Whilst Drax welcomed the UK government's recent budget support for carbon capture and storage (CCS), it said it needed a firm commitment to BECCS before it could commit to investing 2 billion pounds ($2.45 billion) into installing this technology at Drax Power Station, its 2.6 gigawatt biomass power plant in Yorkshire, northern England.

"Until we have this clarity, we are pausing our multi-million pound investment programme in the UK BECCS project," Drax CEO Will Gardiner said in a statement.

Gardiner urged the government to use a planned announcement on measures to support energy security at the end of this month to outline its support.

The current support for the plant through the renewables obligations and contract for difference schemes will expire in March 2027 and could make it uncommercial to operate the plant after that, a Drax spokesperson told Reuters.

BECCS support would enable Drax to make a final investment decision, and start work to get the technology completed and up and running in 2027 to help secure supplies, the spokesperson added. 

Britain needs biomass to maintain energy supply, with peak demand to rise by 4 gigawatt (GW) by 2027, while coal, old gas and nuclear plant closures would remove up to 6.3 GW of capacity, according to a study by consultancy Baringa on behalf of Drax.

Drax is developing technology to capture and store emissions generated from burning wood-based biomass pellets.

Green groups have heavily criticised the burning of wood biomass pellets, arguing it is not a carbon-neutral method of energy generation and that pellet production can contribute to deforestation.

Drax says it only uses wood residuals or byproducts from trees primarily used for lumber, and that demand for wood from sustainable managed forests can help increase forest growth.

($1 = 0.8162 pounds)

(Reporting by Nora Buli; Editing by Susan Fenton)