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Environmental Levies To Cost £57 bn In Next Five Years

March 11, 2017

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.


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.

  1. March 11, 2017 7:49 pm

    Paul put the “bn” in the title

  2. March 11, 2017 8:10 pm

    Yes! I was a bit startled to read that headline also! 😉 Unfortunately, this expenditure is something May and Hammand cannot amend without rolling back the Climate Change Act; this does not look like a priority for May’s Government!
    A similar error in the last week’s greenie US press announced that 55% of US electricity was from wind power! Later this was corrected to 5.5% but with less razmataz!

  3. Robert Fairless permalink
    March 11, 2017 8:40 pm

    This reads like a diary of mental defectives. Based on a false and fraudulent science, created by fools and paid for by ignorant plebs.
    Is there no one left in the country endowed with common sense and intelligence to repeal that pernicious Climate Change Act 2008.

  4. March 11, 2017 10:06 pm

    It has to be remembered that £57bn will not have disappeared. $57bn will have been taken from UK citizens and £57bn will have been received by other people. This must be one of the most lucrative criminal enterprises ever carried out in the UK.

  5. Joe Public permalink
    March 11, 2017 10:22 pm

    “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.”

    Remember your prediction in “Climate Change Committee Want Road Pricing” October 18, 2013:

    I have flagged up before the problem the Treasury will face as more and more electric cars are introduced. Loss of fuel duty and VAT has been estimated to cost the government £14bn a year by 2030, and this is a black hole that will need to be filled.

    Lo & behold:

    Vehicle Excise Duty: Small car buyers face higher costs

    As more cars get cleaner, the existing rules have cut back the Treasury’s income – hence these changes. From 1 April, only newly-registered cars with zero emissions will escape VED – so that means electric and hydrogen cars only.

  6. March 12, 2017 9:58 am

    Austerity creaction in the raw.

  7. March 12, 2017 10:17 am

    Which is worse – the government levies or energy company profiteering?

    Energy companies ‘ripping off’ millions, ministers say

    • March 12, 2017 10:53 am

      The latter is much worse, because it provides an easy diversion of blame from the former.

  8. March 12, 2017 3:25 pm

    Yes best context by putting per household
    £57bn = £11bn per year
    24mn households so about £500/year/household

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