Drax Power Plant to Cease Burning Canadian Wood Pellets

Drax Group, the owner of the Drax power plant in North Yorkshire, has announced a significant change in its biomass sourcing strategy. The company will stop burning Canadian wood pellets entirely within the next year, transitioning to a supply chain that will exclusively utilize pellets sourced from the United States starting in 2027. This decision follows a challenging financial year for Drax, which reported nearly £200 million in impairments related to its Canadian pellet production plants, previously a major supplier of biomass.

The Guardian

Despite the financial setbacks, Drax's shares have surged to 20-year highs, reflecting a market value of approximately £3 billion. The company reported full-year earnings of £947 million for 2025 and announced an 11.5% increase in shareholder dividends. The shift away from Canadian biomass is partly attributed to new tariffs imposed by the Canadian government on biomass exports, which have raised concerns about the sustainability of Drax's supply chain. Environmentalists have criticized the company for sourcing wood from British Columbia, where some of the most ecologically significant forests are located.

The Guardian

Drax's sustainability credentials have faced scrutiny, particularly after allegations surfaced that the company may have burned wood from ancient forests, including trees that are over 250 years old. A spokesperson for Drax has stated that the company does not source biomass from designated old-growth areas, which constitute less than half of British Columbia's total old-growth forests. However, these claims have been challenged, notably by a 2022 BBC documentary that questioned the accuracy of Drax's sustainability assertions. The company dismissed the documentary as "inaccurate" and "ill-informed."

The Guardian

While Drax may continue to produce wood pellets in Canada, these will be exported to third-party buyers, primarily in Asia. The UK government has responded to the situation by curtailing Drax's subsidies, offering a new contract for the period from 2027 to 2031 that will support a limited amount of biomass generation at a fixed price. Drax has also proposed plans to generate additional electricity for AI data centers located on its North Yorkshire site. However, the company has indicated that it will pause its plans to develop carbon capture technology due to uncertainties regarding government support, resulting in a £48 million impairment.

The Guardian

Critics of Drax's operations have raised concerns about the environmental impact of its biomass sourcing practices, particularly regarding the sustainability of the forests from which the wood is sourced. The company’s former lobbyist has claimed that Drax misled the public and regulators about the sustainability of its biomass imports, highlighting the ongoing debate over the ecological implications of biomass energy.

The Guardian

• “The owner of Drax power plant has started reducing the amount of Canadian wood pellets it burns, and will stop burning trees from British Columbia entirely within the next year.” — Drax Group

The Guardian

• “misleading the public, government and its regulator” — Former Drax Lobbyist

The Guardian

This strategic pivot marks a significant moment for Drax as it navigates the complexities of environmental scrutiny and financial viability in the evolving energy landscape.

The Guardian