Britain’s financial regulator has opened an investigation into claims made by Drax Group following a spat over the taxpayer-funded group’s environmental credentials earlier this year.
Drax, which generates energy by burning wood pellets, has received billions of pounds of government funding in recent years for its Selby, North Yorkshire plant.
The process of burning wood pellets is considered a means of sourcing renewable energy. In theory, trees and plants first absorb carbon, then are burnt and release the same carbon back into the atmosphere.
But Drax’s critics are sceptical that all materials used by the firm are taken from renewable sources.
The FTSE 250 firm told investors in a short statement on Thursday that the Financial Conduct Authority had commenced an investigation into the company relating to ‘certain historical statements regarding Drax’s biomass sourcing’ made from January 2022 to March 2024.
The regulator is also probing the compliance of Drax’s 2021, 2022 and 2023 annual reports with City listing rules, and disclosure and transparency requirements.
Drax has received billions of pounds of government funding in recent years for its Selby, North Yorkshire plant
Drax said it would cooperate with the FCA and its investigation.
The FCA separately confirmed it had opened an investigation but did not comment further.
Drax’s Selby plant sources some wood pellets from forests in the US.
Activists from Gloster in Mississippi, where Drax runs a wood pellet factory, claimed earlier this year pollution from its plant has caused health issues for people nearby, including heart disease, cancer and respiratory problems.
Drax burns millions of tons of wood pellets each year and supplies about 5 per cent of Britain’s electricity.
In February, Environment Secretary Ed Miliband extended pre-existing taxpayer support for the firm by agreeing to hand Drax another £2billion over the next four years.
This is Money has contacted the Department for Energy Security & Net Zero for comment.
Drax shares slipped 6.7 per cent to 656.42p in early trading, wiping out 2025 gains so far.
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
InvestEngine
InvestEngine
Account and trading fee-free ETF investing
Trading 212
Trading 212
Free share dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
Compare the best investing account for you
#City #watchdog #probes #claims #renewable #power #generator #Drax #Miliband #greenwashing #row
