The share price of power station operator Drax fell 25% on the news before rallying to close 14% lower, while the Wood Panel Industries Federation (WPIF) dismissed the review as failing to provide a level playing field.
The wider wood industry has complained of insufficient timber to feed the 40 biomass plants either running or in the pipeline, and that panel and pallet supplies are already competing against subsidies that force up the price of raw material.
Drax had confirmed it plans to go coal-free at its station in Yorkshire, but initially will convert three of its six boilers.
Norbord Europe managing director Karl Morris said the government response was misconceived and continued to subsidise the inefficient use of biomass before understanding either the carbon balance or the implications on the existing wood processing sector.
