1. November 2008 Drax – Sustainable Biomass

2. 2 Largest, cleanest, most efficient coal-fired plant in UK Six 660MW units, giving a total capacity of 4,000MW Current output level 24TWh pa, some 7% of the UK’s electricity needs; coal burn around 10 million tonnes pa Investing to co-fire 12.5% of its throughput (by heat) as biomass at Drax Expanding renewables generation through 3 * 300MW stand-alone plant at Hull, Immingham and Drax Introduction

3. 3 Biomass Drax Biomass requirements ► 2008 - 400,000t ► 2010 – 2.5million t Drax Biomass sourcing ► First priority UK sources ► Focus on energy crops ► Initial reliance on imported material ► Mainly wood and wood pellets with some agricultural products Drax Biomass quality ► Biomass must be sustainable ► Drax aiming to be a leader in responsible and economic evolution of sustainability in biomass power generation

4. 4 Sustainability ► High profile through introduction of Biofuel ► Use of palm oil in biodiesel; Low greenhouse gas benefits from some bioethanol ► Focus now on biomass Legislation ► Renewable Traffic Fuel Obligation (RTFO) ► Certified plantation ► GHG emission across the supply chain ► Traceability of information through the supply chain ► Reporting against sustainability criteria ► Renewable Energy Directive under discussion in Brussels Outcome ► Formal (CEN) standard for sustainability of biofuels (draft 2009?) ► Mandatory sustainability reporting for all biomass users from 2009, probably eventually similar to RTFO requirements

5. 5 Drax sustainable biomass procurement policy Aim to be at the forefront of introduction of sustainable practices Current ► Formal public sustainability policy statement driving all biomass procurement activities ► Policy incorporates all likely CEN standard requirements including quantitative, environmental, ethical and social criteria ► Rejects use of non-sustainable biomass ► Requires, over time, all suppliers to comply with the policy ► Integration into all (new) contracts Future ► Aim to encourage sustainable practices throughout the supply chain with annual supplier report ► Introduce third party ‘auditing’ of suppliers ► Transparent reporting ► Formally adopt CEN standard when available and modify policy accordingly

6. 6 Drax key policy objectives Significantly reduce greenhouse gas emissions compared with coal-fired generation and give preference to biomass sources that maximise this benefit; Not result in a net release of carbon from the vegetation and soil of either forests or agricultural lands; Not endanger food supply or communities where the use of biomass is essential for subsistence (for example heat, medicines, building materials); Not adversely affect protected or vulnerable biodiversity and where possible we will give preference to biomass production that strengthens biodiversity; Deploy good practices to protect and/or improve soil, water (both ground and surface) and air quality; Contribute to local prosperity in the area of supply chain management and biomass production; and Contribute to the social well being of employees and the local population in the area of the biomass production.

7. 7 Greenhouse gas balances Some work already done on GHG balances (e.g BERR study 2006). “from an avoided greenhouse gas perspective, the co-firing of biomass with coal represents one of the most effective uses of biomass resources for energy”. Need considerable extra work to update these data, especially considering Land use change Drax target of at least 70% saving

8. 8 Drax next steps Improve awareness of suppliers Develop methodologies for GHG savings Collect/measure key data and defaults (BEAT) Introduce concept of improvement Contribute to internationally recognised sustainability standard Introduce third party verification Ensure transparency and reporting Review performance and policy