A North Yorkshire power station has been given permission to continue burning 300,000 tonnes of the controversial fuel petcoke each year.
Drax produces 10% of the electricity in England and Wales
Last month Drax said a two-year trial of the fuel had shown "no detectable impact" on the local environment.
On Friday, the Environment Agency said it agreed with Drax's findings.
Environmental campaigners have described Petcoke, a blend of coal and petroleum coke, as "dirty fuel" which causes more pollution.
Monitoring to continue
The Environment Agency said Drax also now had permission to store up to 6,000 tonnes of petcoke blended with coal, on the coal stock ground.
Gerard Morris, environment manager for the agency, said: "We are satisfied that the results from the trial fall within environmental limits, and we will continue to monitor operations closely."
He said permission to burn petcoke could be withdrawn or restricted at any time, if there was evidence of a significant threat to health or the environment.
Selby District Council said it would also be monitoring the affects of burning petcoke at Drax on the local community for at least another year.
Council Chris Metcalfe, chairman of the council's environmental board, said: "Our foremost priority remains to ensure the health and welfare of people living in the local area, which is why we want to continue to monitor the situation even though the official trial period has finished."