Environmental Levies To Cost £57 bn In Next Five Years

By Paul Homewood

 

Following the Chancellor’s Budget Statement, the Office for Budget Responsibility has published its latest Economic & Fiscal Outlook for the next five years.

 

The projected cost of Environmental Levies is £57.4bn between 2017/18 and 2021/22:

 

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	0.6	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	1.5	1.5	1.6
Renewables obligation	3.9	4.6	5.4	6.3	6.6	6.8	7.0
Contracts for difference	0.0	0.1	0.7	1.3	1.9	2.7	3.2
Capacity market	0.0	0.0	0.2	0.7	1.0	1.3	1.4
Environmental levies	4.6	6.9	8.7	10.7	11.9	12.6	13.5
Memo: Expenditure on renewable heat incentive (RHI)	0.4	0.6	0.7	0.9	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 March 2017 Economic and fiscal outlook.
1 The ONS have yet to include Warm Home Discount and Feed-in Tariffs in their outturn numbers. If they were included, they would have been £0.3bn and £1.1bn respectively.

http://budgetresponsibility.org.uk/efo/economic-fiscal-outlook-march-2017/

 

Although the cost this year is expected to be £1bn less than anticipated last November, because the cost of next winter’s capacity market auction turned out to be less than forecast, the cost increases in future years, so overall there is little change to last year’s Outlook.

By 2021/22, the cost of Environmental Levies will be £13.5bn, about £500 per household.

On top of this is the cost of the RHI, which adds another £4.9bn.

Apart from the carbon reduction commitment, the cost of the levies is loaded onto energy bills.

 

In addition, Air Passenger Duty and the Climate Change Levy will add £29bn over the next five years:

 

 

 

Taking all of these items together, the overall cost for the next five years amounts to £91.3bn.

 

Interestingly, the OBR expect revenue from fuel duties to rise from £27.5bn to £30.0bn by 2021/22. This does not say much for electric cars making any inroads.