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Environmental Levies

March 19, 2016

By Paul Homewood 


Following last week’s budget, the Office for Budget Responsibility has published its Economic & Fiscal Outlook Tables, ie the detailed forecasts and assumptions for the economy and the public finances.


Under the heading Environmental Levies, we can see the ongoing cost of meeting climate targets. For the coming financial year, this is expected to be a whopping £7.4 billion, approximately £280 per household.

Apart from the Carbon Reduction Commitment, all the above costs are added to energy bills.


2.7 Environmental levies

£ billion

Outturn Forecast

2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Carbon reduction commitment 0.6 0.7 0.7 0.6 0.5 0.5 0.0
Warm homes discount1 0.0 0.3 0.3 0.3 0.3 0.3 0.3
Feed-in tariffs1 0.0 1.4 1.5 1.6 1.7 1.7 1.8
Renewables obligation 3.1 3.9 4.6 5.5 6.0 6.2 6.4
Contracts for difference 0.0 0.0 0.2 0.6 1.3 2.1 2.7
Capacity market 0.0 0.0 0.0 0.0 0.6 1.1 1.1
Environmental levies 3.6 6.2 7.4 8.6 10.4 11.9 12.3
Memo: Expenditure on renewable heat incentive (RHI) 0.2 0.4 0.6 0.7 0.8 1.0 1.1
Note: The ‘Environmental levies’ line above is consistent with the ‘Environmental levies’ line in Table 4.6 of the March 2016 Economic and fiscal outlook.
1 The ONS have yet to include Warm Homes Discount and Feed-in Tariffs in their outturn numbers.


Even this figure does not include everything. As the above table indicates, the RHI costs an extra £0.6 billion, which is funded by taxation.

Then we have the Climate Change Levy and Air Passenger, which earn the Exchequer £1.2 billion and £3.2 billion respectively.



2.13 Climate Change Levy receipts

£ billion


2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
CCL Receipts 1.8 2.1 2.2 2.1 2.4 2.2
of which:

CCL Receipts (ex Carbon Price Floor) 0.6 0.9 1.0 1.0 1.5 1.5
CCL Receipts – Carbon Price Floor 1.2 1.2 1.1 1.0 0.9 0.7



2.8 Current receipts (on a cash basis)

£ billion

Outturn Forecast

2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
HM Revenue and Customs

Air passenger duty
3.2 3.1 3.2 3.3 3.5 3.7 3.9





Looking ahead to 2020/21, Environmental Levies are slightly less than the £13.6 billion predicted last year. However, this is based on what seems the unlikely prospect of a 35% jump in oil prices by 2020.



The public would be horrified if they were told the real cost of the Climate Change Act.

13 Comments leave one →
  1. Broadlands permalink
    March 19, 2016 4:07 pm

    “The public would be horrified if they were told the real cost of the Climate Change Act.”

    Indeed! Even more horrified if they were told that stopping emissions will do little or nothing anyhow…mostly cosmetic and symbolic, but very expensive and potentially devastating to social and economic activity, world-wide.

  2. R G Barton permalink
    March 19, 2016 4:28 pm

    Yes, but who will or indeed can tell the GBP .?o

  3. March 19, 2016 4:49 pm

    Pay more, get less – that’s UK electricity supply policy in a nutshell.

  4. roger permalink
    March 19, 2016 4:58 pm

    Have you included the cost of updating the National Grid to cope with renewable?

    • March 19, 2016 5:37 pm

      No. That just gets absorbed by National Grid

      • manicbeancounter permalink
        March 19, 2016 6:17 pm

        The National Grid costs in turn gets added to the electricity bills in the form of standing charges. It is a hidden cost, along with the impact on jobs and economic growth.

  5. David Richardson permalink
    March 19, 2016 6:37 pm

    RHI – the Renewable Heat Insanity. That is no problem Paul, we are just going to cut benefits to some disabled people to pay for it! I have a jaundiced view of benefits, especially when the work-shy get more in handouts than some hard working people can earn, but really?? ****

    I have said before that RHI makes the Solar FITs look like a good idea (which of course they are not). The more heat you use – the more RHI payment you get. You know it makes sense!

    O/T perhaps, but I have never been a great fan of Iain Duncan Smith, but a politician with integrity? There are not many of those around. Respect.

  6. March 19, 2016 7:03 pm

    I have noticed that on small business electricity bills, to the cost of energy charge, is added a Contract for Difference tax, plus a Capacity Mechanism tax, plus a Climate Levy tax,then this is summed and VAT is applied.This is now the final bill.
    It does not seem right to tax a tax.
    Is it legal.
    Do other countries use the same scam.

    • Joe Public permalink
      March 19, 2016 8:47 pm

      Busnisses can reclaim VAT they pay on supplies

      • Joe Public permalink
        March 19, 2016 8:49 pm

        Also businesses, too😉

    • Dave Ward permalink
      March 19, 2016 8:53 pm

      “It does not seem right to tax a tax”

      The exchequer has been doing it with petrol & diesel for years – fuel duty plus VAT on top!

  7. March 19, 2016 7:16 pm

    VAT means a tax on added value, so if some taxed items are part of the added value it’s just tough luck.

  8. March 20, 2016 8:57 am

    Reblogged this on windfarmaction and commented:
    The truth they don’t want us to know!

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