Drax has been booted from an investment index of clean energy companies as doubts over the sustainability of its wood-burning power plant begin to mount within the financial sector. The FTSE 100 energy giant, which has received billions in renewable energy subsidies for its biomass electricity, was axed from the index of the world’s greenest energy companies after S&P Global Dow Jones changed its methodology. The exit from the S&P Global Clean Energy Index is a blow to Drax, which has vowed to become the world’s first “carbon-negative” energy company by the end of the decade. It comes amid growing scepticism about its green credentials after the financial services firm Jefferies told its clients this week that bioenergy was “unlikely to make a positive contribution” towards tackling the climate crisis. Drax was once one of the largest coal power generators in Europe before it converted four of the generating units at its North Yorkshire site to burn biomass instead. It received more than £800m in government subsidies and tax breaks to support the conversion last year, and could expect billions more in the future. The company claims that burning biomass to generate electricity is “carbon neutral” because the emissions from incinerating wood pellets are offset by the carbon dioxide absorbed when the trees they are made from grow. By using new technology to capture the carbon emissions from the biomass power plant, the company could effectively create “negative carbon emissions”, according to Drax. However, the Jefferies equity analyst Luke Sussams said bioenergy was unlikely to make a positive contribution to climate action because of “uncertainties and poor practices” in some parts of the timber industry regarding the sources of wood, forest management practices, supply chain emissions and high combustion emissions. “We argue that bioenergy production is not carbon neutral, in almost all instances. This casts doubt on whether bioenergy with carbon capture and storage (BECCS) is a net-negative emissions technology. The widespread deployment of BECCS looks challenging,” he said. The interventions by S&P Global Dow Jones and Jefferies are some of the first blows struck by a financial sector against the bioenergy sector, which has long been criticised by green groups. The S&P Global Clean Energy Index also dropped a French biomass generator, Albioma, which, like Drax, has used wood chips to replace coal in its power plants. Despite the growing concerns, Susamms expects the UK government to continue allowing Drax to rake in billions in subsidies to support its plans. Drax’s share price has climbed by more than 4.5% to 540p a share this week. Its BECCS plans could cost British energy bill payers £31.7bn over 25 years and would “not deliver negative emissions” after accounting for the full carbon footprint of biomass in the power sector, according to the climate thinktank Ember. Phil MacDonald, Ember’s chief operating officer, said: “Scientists are increasingly raising concerns that it cannot be relied upon to reduce emissions – and financial institutions are starting to signal that they don’t think it’s clean or green either.” Drax sources about two-thirds of its biomass from the south-eastern states of the US via ocean tankers, which are major emitters, and recently struck a £420m deal to triple its biomass capacity by acquiring the Canadian wood pellet manufacturer Pinnacle Renewable Energy. “It’s time for the UK government position on biomass to catch up with the evidence – so that investors are encouraged to instead invest in technologies which have been scientifically proven to reduce carbon emissions,” MacDonald said. A government spokesperson declined to comment. A Drax spokesperson said its biomass “meets the highest sustainability standards” and that the “science underpinning carbon accounting for bioenergy” was “crystal clear”. The spokesperson added: “The world’s leading authority on climate science, the UN’s IPCC, is absolutely clear that sustainable biomass is crucial to achieving global climate targets, both as a provider of renewable power and through its potential to deliver negative emissions with BECCS.”