ESG Enforcement Tracker

Key facts:

In May 2023, the UK energy regulator Ofgem launched a formal investigation into whether power generation company Drax Power Limited was in breach of its annual profiling reporting requirements relating to the Renewables Obligations scheme and other related matters.

The investigation follows a documentary by the BBC investigative programme, Panorama, in which the company was accused of greenwashing and serious environmental harm.

Drax’s North Yorkshire power plant provides around 12% of the UK’s power. The plant was previously the largest coal-fired power plant in Western Europe but has dramatically decreased its CO₂ emissions from power generation by using biomass as a fuel instead of coal.

Biomass has traditionally been categorised as carbon neutral because the trees that are burnt absorb CO₂ as they grow. However, there has been growing concern over whether it should be deemed sustainable.

The investigation focused on the data governance and controls in place to ensure Drax’ compliance with its obligations under the Renewables Obligation Order 2015 (the Order). The Renewables Obligation scheme places an obligation on suppliers in the UK to provide Ofgem with a specified number of Renewables Obligation Certificates (ROCs) per MWh of electricity supplied, which they obtain from accredited generators. The obligation is set annually.

Under the scheme, Drax is required to report on the types of biomass that it has used. Annual profiling data is the reporting of ‘additional biomass characteristics’ and is not used for the issuing of ROCs. In its decision in August 2024, Ofgem found that there was an absence of adequate data governance and controls in place that had contributed to:

1. Drax misreporting data in relation to its annual profiling submission to Ofgem for 1 April 2021 to 31 March 2022 (CP20); and
2. Drax being unable to provide Ofgem with sufficient supporting evidence for its CP20 annual profiling submission.

While it found no evidence to suggest deliberate misreporting, it held that Drax had failed to comply with its obligations, and specifically its CP20 annual profiling submission in respect of forestry type and saw log proportions. Accordingly, Drax has:

• accepted the findings of the investigation;
• agreed to re-report their CP20 annual profiling submission in respect of forestry type and saw log proportions;
• confirmed it has updated its policies and procedures and that it will commission an independent external audit of the profiling data from its international supply chain and its profiling data reporting for 2023/2024, with the findings to be published;
• submitted to pay £25 million to Ofgem’s Voluntary Redress Fund.