Drax ordered to pay £25m fine for incorrect data on origin of wood used in controversial generator

Kalyeena Makortoff

Energy producer Drax has agreed to pay £25m after the energy regulator found inaccurate sustainability data about the origins of wood pellets used in its huge North Yorkshire power station.

Ofgem’s investigation, which began last year, concluded there was “a lack of adequate data management and controls” in relation to timber sourcing from Canada between April 2021 and the end of March 2022.

Drax, which receives significant subsidies from the UK government, has come under constant fire over the sustainability of its wood-fired power generation operations.

Approximately 80% of the wood pellets used in Drax’s biomass plants come from forests in the US and Canada.

Ofgem said there was no evidence the breach was deliberate, but instead was “technical in nature”.

The regulator also said the data ultimately fell outside the criteria used to determine the amount of public funding Drax receives and would not affect government subsidies. At least 70% of biomass must come from sustainable sources to ensure companies receive government funding.

Drax has agreed to pay £25 million into a voluntary remediation program to settle the matter and resubmit its profiling data for wood pellets from Canada. It will also hire an independent auditor to produce data for its annual biomass report for the year to March.

However, Ofgem’s findings are likely to lead to further criticism of government support for Drax and its biomass activities, which have come under increasing fire from MPs and environmentalists.

HSBC‘s new boss Georges Elhedery won’t officially start his new job until Monday, but it appears the usual top-line reshuffle led by a new CEO is already underway.

Elhedery, who until then will technically remain the UK-listed bank’s chief financial officer, replaces Noel Quinn, who made the surprise announcement in April that he would step down after five “intense” years as chief executive.

Here’s what we learned today about the behind-the-scenes jostling (via a statement from the bank, Reuters reported). The resignation of Nuno Matos in particular is interesting: he was seen as a potential candidate to take the top CEO role.

Out:

• Nuno Matos, CEO of wealth and personal banking at HSBC, is stepping down.

• John Hinshaw, Chief Operating Officer of HSBC Group, has also decided to leave the group to pursue other opportunities.

In:

• Stuart Riley has been appointed HSBC’s expanded Global Chief Information Officer, with responsibility for data and innovation.

• Suzy White, Chief Operating Officer Global Banking and Markets at HSBC, has been appointed Chief Operating Officer Global on an interim basis.

Good morning and welcome to our live broadcast of business, economics and financial markets.

Nvidia shares fell 7% in after-hours trading despite revenue and profit beating analysts’ expectations.

The Silicon Valley chip designer said revenue more than doubled to $30bn (£23bn), a 122% increase in the second quarter compared to last year. Analysts on average had expected revenue of $28.7bn.

Jensen Huangfounder and CEO of Nvidiasaid anticipation for its upcoming Blackwell chips – which pack 208 billion transistors to perform the calculations needed to train large language models – was “incredible,” and demand for its current lineup remained strong. He said:

Nvidia achieved record revenues as global data centers run at full speed to modernize the entire computing stack with accelerated computing and generative AI.”

How come stock prices fell after the US trading day, when the company looked like it was still riding the crest of the artificial intelligence (AI) wave?

One possible explanation is the lack of details about Blackwell’s chip production delays, though the company suggested those production issues had been resolved by TSMC, the Taiwanese semiconductor manufacturer that builds Nvidia’s most advanced chips.

But another possibility is that the company’s growth is so tremendous that it not only needs to exceed expectations to continue growing, but actually exceed them.

Henry Allena strategist at Deutsche Banksaid:

While the results slightly beat expectations, its stock price fell about -7% in after-hours trading, partly because it fell short of some estimates that had expected an even stronger release. For one thing, the revenue outperformance was the smallest relative to expectations in six quarters, so it wasn’t the sort of massive outperformance Nvidia has often reported over the past 18 months.

At the same time, the third-quarter revenue forecast was slightly above the average estimate ($32.5 billion versus $31.9 billion estimated), but still well within the range of analysts’ expectations.

British car production falls as automakers prepare for new models

Car production in the UK has fallen, but this is because companies are switching to new models, according to the Society of Motor Manufacturers and Traders (SMMT).

The lobby group said production fell 14.4% in July “as model changes and temporary supply chain constraints limit output”.

One of those new models is likely to be the electric Range Rover, the first electric car to be built in Britain by Jaguar Land Rover, the UK’s largest manufacturer. The only other electric model, the Jaguar I-Pace, is built by a contract manufacturer in Austria.

The industry produced 482,000 vehicles in the first seven months of the year, down 9% from 2023. The SMMT hopes annual output will top 1 million vehicles next year as production of new models begins.

Mike Hawesgeneral manager of the SMMTsaid

After last year’s significant growth, some adjustment in output was to be expected. Indeed, a continued degree of volatility is likely as the industry restructures to transition to zero-emission vehicle production.

Now that the billions already invested in new models are starting to pay off, volume growth will pick up again. This is on condition that we seize every opportunity to increase our global competitiveness.

The agenda

• 10.00am BST: Consumer confidence in the eurozone (August; -13 points; consensus: -13.4)

• 10:15am BST: Speech by European Central Bank Chief Economist Philip Lane in Frankfurt

• 1:00pm BST: Inflation rate Germany (August; previous: 2.3% year-on-year; post-inflation: 2.1%)

• 1:30pm BST: Second estimate of US GDP (Q2; previous: 1.4% y/y; downside: 2.8%)