Drax to stop burning controversial Canadian wood within next year | Drax
The owner of the Drax power plant has started reducing the amount of Canadian wood pellets it burns and will stop burning British Columbia trees altogether over the next year.
FTSE 250-listed Drax Group said its Canadian wood pellet plants, which once supplied millions of tonnes of biomass to burn at its North Yorkshire power station, cost the company almost £200m in financial write-downs last year.
The company said pellet plants, which have faced criticism from environmentalists, faced a “challenging outlook” after a decision in the second half of last year that from 2027 the Drax power plant would burn pellets sourced only from the United States.
Despite the write-down, Drax shares soared to 20-year highs to give the company a market value of around £3bn after reporting a better-than-expected annual profit of £947m for 2025 and increasing shareholder dividends by 11.5%.
The decision to end its imports of Canadian biomass to the United Kingdom was linked to Ottawa’s decision to impose tariffs on its biomass exports, the company said.
The company outlined the plans amid growing scrutiny over the sustainability credentials of its Canadian supply chain after claiming it was using wood from some of British Columbia’s most environmentally important forests.
The Guardian revealed late last year that forestry experts believed Drax could have continued burning 250-year-old trees from some of Canada’s oldest forests as recently as last summer, despite growing concerns about its historic sustainability claims, which first emerged in 2022.
At the time, a Drax spokesperson said its sourcing policy meant it “does not source biomass from designated areas of old-growth forests” – which make up less than half of B.C.’s total old-growth forest area – and only sources woody biomass “from sustainable, well-managed forests.”
Britain’s biggest power station has received more than £7 billion in subsidies taken from household energy bills, provided the biomass pellets are made from waste or low-value wood from sustainable forests.
Claims about its sustainability credentials were first called into question by a 2022 BBC documentary, which Drax called “inaccurate” and “ill-informed”. The company’s former lobbyist later told an employment tribunal that she was fired after telling Drax boss Will Gardiner in the weeks after the show that the company’s denials were “misleading the public, the government and its regulator” about the sustainability of imported pellets.
The company could continue to produce pellets in Canada, but they will be exported to third-party buyers, mainly in Asia.
The UK government has decided to reduce the company’s subsidies by proposing a new contract covering the period from 2027 to 2031 which will support a limited amount of biomass production at a fixed price. Drax has proposed plans to generate additional electricity for AI data centers built at its North Yorkshire site.
The extension of subsidies was initially proposed as a “transition mechanism” before Drax began receiving subsidies through its project to install carbon capture technology at the plant. Drax said it would suspend plans to develop the project in the short to medium term due to the government’s lack of certainty. It reported a £48m writedown resulting from the decision.
