Environmental Levies, Climate Change Levy & Carbon Allowances
By Paul Homewood
https://obr.uk/efo/economic-and-fiscal-outlook-october-2021/
Just to update the Environmental Levies situation:
1) To get to the table above, click on the link below it, then scroll to:
and look for Table 2.7.
2) A bit more detail on the Climate Change Levy:
The costs above, ie £1.1bn for 2021/22, are made of:
a) Levy charged on energy bills to businesses
b) Levy paid on fossil fuels by electricity generators. In particular, they have to pay 0.331p/kwh for natural gas used ( and other rates for coal etc).
Assuming energy efficiency of 53% at a CCGT plant, this cost would gross up to 0.625p/KWh, or £6.25/MWh.
As market prices tend to be set by CCGT, which is the marginal supply, this amount ends up being added to the market wholesale price. It therefore ends up as being windfall profit for renewable generators (other than CfD).
3) Emission Trading Scheme (ETS)
The UK ETS system was only introduced last year, to replace the EU scheme, which it mirrors.
TABLE 3.4
https://obr.uk/download/october-2021-economic-and-fiscal-outlook-charts-and-tables-chapter-4/
The OBR does not show it as an Environmental Levy because it is a tax, rather than an imposition, but it is included in Current Receipts.
Rather alarmingly it is projected to jump from £0.9bn this year to £4.9bn in 2022/23, although UK ETS prices have already nearly doubled since last May, so some of this increase may already be baked in.
As well as power generators, energy intensive industry and domestic aviation (incl Europe) are covered by the scheme, so it is difficult to calculate how much the generators pay. But my guess would be at least half, meaning £2.5bn next year.
More detail on ETS here.
When we add this altogether for 2022/23, we get:
Env Levies : £9.2bn
CCL: £1.9bn
ETS: £4.9bn
TOTAL: £16.0bn
While not all of this appears in domestic energy bills, the public ends up paying the bill one way or other.
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NOT A LOT OF PEOPLE KNOW THAT 
Paul, you must be one of the very, very few people (outside of those setting these taxes) who actually understands and can analyse all this.
You deserve a major award for service to the public.
Don’t wait up though…
Gerald Ratzer and Doug Lightfoot, Montreal, have found that CO2 plays a very minor role in influencing the planet’s temperature.
The Sun, cosmic rays and especially atmospheric water vapour are the controllers.
The CO2 hypotheses have been overturned.
Wil the “Great and the Good” come to accept that?
There are many excellent books which show in very great detail why the concentration of atmospheric CO2 plays little or no part in global temperature but “The great and the Good” unfortunately do not read them.
There must be money in the scam for the G&the G who support the “green crap”-considerbthe CCC’s ,Chairman, Seven, as bent as a crossbow, or more.
cajw-above.
Is there a goto Ref.for the paper?
Thanks.
Yes, an initial, brief one from Prof.Grald Ratzer , emeritus Chair of Computer Science, McGill University, Montreal, in the form of a newspaper letter.
His readers letter is in the Westmount Independent, 11January, 2022.
A review is under preparation of the historical and future influences of the Sun and water vapour in controlling global temperature and the prospect of a grand solar minimum applying as far ahead as 2050.
Ratzer and Lightfoot show that the IPCC recommendations are out of date and wrong.
Therefore, decarbonisation is unnecessary and would be ineffective.
That the extremely mild, and frankly rather “old hat,” criticisms by Professor Ratzer of the Global Warming nonsense can only get published in a tiny, niche, free newspaper like the Westmount Independent speaks volumes of the suffocating and effective censorship that exists.
OK, as you say, but the authors are preparing a fuller review which will, hopefully, be published elsewhere soon for consideration by a wider readership.
It is amazing how much money a government can waste given carte-blanche.
Of course the hidden cost that is not allowed for by the OBR is the cost of buying electricity and gas on the spot market due to the loss of electricity storage allowed by Rough and coal at coal fired power stations.
These mad policies also have the effect that the UK has very limited energy security: horrendous when you think that even 10 years ago we could have withstood anything that the world-outside threw at us.
BIG NEWS: The West cannot replace Russian Gas if Russia cuts off supply due to US actions.
I would not say it was Big News – just patently obvious the Europe’s energy supply is hanging by a thread. What is not in the lame legacy media is the cold weather in Europe that is increasing energy use and depleting the already depleted gas storage. And as we saw with the idiot AEP recently, halfway through January is not the end of winter. Dr North points towards the end of February and into March when the risk reaches a maximum. That is not just for Europe but for us as well regardless of whether we have freezing temperatures or not. A cold April could see us teetering on the edge.
A couple of points on the CO2 tax. It applies rather more widely than just electricity generation, with major industrial consumers and aviation caught in its net. Here is a listing of industrial operations caught in the net (they get an allocation of free allowances, but those are only about half their need)
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1045104/uk-ets-allocation-table.csv/preview
This means that the gearing between the tax and its effect on electricity prices is in fact quite severe. The loss of revenue from exempting generators would be small compared to the effect on overall electricity prices.
The second point is that I think the OBR prepared their forecast when UKA prices were around £60/tonne CO2. In December, prices had risen to the point where in theory the government would consider that they were rising too fast, and further supply of free allocations might be made. They decided not to do so in yet another “let them eat cake” decision from BEIS. Prices have been as high as £80/tonne CO2 and are moving up again following a dip that occurred because of the mild weather over the new year.
Re overturning CO2 hypothesis, has there been any significant response to the 2020 Wijngaarden & Happer paper ? I haven’t seen anything substantial.