The announcement that the UK will set in law a target to cut greenhouse gas emissions by 78% by 2035 compared to 1990 levels adds to the tailwind behind electrification of the economy, and should sharpen the thought processes as to how the UK will meet these targets. On the same day, BEIS published a call for evidence (The Role of Biomass in Achieving Net Zero), which is open until 15th June, with the formal government response to be part of the Biomass Strategy, to be published in 2022. The aim is to strengthen the Government’s evidence around biomass, and will also inform considerations on the role of Bioenergy with Carbon Capture and Storage in reducing greenhouse gas emissions across the economy. BECCS is mentioned a further 29 times in the document, and although no policies are elaborated, we are of the opinion that the Government is open to BECCS playing a major part in delivering net zero: “…it seeks information on how the deployment of BECCS could be supported, how biomass use could be prioritised to best deliver our net zero target, and whether and how the Government could target sustainable biomass use towards the highest priority applications.” “…the CCC estimates that removals of 58 MtCO2/year could be required from engineered GGR methods, such as BECCS and Direct Air Carbon Capture and Storage (DACCS) in 2050.” We continue to believe that Drax’s narrower biomass-led strategy gives it a strong hand in CCUS power contract negotiations, and view this week’s announcements as helpful. Updated estimates reflecting latest hedging positions, and the completed Pinnacle acquisition, boost FY21E EPS by 18.7%, and a lower WACC of 7.5% (vs. 8%) sees our target price move to 500p.