Drax calls for new payout despite £300m buyback

The UK’s largest wood-burning stove is in talks with the government over further financial support for the controversial biomass plant.

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

More than £6 billion in subsidies has been awarded to the Selby power station in North Yorkshire, which generates more than 4 per cent of the UK’s electricity.

But Drax’s green credentials are being called into question as the company burns wood pellets sourced from Canada, one of the UK’s biggest carbon emitters.

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

The company believes a three-year extension will be crucial to ensure it can deploy 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 – prevents emissions from entering the atmosphere and could help the UK transition to clean energy.

The previous government wanted a ‘bridging mechanism’ to keep the power plant running without subsidies between 2027 and 2030.

Will Gardiner, CEO of Drax, said: “We look forward to working with the new UK government to grow the economy and take rapid steps towards achieving a net zero electricity system by 2030.”

He said a decision was needed this year so that significant investments could be made by 2025 to meet the deadline.

Matt Williams of Cut Carbon Not Forests and an advocate 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 huge amounts of money from the environmental damage.

‘A large part of the profit comes from government subsidies that Drax receives by claiming that burning forests is good for the planet.’

Drax said first-half profits rose 37 percent to £463 million and that 2024 profits should be at the top end of forecasts.

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