Document summary
This report provides an overview of energy subsidies in the UK, starting with an overview of the basic economics, then identifying the scale of subsidies in the UK, and finally comparing the UK position with other countries. The scope of the report is limited to a review of published sources, and it is not possible to say that such an approach captures all subsidies. This report finds that outside of the transport sector, the other energy sectors are much more lightly taxed, generating revenues (excluding VAT and carbon taxes) of around £1bn. This compares with subsidies identified in this report totalling around £10bn, which is around 0.8% of the market value of energy (~£120bn excluding road transport fuel). Even considering that this is a lower bound estimate, in aggregate, energy subsidies and taxes are therefore rather low compared to market value. Nevertheless, they form an important part of the revenue stream for many different types of energy investment, and for this reason, subsidies have an important strategic influence on the development and choice of energy technology used in the UK.