Shares of North Yorkshire power generator Drax Group fell as much as 11% on Thursday after UK Business and Energy Secretary Kwasi Kwarteng questioned the company’s use of North American wood pellets for biomass production.

Kwarteng said Drax’s reliance on North American pellets isn’t sustainable and “doesn’t make any sense.”

Kwarteng made his comments this during a meeting with a group of MPs who raised concerns about the sustainability of wood pellets, described as renewable by Drax.

“There’s no point getting [wood pellets] from Louisiana . . . that isn’t sustainable,” said Kwarteng.

He said shipping pellets from Louisiana has “a huge cost financially and environmentally … doesn’t make any sense to me at all.”

On August 3, Drax Group said it signed an agreement with Princeton Standard Pellet Corporation (PSPC) to acquire its pellet plant in Princeton, British Columbia, Canada.

Drax has been gradually converting its coal-fired power station to biomass power in its mission to become a green energy company.

A Drax spokesperson said the company “is one of Europe’s lowest carbon intensity power generators and our sustainable biomass is critical to UK energy security, supplying enough reliable renewable electricity to keep the lights on for 4mn households.”

Drax imports about 80% of the wood pellets it uses in North Yorkshire from North America and it received around £832 million in government subsidies in 2020 and about £790 million in 2019, according to think-tank Ember.

The subsidies are due to end in 2027 — but Drax is hoping to gain new subsidies by adding carbon capture technology to its plant.

Citigroup analysts Jenny Ping and Rory Graham-Watson wrote: “We see these developments as incrementally negative for the company’s prospects …

“The shares are expensive.”