Expensive taxpayer subsidies for burning wood pellets at Drax power station could continue into the 2030s following a Government consultation aimed at keeping the company in the UK.

The Government today launched proposals to support companies generating electricity through biomass between the end of their subsidies in 2027 and when new carbon capture technology is set to be operational post-2030.

The bridging mechanism is meant to provide companies such as Drax with the financial support to remain in the UK and to develop and launch its BECCS project which will remove carbon emissions from its burning of wood pellets.

The company’s proposals earlier this week received planning permission from Claire Coutinho, the Energy Secretary, following months of delay over the future of the company that has been dogged with allegations of exaggerating its green credentials.

A sunrise behind Drax power station near Selby.

Of the four proposals on offer, one would be particularly expensive for taxpayers, on top of the billions it has already received in government handouts.

This would essentially involve an extension of its current subsidy agreement until the early 2030s, and means that the more energy Drax produces, the more it will be paid.

The Department for Energy insisted that no decision has yet been taken until the consolation concludes at the end of February, but the consultation makes several references to a need to keep costs down for consumers and the government.

It notes that an “unconstrained” subsidy agreement would result in “higher costs” and risks taxpayers paying for biomass to be burned when there is plenty of renewable energy to provide for the country’s needs.

A second restricted subsidy agreement, which would put maximum and minimum limits on the amount of energy produced, with the consultation noting that there would be “several practical and beneficial effects for consumers”.

Welcoming the news, Drax Group CEO, Will Gardiner said “The consultation is necessary to develop an appropriate mechanism that will ensure biomass power stations, like Drax Power Station, continue to play an important role in the UK’s energy security while transitioning to BECCS and helping the UK to meet greenhouse gas reduction targets. We will be responding to the consultation in due course.”

However, MPs from across the House of Commons, as well as climate groups and activists, have spoken out against the proposals.

Many voiced concerns which echoed findings from a Panorama investigation which alleged Drax uses wood from rare North American woodland, rather than sustainable offcuts from other wood as the company claims.

The company is also the subject of an investigation by the energy regulator Ofgem over whether the sustainability evidence it has given to access green subsidies is genuine.

Pauline Latham, a Tory MP, said: “I am disappointed that the Government is thinking of continuing the subsidy to Drax but they are consulting on the issue so as many people as possible should participate in this important consultation.”

Alex Sobel, Labour MP for Leeds North West, said Drax has not delivered on its promise to roll out a carbon capture system despite “many years of multi-billion pound subsidy”.

“The burning of virgin wood to make electricity is not renewable or sustainable,” he said.

Further expensive taxpayer subsidies under consideration for Drax