11th June 2020 marks the first time that the UK has ever gone two months without burning any coal.
To put this into perspective, ten years ago 40% of the UK’s energy came from coal. At the centre of this problem was Drax. However, over the last decade Drax have moved from a pure coal power generation business (and one of the UK’s biggest polluters) to being an integral part of the UK’s net zero carbon infrastructure. In fact, such is their progress in sustainability, in February 2020 the Norges Fund removed Drax from their coal exclusion list as the company now fits within their ESG parameters.
We own Drax bonds within the Kames high yield suite and like the business not just for its steady and regulated cash generation, but also for its strong ESG story – Drax is a core part of the UK’s decarbonisation strategy. They own and operate six power generation units in the UK and with the help of both the regulator (Ofgem) and the UK government they have now converted four of their six plants in the UK from coal to biomass. They are in talks with National Grid, Ofgem and the UK government to upgrade the remaining two as they seek to become even more sustainable.
As bondholders, we want to make investments which not only generate good returns for our clients, but also make a difference to society. Drax has been one of those names that has helped create a more sustainable environment for all of us.
Let us now hope that next time we can write about not only a two month break from coal burning, but a permanent one.
* At the time of writing Kames held Drax bonds