Drax Margins hit by soaring Carbon-Credit cost

Drax seems to be paying high price for running country’s biggest carbon contaminating power station. Its half year earnings have shown steep decline thanks to the higher expenditure of purchasing carbon credits. Company’s current half-yearly profit of GBP 150 Million is in stark contrast with GBP 273 Million figure for the last year. Company is further expecting annual profits to maintain the equally dismal streak.

Drax owns 4000 MW power station in North Yorkshire that accounts for 7% of total power generation in country. Last year, Drax spent £11 Million for buying carbon credits. This year, it already has spent £107m. Implementation of second phase of European emissions trading scheme has reduced Drax’s carbon allocation which has resulted in higher outlay for acquiring required carbon credits. However, firm is still planning to pay £ 50m to its shareholders as dividend.

Company is favoring Britain’s plan to build more coal-driven power plants. Its CEO, Dorothy Thompson, advocated more reliance on coal-based power generation since neither wind nor nuclear can match the constant electricity supply feature of coal. She also heralded coal as the only viable source of energy. Despite her support for coal, she also declared that the firm is looking to augment the output by the use of alternative resources. She said that although biomass is not as economic sources of energy as coal but she expects it to be economically viable, considering the impact of reduced carbon emissions. However, firm seems to be grossly ignoring the environmental impact of such power stations.

Please visit www.draxgroup.plc.uk for more