Drax claimed record £999m in subsidies for burning trees in 2025, thinktank says | Energy industry
The owner of Drax power station in North Yorkshire received a record subsidy of almost £1bn in 2025 for burning trees to generate electricity, a climate think tank has calculated.
According to analysts at Ember, the company was paid £999 million last year for producing around 4.5% of Great Britain’s electricity from its biomass plant, costing each household £13 a year.
The power station was able to claim £2.7 million a day in energy bills, partly by increasing electricity production by around 2% on the previous year, but mostly thanks to increased payments from the old renewable energy support scheme.
Drax has claimed renewable energy subsidies totaling around £8.7bn since 2012, despite persistent claims from campaigners and scientists that wood pellets burned at the power station are not sustainably sourced and could increase carbon emissions.
The allegations sparked concern in Westminster over the company’s claims that the millions of tonnes of wood pellets produced by its Canadian subsidiary used only low-value waste wood from sustainably managed forests.
The Guardian reported last November that forestry experts believe the company burned 250-year-old trees from some of Canada’s oldest forests last summer, despite its sustainability claims coming under increasing scrutiny.
Concerns that Drax may have sourced some wood from ecologically valuable forests were first expressed in 2022. The company has publicly denied the allegations, but court documents released to reporters earlier this year revealed senior staff had raised concerns internally about the company’s disclosures at the time.
Court documents reveal the company took its former chief lobbyist, Drax, to court over claims they were sacked in 2022 after he said the company “misled the public, the government and the regulator” about the sustainability of imported pellets.
The company said Drax reached an agreement with the employee over the court claim last year after reaching a “mutually acceptable position without admission of liability”.
In response to the court’s “explosive” revelations, a cross-party group of 14 MPs and peers called on energy secretary Ed Miliband to halt subsidies for the power station while the financial watchdog investigates the company’s “historical representations”.
Drax said these claims were investigated by industry regulator Ofgem and found no evidence of deliberate misreporting of sustainability data. The regulator’s 16-month investigation found “there was a lack of adequate data management and controls”. Drax agreed to pay £25 million in damages for the breach.
The government has already halved subsidies to Drax for the electricity it produces under a new subsidy contract running from next year until 2031, promising that Drax will only supply electricity when it is “really” needed.
Under the new contract, the power plant will have to switch to using 100% woody biomass from sustainable sources, from the current level of 70%. The government threatened “severe penalties” if Drax did not comply.
Frankie Mayo, author of the report, said: “While it will be a relief that these overly generous payments will be halved from 2027, British taxpayers should never have been in this position in the first place.”
“Nearly £1bn for woody biomass burning is a staggeringly high figure for public subsidies and a problematic figure as prices rise,” Mayo added.
Drax is also reviewing the future of its biomass pellet production business in Canada and said earlier this year that it would completely stop burning trees in British Columbia before the subsidy regime comes into effect.
A Drax spokesman said the North Yorkshire power station had produced a record 15 terawatt hours (TWh) of electricity in 2025 and that “the lights of millions of homes and businesses will remain on, whatever the weather”.
The company claims the power station will save £3.1bn between 2027 and 2031 compared to operating a gas-fired power station. Replacing 2.6 GW of capacity with new nuclear reactors or gas plants would require billions of dollars in capital investment, he added.
