The Financial Conduct Authority has concluded its investigation into Drax, the operator of a major power plant in North Yorkshire, determining that no regulatory action was warranted. The probe, which lasted nearly 10 months, examined whether the company’s annual reports and accounts between 2021 and 2023 contained misleading statements about its biomass sourcing or omitted material information that investors required for informed decision-making. The regulator stated it had analyzed thousands of pages of complex documentation related to the company’s wood pellet procurement practices.
Drax generates electricity by burning millions of tonnes of wood pellets imported annually from North America, asserting that its biomass originates from sustainably managed forests. The company’s environmental credentials faced scrutiny following a television documentary in 2022 that documented instances where the company had sourced pellets from mature forests in Canada. Subsequently, Drax agreed in 2024 to contribute £25 million to a redress scheme after a separate investigation by energy regulator Ofgem identified inadequate data governance and controls in the company’s reporting of historical wood sourcing from Canada. Ofgem determined the oversight was technical rather than intentional and found no evidence that the biomass was unsustainable or that renewable subsidies were improperly claimed.
Reporting by investigative media outlets revealed forestry experts’ assessment that Drax likely continued sourcing wood from ecologically significant Canadian forests into recent months. In response, the company announced plans to reduce Canadian wood pellet consumption and cease sourcing from British Columbia within the coming year. The FTSE 250-listed energy company has received substantial government support through renewable energy subsidies, collecting £999 million in 2025 for providing approximately 4.5 percent of Great Britain’s electricity generation.
Government authorities have taken steps to reduce Drax’s financial support, planning to halve subsidies from 2027 onward while mandating exclusive use of certified sustainable wood. Critics, including environmental campaigners and researchers, maintain that biomass combustion lacks sustainability regardless of sourcing origin and may contribute to elevated carbon emissions rather than emissions reductions. Drax’s chief executive welcomed the FCA’s decision, emphasizing the company’s commitment to regulatory compliance and its collaborative engagement with the investigation.
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