Drax Power Ltd, R (On the Application Of) v Secretary of State for Energy And Climate Change
2014
COURT OF APPEAL (CRIMINAL DIVISION)
United Kingdom
CORAM
- LORD JUSTICE LAWS
- LADY JUSTICE GLOSTER
2014
COURT OF APPEAL (CRIMINAL DIVISION)
United Kingdom
CORAM
AI Generated Summary
This case revolves around DECC's decision that Drax Power Limited did not meet the Key Criterion for an Investment Contract for Unit 3 at the Drax Power Station. Drax challenged this decision via judicial review. The lower court found DECC's decision unreasonable and remitted the application for reconsideration. On appeal, the court determined that DECC’s decision was reasonable and procedurally fair. The appellate court overturned the lower court's decision and dismissed Drax's application for judicial review.
Judgment
Mrs Justice Andrews:
This claim for judicial review arises in the context of the Government’s policy to increase energy generation from renewable sources. Over the years a “stick and carrot” approach has been adopted to encourage energy generators, such as the Claimant (“Drax”) to convert to renewable energy sources. The “stick” takes the form of levies on fossil fuels, such as coal, that make them increasingly unattractive; the “carrot” takes the form of financial incentives to convert.
Drax applied for one such incentive, an “Investment Contract” (“IC”) for Unit 3 at its power station in North Yorkshire. The IC was worth around £1.3 billion. At the final stage of the application process those within the Department of Energy and Climate Change (“DECC”) to whom the Secretary of State had delegated the task of making the decision concluded that Drax had not satisfied the “Key Criterion” (which was a necessary precondition for the grant of an IC) and thus that it was ineligible, despite having reached the opposite view at Phases 1 and 2 of the process. The decision under challenge was communicated to Drax in a letter from DECC dated 22 April 2014. Drax contends that the decision was unreasonable and taken in a manner that was procedurally unfair.
For reasons which will become apparent, Drax’s claim must be determined expeditiously. The parties therefore agreed directions for a rolled-up permission and substantive hearing, and Phillips J made an order giving effect to those directions on 9 May 2014. Having heard the rival arguments, I am in no doubt that the claim satisfies the threshold for permission to bring judicial review, and grant permission accordingly. I therefore turn to consideration of the claim on its merits.
Background
All six units at Drax’s power station were historically fuelled by coal. However each unit was capable of co-firing, that is, burning both coal and biomass, a form of renewable energy. Biomass is material of recent biological origin, derived from plant or animal matter such as wood, agricultural crops or wastes. It is supplied in the form of pellets, but unlike coal, there are significant difficulties in storing large quantities on site. Therefore, in order for a generator to use biomass there must be a regular and reliable chain of supply of sufficient material, and the supply and logistics operation has to be almost continuous.
It is self-evident that the amount of energy that an electricity generator is able to