre-budget tax speculation and isn’t exactly getting his defeated troops cheering the house down, the PM had some awkward questions as the government tries to keep a lid on criticism of its China policy and gently re-engages with Beijing. The outgoing Tory leader has just two sessions left before he leaves the stage. Is he getting quite good at this?

The EU is struggling to get Gulf countries on board with a series of pro-Ukraine commitments ahead of a leaders’ summit on Wednesday in Brussels, according to a draft statement seen by POLITICO.  The EU-Gulf summit, the first of its kind, is meant as a show of unity on everything from trade to energy and security. But a leaked joint statement that circulated on Monday instead highlighted the tense disputes between the EU and Gulf states over Russia’s war in Ukraine.  In one passage, for instance, the EU proposed language calling on all countries to end material aid for Russia and condemning Iran for giving Moscow missiles and drones to use against Ukraine. But the Gulf countries instead wanted more generic language urging all parties to stop sending weapons to the conflict. The possible solution? A joint proposal to ditch the paragraph completely. In another section, the Gulf countries suggested deleting a passage vowing to improve joint work on sanctions circumvention — a clear allusion to the war-era penalties by Western allies targeting Moscow’s finances, and to their struggles in enforcing them. The United Arab Emirates, one of the Gulf states involved in Wednesday’s summit, has reportedly been a particular irritant for Western allies on sanctions evasion. The linguistic dispute reflects the ongoing difficulties the EU and its Western allies have had in winning others over to their coalition to support Ukraine and constrain Russia. Yet while the most contentious issues are seemingly off the table for Wednesday, the two sides do appear to have found common language on several fronts.  Not mentioned was the EU’s deepening fossil-fuel relationship with Qatar. | Karim Jaafar/Getty Images According to the document, they are set to condemn the barrage of missile strikes on Ukraine’s energy infrastructure — an acute concern as winter approaches — although Russia isn’t explicitly named in the text. The two sides are also set to reaffirm a growing partnership on energy, specifically citing renewable energy, hydrogen, the annual COP climate summits and the Paris Agreement, the 2015 pact to keep global warming well below 2 degrees Celsius. Not mentioned was the EU’s deepening fossil-fuel relationship with Qatar, a Gulf state that has sold Europe increasing amounts of liquid natural gas as it tries to ditch Russian energy. On the trade front, the EU has been seeking bilateral trade agreements with various Gulf countries after an attempt to clinch a deal with the whole Gulf region fell apart in 2008. The joint statement shows the Gulf countries pushing back on the EU’s pivot to a one-to-one approach, suggesting a return to regional talks.  Gulf countries are not necessarily unified on the matter, however: Saudi Arabia is more keen to seek a region-wide deal, while the United Arab Emirates is actively seeking a bilateral deal with the EU, hoping to launch trade talks with Brussels before the end of the year.  The two sides are expected to keep working on the statement, with the EU aiming to finalize things on Tuesday.

Today, we proudly announce the launch of a new public institution in Great Britain – the National Energy System Operator (NESO). NESO is built on the strong foundations of the Electricity System Operator, formerly part of the National Grid group. It now stands as an independent, public corporation entrusted with the responsibility of ensuring reliable, clean and affordable energy for all Great Britain. Our responsibilities represent a departure from the traditional approach to energy system planning. We will break down silos and consider all energy vectors to design the networks and markets that Great Britain needs. In this sense, NESO will be responsible for overseeing Great Britain’s electricity and gas networks, planning infrastructure, and exploring emerging technologies such as carbon capture and storage. By aligning our efforts with our neighbors, we will deliver efficient, secure and clean energy for all. > Having served as the CEO of EirGrid, the Irish Transmission System Operator, I > understand that the energy transition cannot happen in isolation. > Collaboration with our European partners is essential as we plan and develop > new energy infrastructure. We are committed to working closely with neighboring countries across the Irish, Celtic and North seas, accelerating toward climate targets and minimizing costs for consumers. This spirit of cooperation is vital for both the EU and the UK to navigate the energy transition successfully. In this spirit, I wholeheartedly welcome the UK’s engagement with the North Sea Energy Cooperation (NSEC) forum. NESO eagerly anticipates supporting the UK’s government at the upcoming NSEC forum in Copenhagen as we explore how the North Sea, Europe’s greatest energy resource, can be best used for everyone’s benefit. As the first CEO of this groundbreaking organization, I believe that NESO’s creation is a pivotal move at a critical time. While the progress made so far to decarbonize the British electricity grid is commendable, it alone cannot fulfil Great Britain’s ambition for a clean power system by 2030 and a net-zero economy by 2050. Since the world’s first coal-fired power station was turned on in London in 1882, Great Britain has relied on coal to generate electricity. Yesterday, in a small village nestled in the heart of England, that 142-year chapter came to a close as Ratcliffe-on-Soar, Great Britain’s last coal-fired power station, was powered down for good. Even just a decade ago, coal accounted for over 30% of Great Britain’s electricity generation. Today, renewable sources like wind and solar power have taken its place. Great Britain has emerged as a global leader in decarbonization, steadfast in its commitment to a sustainable future and the journey toward net-zero emissions. As a newly formed independent organization, we now look forward to working with our European partners to ensure we can decarbonize our collective economies and meet our ambitious climate targets. Beyond our commitment to climate goals, NESO plays a crucial role in ensuring energy security. By collaborating with European partners, we can build a secure and resilient European energy system that leverages the vast natural resources across the continent. > In recent years, operational collaboration between electricity and gas system > operators across Europe has proven instrumental in managing energy crises and > ensuring reliable supplies for all citizens. From long-term planning to > minute-by-minute operational dialogue. From long-term planning to minute-by-minute operational dialogue, we worked hand in hand with fellow transmission system operators, ensuring interconnectors enhanced our collective energy security and kept Europe’s lights on. This energy cooperation between Great Britain and Europe is not a recent development. It dates back to 1961 when the first sub-sea electric interconnector connected Great Britain and France. Today, there are nine electric and three gas interconnectors linking Great Britain with its neighbors, and NESO remains committed to working closely with our neighbors as we design and plan the future energy infrastructure. NESO’s creation marks a significant milestone in Great Britain’s energy landscape. With its holistic approach, collaborative mindset and unwavering commitment to energy security, NESO is poised to take the lead in Great Britain’s energy transition and contribute to the global fight against climate change. As Great Britain continues its journey toward clean power by 2030 and a net-zero economy by 2050, NESO reaffirms its commitment to open, collaborative and constructive engagement with our European and international colleagues and partners. In her Political Guidelines, the European Commission’s president, Ursula von der Leyen, acknowledged the importance of EU-UK cooperation ‘on issues of shared interest’, including energy. Our secretary of state for energy security, Ed Miliband, and net zero has also held constructive discussions with the executive vice president of the European Commission, Maroš Šefčovič, regarding our energy relations, and we look forward to continuing constructive dialogues with European partners to meet our shared vision of a sustainable and just economy. > Today marks the beginning of an exciting new chapter in the annals of the UK > and Europe’s decarbonization journey. Together, we can achieve remarkable > things for a sustainable future.