Drax BECCS approval opens £30bn subsidy question for UK government

Drax BECCS approval opens £30bn subsidy question for UK government Ofgem edging toward approving carbon capture at Drax has made a £30 billion government commitment harder to avoid. Drax's bioenergy with carbon capture project in North Yorkshire has cleared a significant regulatory hurdle, with Ofgem moving closer to approving the carbon capture technology at the site, Energy Voice reported on Monday (2026-06-01). The regulator's green light unlocked £99.2 million in investment for the Northern Endurance Partnership, enabling the joint venture to develop carbon capture and storage infrastructure with potential capacity for up to one billion tonnes of CO2.⁵ The subsidy question is now squarely in front of ministers. Energy think tank Ember estimates the government support required for Drax's BECCS plans at around £30 billion, more than the combined funding awarded to the East Coast Cluster and HyNet schemes in the North West of England, which will receive £21.7 billion between them over 25 years.⁵ The scale changes the political stakes. Until now, CCS subsidy discussions centred on industrial clusters where multiple projects share infrastructure costs — the East Coast and HyNet schemes each anchor a network of emitters rather than a single facility. A power station of Drax's scale absorbing a larger public commitment would require ministers to make an explicit choice, not simply back a consortium.⁵ That choice arrives at an uncomfortable moment for household energy costs. Cornwall Insight now forecasts the Ofgem price cap from July to September at £1,850 per year for a typical dual-fuel household, a 13% increase on April's £1,641 cap. That is slightly higher than the 12% rise the consultancy projected a month earlier, with Craig Lowrey, principal consultant at Cornwall Insight, noting the forecasts had shifted from showing virtually no quarter-on-quarter increase to a 13% rise in current conditions.² But bill pressure is already surfacing as a political wedge. Reform UK Deputy Leader Richard Tice told energy industry executives at a round table on Friday (2026-05-29) that a Reform government would prioritise cutting bills over green energy investment. North Sea drilling, not offshore wind, was presented as the party's answer to consumer costs.⁴ The fiscal environment for North Sea development complicates that case. At an effective tax rate of 78%, Britain's levy on North Sea production is among the highest globally, deterring investment in a basin that already carries elevated operating costs, the Economist reported on Saturday (2026-05-17). North Sea revenues peaked at 3% of GDP in the mid-1980s; that era is long gone.³ Norway's recent decisions offer a pointed contrast. Oslo's energy ministry approved development plans on Tuesday (2026-05-19) for the Albuskjell, Vest Ekofisk and Tommeliten Gamma gas fields in the southern North Sea, fields that had sat idle for 30 years. The operator told Montel that production should start in the fourth quarter of 2028, with daily output at 5.7 million cubic metres, equivalent to roughly 1.5% of Norway's average daily production. Combined reserves are expected to yield 90 to 120 million barrels of oil equivalent, predominantly gas and condensate, at a total investment of around €1.8 billion.¹ Those approvals demonstrate that incremental North Sea gas development remains commercially viable where the fiscal framework supports it. The contrast with the UK's 78% effective rate is visible to any operator active in both basins.³ For Drax, the immediate question is whether the government will treat BECCS as essential low-carbon infrastructure or as a single corporate request that cannot be prioritised against rising household costs. Several cabinet ministers are said to privately doubt Energy Secretary Ed Miliband's commitment to green investment and are open to expanded North Sea drilling, according to people familiar with those internal discussions.⁴ The £30 billion figure will be tested against a July price cap rise that has become the dominant public narrative on energy costs.^5,2 Autumn, when demand begins to climb again, will sharpen that pressure considerably.