Sustainable Biomass
Alan Knight:
Tokyo
September 2023

Drax: Enabling a zero carbon, lower cost energy future
Who we areGlobal, vertically integrated renewable power &carbon removals company
Operator of Europe’s largest decarbonisation
project; we’ve converted 2.5GW from coal tosustainably sourced biomass
The largest renewable power generator in the UK(11%), providing power to over 5 million homes andbusinesses
A leading producer of wood pellets from sustainably
managed working forests; with operations acrossthe US South and Western Canada
35,600 jobs supported across UK, US and Canadamarkets and Drax Asia established in 2022
Carbon Dioxide Removal (CDR) pioneer

Attractive Opportunities to Invest For Long-term Growth
Strategic investments aligned with climate solutions, net zero and energy security
Attractive opportunities for long-term growth and positive climate, nature and people outcomes
Ambition for >20Mt of carbon removals via BECCS – 14Mt pa by 2030
Carbonremovals•

2 sites selected and moving to option in US South – targeting c.6Mt by 2030

•Evaluating 9 additional sites in US for greenfield and brownfield BECCS•Development of option for CCS on a pellet plant – targeting FID in 2024/25, commissioning in 2026•

MoUs agreed for sale of >2Mt•

8Mt of carbon removals at Drax Power Station by 2030

Targeting 8Mt of production capacity by 2030
Biomasspellet supply

Dispatchable,renewablegeneration•

c.5Mt of current production capacity•

18 fully operational pellet plants plus developments across three major fibre baskets and five ports•

c.2.5Mt of new capacity, plus 0.6Mt in development•Continue to target 4Mt of sales to third parties by 2030

Increased value from pumped storage and option for 600MW expansion of Cruachan by 2030
•Multiple earnings sources aligned with system needs•Underpinned by long-term earnings stability via a cap and floor mechanism

Construction of 3 new 299MW Open Cycle Gas Turbine plants at sites in England and Wales
3

Coupling Growth With Sustainability
Financial, climate, nature and people positive outcomesCountries, businesses and individuals are increasingly conscious of sustainability•

But savings are being offset by growth and new consumption

Drax model couples long-term financial performance with environmental and social growth•

Supporting more renewable energy•

Helping to restore the climate by removing CO2•

Supporting the quality and growth of nature systems like forests•

Creating green jobs and supporting communities

Climate Positive

Nature Positive

People Positive4

Led by the Science
Our business is based on what the scientific consensus is telling us
Independent Advisory Board continues scrutinise our use of science
Creation of a central science function•

Enhance use of existing science•

New research•

Share thinking with stakeholders

Development of BECCS Evidence Book5

Responsive to Stakeholders‘BECCS Done Well’ report – Forum for the Future (November 2022)• Independent report commissioned by Drax•

Panel of four experts – Jonathon Porritt chair•

Seventy-plus expert stakeholders interviewed•

Supportive of BECCS•

Thirty conditions to ensure BECCS is done wellSince publication•

Extensive internal debate chaired by Will Gardiner•

Preliminary response due to be published shortly•

Full commitments and policies to follow•

Continue to work with Jonathon Porritt

6

Biomass sustainability and standards

7Our Biomass Story Starts With Timber

The world needs more timber for construction, furniture and more•

Timber creates sawdust / shavings•

Harvesting forests creates thinnings, branches, unusable logs•

Good forest management includes removal of material•

Reduce the risk / intensity of forest fires•

Restoration from disease•

Drax fibre sources are embedded in the timber industry (2022 ARA)•

c.98% from sawmill and other wood industry residues, branches and tops,thinnings, low-grade roundwood•

c.2% agricultural residues

8

Biomass Sourcing
Biomass generation uses low-grades residuals••

Sawdust and chips from wood processing plants
Forest sourced thinnings, branches, tops and low-grade round wood

ForestProducts
Sawlogs

SawmillResidues
Wood chips

Low grade roundwood
and thinnings

SawdustBranches, tops and barkSlab-wood

Sawlogs are the primary economic driver for commercial forestry
Premium product for use in construction and manufacturing

Branches and tops
Low grade wood
Low value residual
Used in biomass

Small dimension
Low grade wood
Low value residual
Used in biomass
Large dimension
Premium price, primary market
Used in construction andmanufacturing
StumpsLeave to support soil health9Forest Management

Protection ofsensitive sites

Forest Fire protection
and Restoration fromdisease

Improved
Biodiversity

Increased forest
productivity

Local employment

Improved access forrecreation

We source from forests that are well regulated to ensure positive people,
nature and climate outcomes•Working forests are well managed through laws and timber sector•

Healthy managed forests deliver sustained ecological, economic and social outcomes•Working forests for timber encourages regeneration•

Active management of forests prevents risk of disease and wild-fire•

Utilisation of material with limited other uses

10

Minimising Wastefulness in Working Forests

Historically, commercial uses for residues were limited… particularly in British Columbia…
…..where burning of residues was undertaken
Biomass provides a better alternative and supports long-term investment in good forest management

11Fibre Sources (2022)
c.60% of Drax Group fibre comes from USA•Drax Group sources of fibreWorking forests harvested by landowners fortimber and pulp

Sawmilland otherwood
industry
residues

Branchesand topsThinnings

Low
grade
roundwood

Arboriand agri.
residues

Waste

Total•

Stable / growing carbon stocks•Engagement with suppliers helps sustain andimprove forest management practices

USA

19.7%

3.0%

13.8%

22.0%

1.4%

-59.9%

Canada

20.2%

3.3%

-

0.8%

--

24.3%

Working with small and large producers

Latvia

2.1%

--

6.8%

--

8.9%

Portugal

0.1%

0.3%

0.3%

1.2%

--

1.9%

c.20% of Drax Group fibre comes from Canada

Brazil

--

0.0%

1.8%

--

1.8%

•Estonia

0.7%

-

0.2%

0.7%

--

1.6%

Other European

0.5%

---

1.1%

0.1%

1.7%Total

43.3%

6.6%

14.3%

33.3%

2.5%

0.1%

100.0%•80% – sawdust and sawmill by-productsTŝideldel Biomass
A company formed by one of the six Tsilhqot’in Nations“We rely heavily on forest industries for employment
and community wellness….supplying Drax with forest
residues for biomass production is an important part ofwhat we do” (Percy Guichon)

Drax Pellet Production sources of fibre
USA

24.3%

0.0%

16.2%

12.3%

--

52.8%

Canada

38.9%

7.1%

0.0%

1.1%

--

47.2%

Total

63.3%

7.1%

16.2%

13.4%

--

100.0%
12

Carbon Stocks in Forests

Catchment Area Analysis•

Tracking of carbon storage and sequestration dynamics in regions where we source•

Applied to own-use fibre and third-part pellet suppliers

Catchment Area Analysis considerations•

Amount of carbon stored on landscape (growing stock)•

Sequestration rate of carbon (productivity of forests)•

Harvesting levels vs productive capacity of area•

Changes in forest management practice•

Wood prices and other markets that use woodImpact•

Supports focus on sourcing from growing and stable forests•

Actions do not have an adverse impact•

Account for forest carbon stocks for our source13Independent Sustainability Standards and Checks
Multiple regulations / standards and audits of our biomass sources:•In-country forestry regulations for timber sector•

Independent, multi-stakeholder forest standards bodies – FSC, PEFC, SFI•

Independent, multi-stakeholder standards for biomass – SBP•Internal policies and audits

Highlight on:
Sustainable Biomass Program (SBP)
SBP is a certification system designed for woody
biomass used in industrial energy production
Originally created by biomass generators, SBP has
evolved and has had a multi-stakeholder
governance structure since 2019
Sustainable Forestry Initiative (SFI)
Programme for the Endorsement of Forest
Certifications (PEFC)
Forest Stewardship Council (FSC)

14

Leading the Sector
Drax, leading role in creation of Glasgow Declaration
Lead the industry in setting the sustainability standards for biomass
Clear principles
Forum for users and producers, with others stakeholders to agree acommon approach to sustainability
Working closely with World Bioenergy Association, RWE, Graanul,
Enviva and others

15

Multiple Controls and Processes in Place to Ensure Sustainable Biomass Sourcing

The economics offorestry mean wetake low-grade
material

We buy fromregions whereforest regulations
are tight

Voluntarycertification
schemes

Sourcing policy,
supported by ourcompliance
procedures

UK regulations
and compliance isauditedPost-harvestingstudies, to track
impactIndependent
Advisory Board ofleading academics

Work with our
sector to create auniversal gold
standard
16

Towards BECCS and what next?

17Modelling of Potential Sources of Biomass at a Global Level
Geospatial models with sustainability filters…

…exploring three main types of biomass

Modelled current and potential future biomass production
11 geospatial datasets, 7 scientific references and high-resolution data
Criteria
No high conservation value land: intact forest
landscape; high biodiversity intactness index; key
biodiversity area; peatland; wetland; areas with high soil
loss
Leaving enough reside for nature: protect nutrient
cycles, floor biodiversity in forests
Good practice forestry and logistics: exclude land
steeper than a threshold grade; land far from major
infrastructure; containing a low biomass density
excluded

Low grade and forest and sawmill residuals: woodresidues, primary residues from forest harvests,
secondary residues, and low-grade roundwood
Excludes high-quality roundwood such as sawlogs
Agricultural biomass: primary residues (e.g., stalks,leaves) and secondary residues (e.g., processing
residues like bagasse)

Waste biomass: woody municipal waste, sludges,
cooking oils, animal fats, food processing wastes,and other municipal wastes
18

A Wide Range of Views on the Level of Sustainable Biomass Sources Globally
Drax conservatively estimates this could support >2billion tonnes of CO2 pa from BECCSTheoretical maximum of CO2 that could be captured by BECCS based on global sustainable biomass supply, GtCO2 pa
30241911243F​ OLU Satellite F​ OLU Satellite
Drax – agri,
CNE ag,waste,
forest, energy prioritizing
prioritizing
forest (2050) crops (2021)
nature
BECCS (2050)3(2050)2,3

Most stringent sustainability criteria
appliedGov’tØ 11985​ICCT (2050) U​ K Committee E​ TC prudent
on climatecase (2050)
change (2050)4

Sustainability studies reviewed indetail in ETC evaluation of biomass

121193195​ETC IEA Netzero Energy(2050)​IEA (2060)​IRENA
World Energy S​ hell/Ecofys ​Shell Sky 1.5Council
Boosting“Case”2 Lignoscenario
Scenarios
biofuels –cellulosic(2050)32065
2050 Stretch(2070)
Goal7

Energy agencies

IndustryG​ reen peace
Searle andEnergy
Malins (2050)(R)Evolution
scenarios

NGOsD​ aioglou(2100)

Academia

Range of sustainability criteria
considered

Notes: ETC estimate shows high end of prudent range, excludes ~10 EJ of woody biomass from forestry used as materials (based on current harvests from commercial forestry; may increase if forestry practices expand); dashed areas shows maximum potential from seaweed,waste and freeing up agricultural land (~60 EJ); excludes traditional fuelwood (~5-15 EJ) and biomass used in recycled materials (~4 EJ today)
2. This scenario is effectively a ‘no BECCS’ scenario. 3 Excludes traditional uses of biomass (fuelwood, charcoal and dung used in the residential sector, predominantly in developing countries). 4 Mid scenario. Figures represent ‘tradable’ bioenergy feedstock suitable forinternational trade (e.g., forestry and energy crop feedstocks) while excluding ‘non-tradable’ feedstocks not suitable for long-distance trade due to low energy densities or other physical properties (e.g., biogenic waste). 5 Unfinished Symphony Scenario. 6 Organic waste
streams include agricultural residues, food processing, and municipal and industrial organic waste streams. 7 Recent 1.5°C Scenario from IRENA estimates primary bioenergy demand to be 153 EJ in 2050.
Source: ETC, Drax analysis

19Carbon Reduction

Over the past decade Drax has reduced its scope 1 and 2
carbon emission from generation by almost 100%
Generation Scope 1 and 2 CO2 (tCO2e/GWh)
1,000

900

Coal reduction saw scope 1 emissions fall

800
700

Which is why we have put in place targets to reduce ourremaining Group scope 1, 2 and 3 emissions

600
500
400
300

Targeting net zero by 2030

200
10002012

2013

2014

2015

2016

2017

2018

•

Transition from coal to biomass•

Sale of combined cycle gas generation•Closure of remaining coal

2019

2020

2021

2022

20

Creating a Nature Positive Company

Well-established science and policy underpins biomass sustainability
Mapping our impact and dependencies on the natural environment to enable us to havea positive impact••••••

Working with WBCSD and others to establish best practice
Identifying nature metrics specific to our generation assets and forest sources
Recruiting nature specialists at corporate and operation level.
Policies and projects in place to protect and enhance nature at our many touchpoints
Developing partnerships throughout our value chain to deliver benefits to nature
Member of Task Force for Nature Related Financial Disclosure (TNFD) Pilot21People Positive – Drax Giving: Investing in Our Communitiesc.£1million investment in 2023 in projects and programmes that support our communities

22

Development of Governance, Reporting and Disclosure

Strengthening our governance across the company
through a new governance model and ESG reporting••••

Sustainability Council
New executive role for sustainability
Expert hubs (Climate, Forests, Carbon Reduction, Nature,Biomass)
ESG reporting23

SummaryA business model that links positive long-term
financial, climate, nature and people outcomes
Underpinned by the science and strong governance24