UK-headed renewable energy major and biomass pioneer Drax Group plc (Drax) has announced that it has agreed on a Memorandum of Understanding (MoU) with Respira International Ltd (Respira), an impact-driven carbon finance business, which could see the largest volume of carbon dioxide removals (CDRs) traded so far, globally.
Under the terms of the MoU, announced on September 21, 2022, in conjunction with New York Climate Week, Respira will be able to purchase up to 2 million tonnes of CDRs from Drax over a five-year period.
Support BECSS deployment
This would enable buyers, such as corporations and financial institutions, to achieve their own carbon emissions reduction targets.
The creation of the CDRs would be linked to the future deployment of bioenergy with carbon capture and storage (BECCS), by Drax in North America.
The MoU between Drax and Respira supports a roadmap to secure binding commitments prior to a future final investment decision being made.
Drax already aims to invest over GBP 2 billion (≈ EUR 2.29 billion) in its UK BECCS project and its global supply chain by 2030, to remove 8 million tonnes of carbon dioxide (CO2) from the atmosphere each year.
In addition to this, it is developing investment plans for BECCS projects outside the UK, including in North America, which could remove a further 4 million tonnes of CO2 from the atmosphere annually.
Voluntary carbon markets and policy support needed
BECCS is widely seen as a critical technology required globally, because it is the only one available that can provide reliable, renewable power, supporting energy security, whilst permanently removing CO2 from the atmosphere.
This agreement with Respira will play a pivotal role in the development of voluntary carbon markets globally and the deployment of BECCS. The clear demand that we are seeing for engineered carbon removals, alongside the policies being developed by progressive governments in the US and UK to support BECCS, will enable the investment needed to kickstart a vital new sector of the economy, creating tens of thousands of jobs, often in communities which need them the most, said Will Gardiner, CEO of Drax Group.
Respira invests in high-quality carbon credits to unlock capital to invest in the creation and acceleration of carbon reduction and removal projects around the world.
BECCS in the US has the potential to offer a game-changing contribution to the fight against climate change, provide energy grid stability to those areas which need it most and also revolutionize the way companies approach decarbonizing their operations. Drax aims to be a global leader in the deployment of BECCS and our deal with Respira is a landmark moment for our business as well as the fight against climate change, Will Gardiner said.
In the US the US$739 billion Inflation Reduction Act (IRA), which marked the largest investment in climate action in the country’s history, includes an enhanced level of support for carbon removal technologies.
Supportive regulatory frameworks for CDRs, including BECCS, are being developed at the state level including in California (CA), Louisiana (LA), and Texas (TX).
Rising global temperatures underline that it is absolutely vital for corporates to augment existing carbon emissions strategies with further solutions to address the climate emergency. This partnership with Drax marks a new and exciting development for Respira as it is our first engineered carbon removals project, said Ana Haurie, CEO and Co-Founder of Respira International.
The deal between Respira and Drax is the biggest for CDR. The next biggest was for 100kt a year (400kt total) of Direct Air Capture (DAC) between Airbus and 1PointFive, which was announced in March 2022.
We are proud at Respira to be leading the way in the voluntary carbon market, supporting companies in their mitigation strategies by providing high-quality carbon credits. The deployment of critical technologies like BECCS by Drax, and the resulting engineered CDRs, very much have their place as an important instrument in the value chain management that supports corporate action, Ana Haurie said.
Drax Group has 18 operational pellet plants and developments with a nameplate production capacity of around 5 million tonnes a year.
Drax is targeting 8 million tonnes of production capacity by 2030, which will require the development of over 3 million tonnes of new biomass pellet production capacity.
Since announcing its ambition to deliver 4 million tonnes of CDRs from BECCS in locations outside the UK, Drax has been working on models for developing BECCS projects, primarily in North America.