The cost of environmental levies on energy bills to support the UK’s low carbon transition is expected to rise to £12.6 billion by 2020.
That’s an increase from £6.9 billion in 2016/17 and could rise to £13.5 billion in 2021/22, according to latest figures from the Office of Budget Responsibility (OBR).
It expects household energy bills to “rise faster than previously assumed” in the near term.
Environmental taxes include levy-funded spending policies such as the Renewables Obligation (RO), Contracts for Difference (CfD), Feed-in Tariffs (FiTs), Capacity Market and Warm Home Discount.
The OBR’s report states the increase mainly reflects the build-up in the CfD scheme – which is designed to boost renewable energy – and the development of the Capacity Market scheme which focuses on security of supply.