Drax Group PLC (LON:DRX) shareholders have voted in favour of buying Pinnacle Renewable Energy Inc, a Canadian biomass company.
The C$11.30 (652p) per share acquisition, which values Pinnacle at C$385mln (£226mln) is now expected to complete next month after 99.99% of shareholders gave the green light.
READ: Giant clean energy ETF to track broader range of companies
The energy firm is planning to clean up operations by replacing coal with wood pellets but scientists have warned against it.
The acquisition will more than double Drax’s biomass production capacity, cutting production costs and adding a major biomass supply business underpinned by long-term contracts with Asian and European counterparties.
It said it will become the world's leading sustainable biomass generation and supply business alongside the goal to be a carbon negative company by 2030, using Bioenergy Carbon Capture and Storage (BECCS).
However, a group of 20 environmental organisations, including activist investor Share Action, urged shareholders to vote against it in an open letter published last week.
“If this acquisition proceeds, it is likely to pose financial and reputational risks to Drax and its shareholders. It will increase Drax’s contribution to biodiversity loss, carbon emissions and the potential for Indigenous Peoples’ land rights violations,” the group said.
“Forest biomass energy and thereby the demand for internationally traded wood pellets is extremely dependent on subsidies to remain financially viable, and thus very vulnerable to policy changes… Opposition to biomass burning is also growing in Pinnacle’s key markets in Japan and South Korea.”
It came after another open letter where 19 environmental NGOs warned the UK government about the risks associated with BECCS.
They said BECCS at Drax will be costly and will not deliver negative emissions after full emissions accounting for biomass in the power sector, while creating “enormous” demand for forest and other biomass and come at serious risks for land use, agriculture and biodiversity in the UK and abroad.
Shares in Drax were flat at 420.4p on Thursday morning.