The BBC broadcast a programme tonight (3 October) entitled ‘The Green Energy Scandal Exposed’ which made a number of claims about Drax, specifically that the company was breaking the rules on how it generated supposedly ‘renewable’ energy from wood. As our Gaia portfolios are run to a sustainable/positive impact mandate, and have a significant exposure to the renewable energy sector, we felt that we should provide some comment on the programme and the claims made within it.
Firstly, it is worth stating that most parts of the renewable energy sector do exactly what they claim to do, which is generate energy in a more environmentally-friendly way than fossil fuels, thereby playing a key part in the global plans to transition to a net zero economy. Therefore, whilst much of tonight’s programme is disturbing, it should be made clear that it was only covering one rather contentious part of the renewable energy sector, namely biomass. Whatever the issues with that sub-sector, the whole renewable energy sector should not be tarnished with the same brush.
Secondly, we have had concerns about Drax and similar companies for some time. Whilst the idea of using wood chippings and other waste products that would otherwise rot and produce no benefit makes intuitive sense, the fact that burning wood produces greater levels of CO2 than coal is obviously problematic (whilst Drax have announced plans to implement large scale carbon capture, that has yet to happen). Furthermore, the idea that the impact of removing trees from mature forests can be offset by new plantings is highly contentious, and one with which we struggle. As a result, we have never held Drax within our Gaia portfolios. We believe that this shows the benefit of active management and our deep-dive research into our holdings, as the fact that a company meets someone else’s technical definition of a renewable energy generator does not mean that we will agree with that assessment, or see it as a sustainable business that meets a high enough standard to be included in our portfolios.