Reconomy: ‘Environmental tax revenue has returned to pre-pandemic levels’

The bulk of environmental tax revenue (75.0%), stemmed from energy taxes in 2023. Fuel Duty took the lead within this category, contributing 63.2% to UK energy taxes, while the UK Emissions Trading Scheme and Renewable Energy Obligations together accounted for 33.5% of taxes in this category. 

Transport taxes followed behind, accounting for 22.5% of total environmental tax revenue. Meanwhile, pollution and resource taxes made up a smaller proportion, at 2.4%, with increases seen in revenue from the Plastics Packaging Tax. 

Despite overall decreases in pollution and resource tax revenue, the implementation of the Plastics Packaging Tax saw a rise in revenue, generating £279 million in 2023.  

Household contributions to environmental tax revenue witnessed a surge in 2021, marking a 9.2% increase from the previous year.  

Decrease  

The electricity, gas, steam and air conditioning supply sector remained the largest industry contributor to environmental tax revenue, despite a slight decrease in its contribution in 2021.  

The transportation and storage industry experienced a further decrease in environmental tax revenue, which the government has said highlighted the need for targeted interventions in these sectors to promote sustainability. 

While UK environmental tax revenue as a percentage of GDP remains lower compared to the EU average, the nation’s proportions have remained stable in recent years.  

‘Pre-pandemic’ 

Steve Gough, chief executive of Valpak by Reconomy, said: “These figures show that UK environmental tax revenue has returned to pre-pandemic levels with Fuel Duty remaining the largest contributor.  

“As demand and consumption will only keep rising, increasing circularity where waste is reduced and conserving finite resources will be key to meaningfully reducing the amount of CO2 produced by economic consumption and reach net zero targets in a cost-effective way. 

“Government policy is one lever to achieve this while we hope that embedding long-term positive behaviours from businesses in the UK will further support more efficient resource management. Businesses that are prepared to embed circularity at the heart of their model can drive positive environmental change, reduce costs such as taxation and lay the foundation for future, sustainable economic growth.”