Drax Group is facing a formal investigation by the UK’s Financial Conduct Authority (FCA) over the accuracy of its past disclosures.
The watchdog confirmed it has opened an inquiry into statements made by the North Yorkshire-based firm between January 2022 and March 2024 regarding the sourcing of wood used in its biomass operations.
The review will also examine whether Drax’s annual reports for 2021, 2022 and 2023 complied with stock market listing, disclosure and transparency requirements.
The company, which is listed on the FTSE 250 index, said it would fully cooperate with regulators.
Its shares have been trading at their strongest levels in more than two years after publishing robust interim results earlier this month.
Sustainability controversy
Drax has faced repeated criticism over its biomass practices. In 2022, then–business secretary Kwasi Kwarteng questioned the sustainability of importing wood pellets from the United States. Around the same time, a BBC Panorama investigation alleged that the company was sourcing timber from ecologically sensitive forests in Canada.
The group, which has received billions of pounds in renewable energy subsidies, has consistently denied those claims, arguing that it primarily uses sawdust, residue wood or trees that were already dead, and that harvesting can even lower wildfire risks.
Drax chief executive Will Gardiner has also pushed back against suggestions the company is the UK’s largest single carbon emitter, despite its own figures reporting 13.3 million tonnes of CO₂ emissions in one year.
Pressure on subsidies and carbon capture
In 2023, Drax warned that its flagship biomass facility would struggle to remain commercially viable without further state support. It temporarily suspended a £2 billion investment into carbon capture and storage technology until new subsidies were confirmed.
The same year, Ofgem examined whether the wood fuel used in the company’s power stations met the sustainability standards required under government renewable energy schemes, with some experts challenging the classification of biomass as “carbon neutral.”
Drax insists its Canadian supply chain is certified under the Sustainable Biomass Program, and has hired independent auditors to verify compliance.
Ongoing scrutiny
In early 2024, ministers granted approval for carbon capture technology at the firm’s North Yorkshire site. However, a report by the National Audit Office later raised doubts over whether billions in public subsidies had been awarded to genuinely sustainable biomass operations.
The scrutiny intensified in February 2024 when another Panorama investigation alleged that Drax continued to burn timber from protected Canadian forests. The company reiterated that its wood pellets were sustainably and legally sourced.
FCA launches probe into Drax over biomass sourcing disclosures
