Environmental Levies–March 2023
By Paul Homewood
https://obr.uk/efo/economic-and-fiscal-outlook-march-2023/
The OBR have now published their fiscal outlook, following the new budget. Below is the section for Environmental Levies, AKA renewable subsidies.
As usual, I have included FITs, CCL and ETS as Memo items, as the latter two are included in other tables, whilst FITs are no longer classified as Env Levies:
The expenditure on RHI is funded from general taxation. but the other levies however largely impact energy bills.
The ETS, for instance, applies to energy intensive industries, the power generation sector and aviation, so some of the cost is passed onto industry; but a large part is passed onto electricity generators.
Worse still, as the ETS adds to the cost of gas power generators, this has the effect of increasing wholesale power prices across the board, not just for gas - a multiplier effect, in other words.
The OBR think that CfDs will return money to energy users this year, but currently that is not the case, as wholesale power prices are lower than CfD strike prices at the moment In any event, it is a choice of being burned or scalded; we either pay higher electricity prices, or lower ones with subsidies added on!
We can of course ignore the rosy forecasts for CfDs in the later years. These assume that lots of offshore wind capacity will come on stream at the ridiculously low prices tendered. As we know, there is not a cat in hell’s chance of this.
NOT A LOT OF PEOPLE KNOW THAT 
Heck.
For 2022/23 OBR now expects those with CfDs to refund only £0.1bn.
Only last November, OBR projected that those with CfDs would refund 38x as much – £3.8bn!
It looks as though the outturn will be a payment, not a refund. The LCCC instituted an Interim Levy Payment designed to raise ~£150m by the end of the month. I think the overall total for the year will be close to £0.1bn payment. You have to suspect they are ignoring the reality that new wind farms with low strike prices are going to take higher market prices instead.
Office for budget what??? OBI would be closer to the mark.
OBF. Office of Budget Fallacies. They are now a left-leaning no impartial body. The far-left Resolution Foundation has seized control of it.
So close on £700/household.
Tell me how renewables are cheaper?
That was my immediate thought. Given that one way or another these costs will probably be passed on to the end consumer, the truth probably is that this is what it’s costing every household. But of course it’s a hidden cost, so people are unaware of it.
Jo Nova has a nice graph showing the growth of unreliables and the growth of the electricity price. Free stuff is certainly bloody expensive.
In the Budget, there was £20bn allocated to carbon capture. Where / when and to whom will this bonanza from the UK tax payers go?
It will go to increased sales of gas to provide the energy to pour the money down a hole, and to the consultant engineers who design the system, and probably mainly to the Chinese for the necessary kit. Plus a management fee for the troughing companies who farm the subsidy.
Don’t worry about a £20bn bonanza Peter. It won’t happen.
You won’t find any tangible use for the £19bn in Budget forecasts (which go out 5 years). This is purely an exercise in window dressing. Expect many announcements from lots of people to make it look like something is happening. A good deal of money will be spent on non-jobs in design, engineering, legal, planning, banking, PR, as well as webpages and visitors centres. But nothing will get much further than the drawing board.
The SMR competition is the same: a distraction with no real intention of ever producing anything. So don’t allow yourself to be distracted by that either.
The serious public money will be spent on Sizewell C. And then the next EPR to follow. Expect much chumming-up and back-slapping with our French neighbours. We might even get some power from these behemoths in 15-20 years. Maybe!
Levies is but a euphemism for “rate payer subsidies.” The so-called green energy sources have soaked up literally billion$ in subsidies with nothing to show for it. If green tech worked there would be a market for it. This is a Marxist ploy by the WEF and the climate fanatics to destroy fossil fuel industries–even if it means going back to living in caves that are heated by open fires.
Paul,
Thank you for producing this. I mentioned it a short while ago, when I was trying to make sense of the November numbers — but adding the other three levies is what everyone needs to be told about loud and clear.
Don’t worry about the WEF and various shills — look at what is happening right across Scotland. Everywhere there are schemes coming forward — huge schemes that will have terrible effects on the landscape and wildlife. RES have just announced two such schemes in this part of the Borders, the slightly grotesque consequence is that each application will have to account for the impact of the other scheme when doing the cumulative picture.
The developers tell us NPF4 (new Scottish planning policy) has opened the door. And so in they are all rushing to profit from the subsidies. You are quite right to point the cost in a few years time. But maybe even the Government might wake up to that …
That’s why these numbers need maximum publicity
The good news is, if govt hold the line, is AR4 CfD windfarms look dead in the water now and its clear AR5 aint going to clear anywhere near as low so that subsidy wont go as far. Then they will realise a capacity crunch is coming and we find more CCGTs coming forward but at much higher capacity market prices unless they are given confidence they wont be shut out of the system in the 20230’s.