Environmental Levies To Cost UK £65 Billion In Next Six Years

By Paul Homewood 

 

Following last week’s Autumn Statement from the Chancellor, the OBR have now published their latest Economic and Fiscal Outlook.

We can therefore update the latest projections of Environmental Levies and other costs associated with the Climate Change Act. 

 

 

2.7 Environmental levies
	£ billion
	Outturn	Forecast
	2015-16	2016-17	2017-18	2018-19	2019-20	2020-21	2021-22
Carbon reduction commitment	0.7	0.7	0.6	0.5	0.5	0.0	0.0
Warm home discount1	0.0	0.3	0.3	0.3	0.3	0.4	0.4
Feed-in tariffs1	0.0	1.3	1.3	1.4	1.4	1.5	1.5
Renewables obligation	3.9	4.6	5.4	6.2	6.5	6.6	6.8
Contracts for difference	0.0	0.1	0.7	1.3	1.9	2.6	3.1
Capacity market	0.0	0.0	1.4	1.7	1.0	1.1	1.2
Environmental levies	4.6	7.0	9.7	11.4	11.7	12.2	13.0
Memo: Expenditure on renewable heat incentive (RHI)	0.4	0.6	0.7	0.8	1.0	1.1	1.2
Note: The ‘Environmental levies’ line above is consistent with the ‘Environmental levies’ line in Table 4.6 of the November 2016 Economic and fiscal outlook.
1 The ONS have yet to include Warm Home Discount and Feed-in Tariffs in their outturn numbers.

 http://budgetresponsibility.org.uk/efo/economic-and-fiscal-outlook-november-2016/

 

So, by 2021, these will be costing the UK £13bn a year, equivalent to about £500 per household.

The total cost for the next six years is £65 billion. Given the long running controversy over HS2, the proposed high speed rail link estimated to cost £56bn, one wonders why there is so little public debate about the much greater costs of the Climate Change Act, which are likely to have risen near to £200bn by the time HS2 is up and running in 2032.

 

In addition to the levies, we also have the costs of the Carbon Floor Price and Climate Change Levy, which will add another £12.4bn by 2021/22.

 

2.13 Climate Change Levy receipts
	£ billion
	Forecast
	2016-17	2017-18	2018-19	2019-20	2020-21	2021-22
CCL Receipts	1.9	1.9	2.0	2.2	2.2	2.2
of which:
CCL Receipts (ex Carbon Price Floor)	1.0	0.9	1.0	1.4	1.5	1.5
CCL Receipts – Carbon Price Floor	0.9	1.0	1.0	0.8	0.7	0.7

 

 

The cost may well be higher than the OBR forecast, as they also assume that oil prices will quickly rise to over $60 per barrel. If prices remain as subdued as they projected in March, this will likely have a knock on effect by keeping wholesale electricity prices low.

If this is the case, the cost of CfDs will be higher than anticipated.  

  

 

 

 

One day, the media might wake up to the horrendous cost of Ed Miliband’s folly.