Drax seeks new deal despite £300m buyback

The UK’s largest wood-burning stove maker is in talks with the government over further support to cover funding for its controversial biomass plant.

Despite huge profits and a £300m share buyback, Drax wants ministers to provide financial support until the end of the decade.

More than £6bn in subsidies have been awarded to Selby power station in North Yorkshire, which generates more than 4% of the UK’s electricity.

But Drax’s green credentials have been questioned as it burns wood pellets sourced from Canada and one of the UK’s biggest carbon emitters.

The company will no longer receive government subsidies when funding ends in 2027.

A three-year extension is thought to be key to ensuring it can accommodate carbon capture technology from 2030, as it is unclear whether wholesale electricity prices will be high enough for Drax to cover input costs and continue operating without financial support.

The process (bioenergy with carbon capture and storage) is said to prevent emissions from being released into the atmosphere and could help the UK transition to clean energy.

The previous government was seeking a “bridging mechanism” to keep its power plant running without subsidies between 2027 and 2030.

Will Gardiner, chief executive of Drax, said: “We look forward to working with the new UK government to help grow the economy and take urgent action to achieve a net-zero electricity system by 2030.”

He said a decision was needed this year to be able to make significant investments in 2025 and meet the deadline.

Matt Williams, of Cut Carbon Not Forests and campaigner for the US environmental group Natural Resources Defense Council, said: “It is unacceptable that this company is burning down the world’s forests and making money off of environmental damage.

‘Much of the profit comes from public subsidies Drax receives by claiming that burning forests is good for the planet.’

Drax said profits rose 37 per cent to £463m in the first half, and revenue should be at the top end of forecasts for 2024.

It will return £300m to shareholders over two years. Shares rose 14 per cent, or 79p, to 645.5p.