Drax to reduce carbon capture investment despite subsidies

The owner of the Drax wood-burning power plant will slow its investment in carbon capture to reduce its emissions, despite securing an extra three years of government subsidies and earning record profits of more than £1bn last year.

- Jillian Ambrose

Drax Group said it would commit less investment to fitting the technology at the North Yorkshire power plant unless the government provided clarity over the returns it could expect to make from the upgrade.

The company signalled the slowdown just weeks after the government agreed to pay extra public subsidies worth about £500m a year to help Drax develop its carbon capture project after 2027, when its current subsidy regime ends.

The company lobbied for the extra support from 2027 to 2031, arguing it was necessary to keep the power plant running while it developed the scheme, which could begin operating in the 2030s.

Yesterday, however, Drax said it would "commit less development investment" to its strategic investments - including carbon removals, 24/7 renewable power, datacentres and energy storage - "until we receive greater certainty on appropriate regulatory structures and investments returns".