Why is Drax's Wood Sourcing Under Scrutiny?
Drax Group supplies around 6% of the UK’s electricity, primarily from its biomass plant in Yorkshire.
As part of its transition from coal, the company relies on compressed wood pellets to generate renewable energy. The UK government requires Drax to report on its biomass sourcing, detailing the origin and type of forests used.
However, a BBC investigation has revealed that Drax has been sourcing whole trees from British Columbia’s primary and old-growth forests without accurately reporting it. This contradicts the company’s own sustainability policies and regulatory obligations.
On its website, Drax states: “Our sustainability due diligence process is designed to ensure the biomass we use for generation at Drax Power Station is sustainable and compliant with relevant legislation. Woody biomass supplier compliance is evidenced by external certification schemes, alongside our internal assurance system and third-party audits commissioned by Drax.”
Despite this commitment, concerns persist over the company’s adherence to sustainability requirements.
Financial backing and regulatory challenges
This isn’t the first time Drax has faced scrutiny over its sourcing and procurement practices.
In 2024, the UK’s energy regulator, Ofgem, fined the company £25m (US$31m) after a 15-month investigation found inaccuracies in its biomass reporting. This followed years of government subsidies, with Drax receiving approximately £6bn (US$7.4bn) in green energy support.
Oonagh van den Berg, CEO and Founder of Compliance Consultancy and Compliance Education, commented on LinkedIn: “Drax Group, the UK’s largest renewable power generator, has been under scrutiny for misreporting biomass data and sourcing wood from ecologically significant forests in Canada.
"This is not the first time, and according to news reports, Drax ‘...did not deny misreporting its sustainability data but said it is “focused on implementing the lessons learned.”’
Despite these controversies, Drax has continued to receive significant financial support from major banks.
- Barclays participated in a US$369m sustainability-linked loan (SLL) to Drax in 2020.
- RBC joined a US$208m SLL for the company in 2021.
- J.P. Morgan has also been involved in financing Drax’s operations.
These loans are meant to encourage sustainable business practices.
However, Drax’s environmental track record raises questions about their effectiveness. Oonagh pointed to RBC’s recent exit from the Net Zero Banking Alliance as a potential indication of shifting climate commitments in the financial sector.
She added: “This situation prompts a critical examination of ESG policies in banking. Are financial institutions prioritising profits over genuine sustainability? Is ‘cash is king’ still the prevailing mantra, even at the expense of environmental integrity?”
The debate around biomass
Biomass energy, which involves burning organic materials such as wood and agricultural waste, is promoted as a low-carbon alternative to fossil fuels.
According to Drax: “Biomass is organic matter. In the case of bioenergy, it typically refers to agricultural by-products and residues, woody waste products, and crops and microbes that can be used for fuel.”
The company argues that biomass helps reduce carbon emissions while providing reliable energy. Meanwhile, CEO Will Gardiner states: “At Drax, our transition from coal to biomass has been guided by strict sustainability requirements, ensuring that the biomass we use is renewable and responsibly sourced.”
However, biomass remains controversial. Some environmental groups argue that burning wood emits carbon at rates comparable to coal, with concerns over deforestation and biodiversity loss.
Critics also highlight the long carbon payback period — the time it takes for newly planted trees to reabsorb the carbon emitted by burning biomass.
Drax’s power station, once Western Europe’s largest coal plant, now runs primarily on biomass. The facility generated 12.7TWh of electricity in 2022, helping to reduce the company’s Scope 1 and 2 emissions by 99% since 2012.
The company’s sustainability commitments focus on three key areas:
- Reducing CO₂ emissions
- Protecting the natural environment
- Supporting local communities
While Drax pushes forward with its net zero ambitions, the ongoing concerns about its sourcing and reporting practices suggest that greater transparency may be needed to align with true sustainability goals.
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