Subsidies of up to £1billion given to firms for burning wood in power stations could be axed – as critics argue it creates same CO2 as coal

Controversial subsidies for burning wood in power stations could be scrapped in the drive to clean up Britain’s air.

Firms that burn wood pellets currently receive about £1billion a year because, unlike coal, these are considered renewable sources of energy.

But critics say burning wood produces similar amounts of carbon dioxide to coal, contributing to air pollution.

It also increases the logging of forests in the US, while shipping them to Britain in vast quantities has a further negative effect on the environment.

Environment Secretary Michael Gove yesterday revealed subsidies for burning wood could be scrapped as he unveiled the Government’s clean air strategy.

The U-turn comes after years of state support for ‘biomass’ such as wood pellets, in schemes pioneered by disgraced former Liberal Democrat energy secretary Chris Huhne. 

He was hired by US firm Zilkha Biomass, which makes wood pellets, after serving a prison sentence in 2013 for perverting the course of justice.

The clean air strategy includes proposals to scrap some subsidies paid under so-called ‘contracts for difference’. 

The contracts, which last until 2027, offer payments of about £100 per megawatt hour for burning imported wood – more than double the wholesale energy price.

Britain’s biggest power station, Drax, near Selby, North Yorkshire, burns about 7million tons a year of compressed wood pellets imported from the US and Canada. 

Drax supplies around 7 per cent of the UK’s electricity, with four of its six units converted to burn the pellets. 

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