The Drax energy company boasts that it is the UK’s largest source of renewable energy. Which is curious, since its key asset, Drax Power Station, is the most carbon-intensive generator in the country.
The story of Drax serves as a cautionary tale for Australia, as it grapples with the contradictions of net zero. However well-intentioned the UN’s climate change initiative may have been, the process has been deeply corrupted by rent-seeking, regulatory capture and creative accounting.
Nonsensical rules, such as the one that allows Drax’s carbon footprint to disappear, are ruthlessly exploited by corporations marketing themselves as champions of a low-cost, green energy future.
Governments participate in this scam because every tonne of emissions saved is something to boast about, whether the savings are real or not. The climate-obsessed elite have no desire to start tugging at loose threads, perhaps out of the fear that the whole suit of clothes will unravel.
At the start of the century, Drax was the largest coal-fired power station in Europe, in dire need of a refit in which no one was willing to invest.
In 2006, the Intergovernmental Panel on Climate Change reaffirmed an earlier ruling that burning biofuel is carbon neutral. It was followed by a European directive that bioenergy would be reclassified as renewable and therefore eligible for subsidies.
Drax changed its business model from an energy producer to a subsidy sponge. It converted its boiler to run on wood pellets and established a supply chain in the US and Canada. Drax invested in string of processing plants where offcuts, low-grade timber and other organic matter were compressed and dried.
The pellets are trucked to North American ports, loaded on to bulk-carriers, shipped to ports in northern England and loaded on to trains (diesel-hauled, if you care to ask).
In his 2010 book, Energy and the English Industrial Revolution, historian EA Wrigley concludes that the shift from a wood-burning organic economy to a coal-burning mineral economy was the enabler of industrial progress and prosperity.
Harvesting wood for fuel is land-intensive and competes with agriculture. Wood and biomass are bulky, inefficient and regionally constrained. They are prone to economic bottlenecks.
“In an organic economy, growth carries with it the seeds of its demise,” Wrigley writes.
None of those constraints have disappeared. Wood pellets are bulky. They have less than half the energy density of coal by volume, which means Drax needs to be fed with around 17 trainloads a day to produce around 2GW of electricity.
Burning wood is hardly clean. Drax was responsible for 14 million tonnes of CO2 emissions in 2024, according to the climate think-tank Ember.
Yet these emissions are wiped from the slate under international carbon accounting rules. CO2 released from biofuel is not counted against the UK’s emissions total because it is notionally reabsorbed by regrowth forests in the US and Canada.
There are more ridiculous ways to power a modern economy, and those, too, are plied up with subsidies to make the business case stack up. The most valuable subsidy is the granting of Renewable Obligation Certificates, which can be sold on the open market for £50 ($102.50) to £60 each. In 2023, Drax earned 42 per cent of its total revenue from selling ROCs and 58 per cent the old-fashioned way by selling electricity.
Australia’s embrace of net zero is following a similar path: grand pronouncements, bureaucratic frameworks, and market distortions that reward the appearance of decarbonisation over its reality. We should not be surprised at such glaring anomalies. What did we expect would emerge from a scheme framed by bureaucrats, twisted by governments for competitive advantage, expropriated by politicians for moral virtue, and gamed relentlessly by big energy and big finance?
Did we really imagine that this top-down masterplan for a new economy would succeed, when every previous attempt has failed? It is one thing for left-wing governments to fall for the intellectual conceit that the state should override decentralised decision-making to achieve a chosen social objective.
Conservatives, however, should know better. Conservatism starts with the sentiment that good things are easily destroyed but not easily created.
It puts them at a disadvantage in civic debate, since, as Roger Scruton pointed out, the work of destruction is quick and exhilarating while the work of creation is slow, laborious and dull. The conservative position is true but boring, while that of its opponents is exciting but false.
In few public policy areas does this aphorism sound the alarm bell more loudly than in the emotionally charged sphere of climate and energy. A politician with a masterplan for a cleaner economy delivering cheaper energy and skies filled with butterflies has an easier sell than one who is cautious about abandoning technology that has blessed humankind with unprecedented growth over the past three centuries.
Yet the conservatives’ lot in life is to embrace the unexciting, even if that means cutting across the grain of conventional wisdom, as it usually does in an era where progressive liberal ideas predominate in politics, academia and the media. Their consolation is that they will eventually be proved right, as those who prioritise empirical evidence and real-world experience over sentiment and theory always are.
The WA Liberal Party’s decision to reject net zero at the weekend’s State Council meeting will doubtless make life difficult for the opposition in the short term. Yet this issue goes beyond factional interplay to the question of honesty and character. Almost four years after the Coalition signed up to net zero, the notion that the target can be achieved is no less fanciful. The marginal reduction in emissions hardly justifies the cost.
We are no more confident that other countries will play by the rules and absorb the inherent risks of the great energy transition. The technologies in which we have invested so much hope, such as green hydrogen, have not matured. They are no more economically and technically feasible than they were in 2021.
Popular support for wind, solar, pumped hydro and batteries has crumbled, particularly in rural Australia, where the impact of industrial-scale wind, solar, high-voltage cables and battery parks is most keenly felt.
There is no pain-free way of resolving these glaring contradictions in the policy that the Coalition took to the last election. Yet it cannot be avoided. The longer the Coalition leaves the question of net zero hanging, the harder it will be.
Little changes as Richard White’s own right hand takes WiseTech reins
Despite a promise of being relentless about innovation, the tech billionaire has repeatedly shown a reluctance to be challenged.
AI revolution to wreak havoc on Australia’s middle class
A seismic shift in Australia’s job market looms as AI prepares to replace ‘tens of thousands’ of middle-class workers in banking, HR and call centres.