UK Cuts Subsidies for Drax Power Station in Half, Saying It Must Burn 100% Sustainable Biomass

The United Kingdom has announced new reduced subsidies for its controversial Drax power station, which had been previously converted to burning wood biomass from coal.

The North Yorkshire plant is an important source of energy for the country, but has received criticism because of sustainability concerns, in addition to Drax Group plc’s enormous profits, reported Bloomberg.

“Biomass currently plays an important role in our energy system, but we are conscious of concerns about sustainability and the level of subsidy biomass plants have received in the past,” said Michael Shanks, UK energy minister, in a statement. “We believe that [the subsidies] simply did not deliver a good enough deal for bill payers and enabled Drax to make unacceptably large profits.”

Drax has received criticism for burning wood pellets that were sourced from Canadian and United States forests, The Guardian reported.

Subsidies for Drax have been cut in half, and the UK government has ordered the power station to use only sustainable wood, rather than the 70 percent of woody biomass it is currently getting from sustainable sources.

🚨The DIRTIEST power station is about to get a bit LESS dirty! 😮‍💨 The UK government has announced LIMITS on Drax power station's ability to BURN TREES and POLLUTE our air. They will ALSO start FINING Drax if the wood burnt doesn't come from WASTE products. 🔥

— Greenpeace UK (@greenpeaceuk.bsky.social) February 10, 2025 at 9:45 AM

The new agreement specified that “material sourced from primary and old growth forests” would not be subsidized, reported the BBC.

The government has threatened Drax with “substantial penalties” for noncompliance, The Guardian reported.

The new deal halves subsidies from 2027 to 2031, saying the plant will provide power only at times when it is “really” necessary. It is estimated the strategy will save customers $210.5 million each year.

Drax is the largest renewable power generator in Britain by output, with its plants making up roughly six percent of the UK’s supply of electricity. The company’s last coal-fired power plant was shut down near Selby in 2023 after 50 years.

The revised arrangement includes a “clawback mechanism” to keep the company from making excessive profits should there be a steep rise in electricity costs, reported the BBC.

“Under this proposed agreement, Drax can step in to increase generation when there is not enough electricity, helping to avoid the need to burn more gas or import power from Europe, and when there is too much electricity on the UK grid, Drax can turn down and help to balance the system,” said Chief Executive Will Gardiner, as the BBC reported.

Green activists had been afraid UK ministers would give Drax, which has received billions in past subsidies, unrestricted support despite concerns over the impact burning biomass has on the environment.

“Continuing to subsidise huge biomass imports is not a step on the road to a cleaner future, but a dirty compromise with past failures. Trees should be left to grow and not be burnt in a major subsidy-fuelled bonfire,” said Doug Parr, Greenpeace UK policy director, as reported by The Guardian. “The new criteria should, hopefully, limit the damage done both by restricting its operations and reforming its supply chain, but the government is still far too trusting of big polluters asking for big subsidies to decarbonise. We have cheap, clean power sources available, and we shouldn’t be left to gamble on schemes like this any more.”