Drax Group has announced it will cease burning Canadian wood pellets entirely within the next year due to financial losses and environmental criticism.
Drax Group, the owner of the Drax power plant in North Yorkshire, has commenced a significant shift in its energy sourcing strategy by reducing and planning to stop entirely the burning of Canadian wood pellets. The company has faced intense scrutiny and criticism from environmentalists regarding its biomass sourcing, particularly wood from British Columbia, which has contributed to approximately Ā£200 million in financial impairments last year. This decision aligns with a broader commitment to transition toward more sustainable energy practices, as Drax aims to source its biomass exclusively from the U.S. starting in 2027.
The financial implications of this transition are noteworthy. Despite the financial writedowns related to its Canadian operations, Drax's shares have surged to 20-year highs, reflecting investor confidence following stronger-than-anticipated earnings of Ā£947 million for the year 2025. Furthermore, the company has announced an 11.5% increase in shareholder dividends, making it clear that while the transition may incur short-term costs, the overall outlook remains promising for Drax as it shifts to potentially more sustainable biomass sources.
The decision to stop burning Canadian biomass connects to broader geopolitical and environmental narratives, particularly relating to international policies and agreements on forestry and carbon emissions. Ottawa's recent government announcements reflected concerns over logging practices, which may have further propelled Drax's decision to end its imports from Canada. This strategic move not only impacts the companyās operations but also signifies a more significant trend within the energy sector towards accountability and sustainability, in the face of growing environmental pressures and climate commitments.
