Drax, the company that runs the UK's largest coal-fired power station, has attempted to shrug off its status a bete noire of environmentalists with the announcement this week of plans to build a major new biomass facility at its power plant in North Yorkshire.

However, Greenpeace criticised the move, claiming that the biomass fuelled system would primarily run on imported timber – a fact that will undermine the carbon reductions delivered by the technology.

Drax said earlier this week that it has inked a £50m deal with French engineering firm Alstom to construct a biomass co-firing facility capable of handling 1.5m tonnes of biomass a year, such as wood chips and agricultural waste.

The company said that the 400MW system, work on which will begin in the second half of the year, would allow the blending and burning of biomass materials with coal, potentially cutting emissions from the plant by up to two million tonnes a year. It added that it was aiming to generate a tenth of it energy output through co-firing, the equivalent output of about 500 wind turbines.

Drax chief executive Dorothy Thompson said that the project marked a "major milestone" in the company's strategy to cut emissions by 15 per cent by 2011. She insisted that while the company's coal-fired plant has been criticised as one of the largest emitters of carbon emissions in the UK, the company was fully committed to cutting emissions. "At Drax, we are only too well aware of the need to tackle climate change and we firmly believe that we are part of the solution, " she said. "We have a role to play in the transition towards a low carbon economy while delivering reliable supplies of electricity."

The move was welcomed by Neil Crumpton of Friends of the Earth, who told The Guardian that using biomass to fuel power stations represented a more effective use of the resource than converting it to biofuels. "Co-firing with biomass is a reasonable way forward; it's a logical extension of what it [Drax] is already doing and I've got no qualms about it," he said. "If it helps build the sustainable biomass market in the UK, then all well and good."

However, Doug Parr, chief scientist at Greenpeace UK, was far less effusive about the proposals, expressing concern about Drax's ability to source enough biomass in the UK to run the plant. Speaking to The Times, he voiced fears that importing timber from overseas without guarantees that it is from sustainable forests could cause more harm than good and urged Drax to only use FSC certified wood.

Drax said that efforts would be made to ensure the biomass used comes from sustainable sources and that all its procurement contracts would include sustainability criteria. However, it admitted that initially much of the timber used would have to be imported with suppliers in Scandinanvia, the US , Canada and South America currently being considered.