Drax Power Plant's Record £999m Biomass Subsidies Spark Parliamentary Scrutiny
The Drax power station in North Yorkshire, which burns biomass wood pellets to generate electricity, claimed a record £999 million in renewable energy subsidies during 2025, according to calculations by the climate thinktank Ember. This substantial payout, funded through household energy bills at an average cost of £13 per home annually, supported the plant's production of approximately 4.5% of Great Britain's total electricity supply last year.
Subsidy Totals and Generation Increases
Drax's subsidy claims reached nearly £2.7 million per day in 2025, partly due to a 2% increase in power generation compared to the previous year, but primarily driven by escalating payments under a legacy renewable energy support scheme. Since 2012, the company has received approximately £8.7 billion in renewable energy subsidies, despite persistent allegations from environmental campaigners and scientists that the wood pellets burned at the facility are not sustainably sourced and may actually increase carbon emissions.
Sustainability Allegations and Internal Concerns
The controversy centers on Drax's claims that its Canadian subsidiary produces millions of tonnes of wood pellets using only low-value waste wood from sustainably managed forests. However, investigations have revealed that forestry experts believe the company was burning 250-year-old trees from some of Canada's oldest forests as recently as last summer. These concerns were first raised in 2022, and while Drax publicly denied the allegations, court documents disclosed earlier this year showed that senior staff members had expressed internal worries about the company's sustainability statements at that time.
The tribunal documents emerged when Drax's former chief lobbyist took the company to court, alleging they were dismissed after stating in 2022 that Drax was "misleading the public, government and its regulator" about the sustainability of its imported pellets. Drax settled the claim last year, reaching "a mutually agreeable position, without admission of liability."
Political Response and Regulatory Actions
In response to what they called "explosive" court disclosures, a cross-party group of 14 MPs and peers urged Energy Secretary Ed Miliband to suspend the power plant's subsidies while the financial watchdog investigates the company's "historical statements." Drax countered that these allegations were examined by the industry regulator, Ofgem, which found no evidence of deliberate misreporting of sustainability data but did identify "an absence of adequate data governance and controls." The company agreed to pay £25 million in compensation for this regulatory breach.
Future Subsidy Changes and Compliance Requirements
The government has already reduced Drax's subsidies by half under a new contract effective from next year until 2031, requiring the plant to provide power only when "really" needed. This new agreement mandates that Drax must source woody biomass from 100% sustainable sources, up from the current 70%, with the government threatening "substantial penalties" for non-compliance. Frankie Mayo, author of the Ember report, commented: "While it's a relief these overly generous payments will halve from 2027, British taxpayers should never have been in this position in the first place. Nearly £1bn for woody biomass burning is an astonishing high-water mark for public subsidies – and a problematic one as prices soar."
Company's Defense and Future Plans
Drax is currently reviewing the future of its Canadian biomass pellet production business and announced earlier this year that it would cease burning trees from British Columbia entirely before the new subsidy regime takes effect. A Drax spokesperson highlighted that the North Yorkshire power plant generated a record 15 terawatt hours of electricity in 2025, "keeping the lights on for millions of homes and businesses, no matter the weather." The company asserts that the plant will save £3.1 billion between 2027 and 2031 compared to operating a gas-fired power plant and that replacing its 2.6GW capacity with new nuclear reactors or gas plants would require billions in capital investment.
