UK regulator closes Drax biomass sourcing probe with no further action

The Financial Conduct Authority on June 18 closed its investigation into Drax Group plc and said no further action would be taken after a review of the company’s biomass sourcing disclosures and market disclosure requirements.

Drax said the probe had been announced on August 28, 2025, and said the closure brought the matter to an end. The FCA’s decision followed a review that Drax said lasted nearly 10 months and covered thousands of pages of material, but the regulator found no evidence requiring enforcement.

The result removes one legal risk for the operator of the UK’s largest biomass power station, but it does not settle the wider argument over whether imported wood pellets can support a credible low-carbon power model. Drax continues to say biomass provides dependable renewable electricity and supports the UK’s shift away from fossil fuels, while its biomass sourcing policy, updated in 2025, says the company reports monthly on compliance with UK sustainability criteria covering life-cycle emissions limits and land criteria.

The company’s fuel chain remains central to the dispute. Drax imports millions of tonnes of wood pellets each year from North America, and critics have long questioned both the carbon accounting and the disclosure standards behind that trade. Ember said Drax received £999 million in biomass subsidies in 2025 and generated around 4.5% of Great Britain’s electricity that year, figures that keep the company at the center of the UK power and subsidy debate. Ember also said subsidy payments are expected to fall sharply from 2027 and that Drax is likely to remain the UK’s biggest emitter until at least 2030.

The FCA outcome also lands against the backdrop of an earlier regulatory case. Ofgem opened an investigation into Drax Power Limited on May 31, 2023 and closed it on August 29, 2024, saying it found no evidence that the biomass was not sustainable or that Renewable Obligation Certificates had been issued incorrectly. In connection with that case, Drax agreed to pay £25 million into a voluntary redress fund tied to historical profiling data issues for Canada covering April 2021 to March 2022.

Policy support for the sector is still in play. The UK government said in February 2025 that it planned short-term support for large-scale biomass generators from 2027 to 2031, subject to value-for-money and sustainability checks. A parliamentary committee later said the agreed support with Drax would save about £170 million a year versus supporting gas and cut bills by around £6 per household per year. The FCA closure may narrow the legal overhang, but the test on trust, sourcing and subsidy legitimacy remains open.