Drax Group has started reducing the amount of Canadian wood pellets it burns and will stop burning trees from British Columbia entirely within the next year. From 2027, the Drax power plant will burn pellets sourced only from the US. This decision was linked to Ottawa's decision to impose tariffs on its biomass exports. Drax Group reported better than expected full-year earnings of £947 million for 2025 and raised shareholder dividends by 11.5%, with shares soaring to 20-year highs, giving the company a market value of about £3 billion. The company's Canadian wood pellet plants cost it almost £200 million in financial impairments last year.
Controversies over sustainability and subsidies have intensified. Drax may have continued to burn 250-year-old trees sourced from some of Canada's oldest forests as recently as last summer. A Drax spokesperson stated that it does not source biomass from designated areas of old growth – which amounts to less than half of the total old-growth forest areas in British Columbia – and only sources woody biomass from well-managed, sustainable forests. Britain's biggest power plant has received more than £7 billion in subsidies levied on household energy bills on the condition that the biomass pellets are made from waste or low-value wood from sustainable forests. Claims about Drax's sustainability credentials were first called into question by a 2022 documentary from the BBC, which Drax dismissed as inaccurate and ill-informed. Drax's former top lobbyist claimed in an employment tribunal that she was sacked after telling the Drax boss that the company's denials were misleading the public, government, and its regulator about the sustainability of the imported pellets. Campaigners estimated that Drax received an effective tax break of more than £8 billion as a green energy provider despite the Selby plant releasing over 140 million tonnes of carbon dioxide between 2013 and 2025. The Government plans to halve subsidies to Drax by 2027, and the UK government has moved to curtail Drax's subsidies by offering a new contract covering 2027 to 2031 that will support a limited amount of biomass generation at a set price.
Regulatory scrutiny and future plans are unfolding. The sourcing of wood pellets is being probed by the Financial Conduct Authority, with Drax's co-operation, after a probe was launched to check if it complied with transparency rules. Drax is under pressure in the US over allegations that a wood pellet factory in Mississippi has caused health problems for nearby residents. Drax may still continue to produce pellets in Canada, but these will be exported to third-party buyers, primarily in Asia. Drax has proposed plans to generate extra electricity for AI datacentres built on its North Yorkshire site. Drax's boss could earn nearly £7 million this year, having scooped just under £2.7 million last year despite a drop in profits.