Welcome back to The Strawman, the daily climate newsletter that’s more sustainable than Drax’s wood pellet supply chain (we hope). Today, we’re looking at why Drax is getting new subsidies—and why it’s controversial.

Drax’s New Deal: Fewer Subsidies, Fewer Operating Hours

The Drax power station in Yorkshire, which supplies about 4% of the UK’s electricity, just secured a new contract for difference with the government. The deal locks in a minimum electricity price of £113 per megawatt hour from 2027 to 2031.

But this new agreement comes with strings attached. Drax’s subsidies will be halved, and the plant will only be supported to operate at 27% of its capacity—less than half as often as it currently does. The government framed this move as ensuring Drax plays a “much more limited role” in the UK’s energy system.

Drax’s current subsidy strike price is £132 per megawatt hour, meaning the new deal represents a reduction. Still, Drax’s shares jumped 5% after the announcement.

Biomass: Clean Energy or Greenwashing?

The new subsidy extension comes amid ongoing controversy over Drax’s use of wood pellets as fuel. While the plant was originally converted from coal to biomass as part of the UK’s push for cleaner energy, concerns remain about whether the wood it burns is truly sustainably sourced.

Regulator Ofgem investigated Drax last year and found holes in its supply chain data. Although Drax wasn’t penalised directly, it agreed to pay £25 million into Ofgem’s voluntary contribution fund and was ordered to undergo an independent audit of its supply chain.

Drax’s CEO, Will Gardiner, insists the plant is an essential part of the UK’s energy security. He argues that keeping Drax open is cheaper than building new fossil fuel plants and helps balance the grid during periods of high or low renewable energy generation.

The Bigger Picture: Carbon Capture on the Horizon

The new subsidy extension also buys Drax time to install a carbon capture and storage system, which it hopes to have ready by 2030. The government sees this as crucial for reducing the plant’s emissions and enhancing energy security.

Still, biomass accounts for 11% of the UK’s power generation, and sustainability concerns aren’t going away anytime soon. Critics argue that monitoring processes for the wood supply need to be improved to ensure that biomass truly delivers on its environmental promises.

The Strawman’s Takeaway

Drax’s new deal keeps the plant running, but with reduced support and mounting scrutiny. As the UK looks to decarbonise its power grid, carbon capture and stricter oversight will be key to proving whether biomass is part of the solution—or just another problem.