Environmental economy

Environmental accounts are "satellite" or extended accounts to the main UK National Accounts.

They are compiled in accordance with the System of Environmental-Economic Accounting (SEEA), which closely follows the United Nations System of National Accounts (SNA).

They measure the impact the economy has on the environment, how the environment contributes to the economy, and how society responds to environmental issues by using the accounting framework and concepts of the national accounts.

They are used to inform sustainable development policy, model impacts of fiscal or monetary measures, and evaluate the environmental impacts of different sectors of the economy.

Data are provided in units of physical measurement (mass or volume) and monetary units, where these are the most relevant or only data available.

In our accompanying dataset (XLSX, 3.2MB):

• Worksheets 12.2 to 12.5 show estimates of energy consumption, atmospheric emissions and material flows

• Worksheets 12.6 to 12.8 show natural capital accounts

• Worksheets 12.9 to 12.12 show data on environmental taxes

More data, information and other environmental accounts (including fuel use, environmental goods and services sector, and environmental protection expenditure) can be found on our Environmental accounts release web page.

Worksheet 12.2 in our accompanying dataset (XLSX, 3.4MB) presents energy consumption by industry for the UK.

Energy consumption is defined as the use of energy for power generation, heating and transport. This is essential to most economic activities, for example, as an input for production processes.

The term "direct use of energy" refers to the energy content of fuel for energy at the point of use, allocated to the original purchasers and consumers of fuels. Alternatively, "reallocated use of energy" means that the losses incurred during transformation and distribution are allocated to the final consumer of the energy, rather than incorporating it all in the electricity generation sector.

Transformation losses are the differences between the energy content of the input and output product, arising from the transformation of one energy product to another.

Distribution losses are losses of energy product during transmission (for example, losses of electricity in the grid) between the supplier and the user of the energy.

Fossil fuels are the main source of energy for consumption, although other sources (including nuclear, net imports, renewable and waste sources) are becoming increasingly important.

Renewable sources include:

• solar photovoltaic

• geothermal and energy from wind, wave and tide

• hydroelectricity

• wood

• charcoal

• straw

• liquid biofuels

• biogas from anaerobic digestion

• sewage gas

Landfill gas, poultry litter and municipal solid waste combustion have also been included within this definition.

Short-term fluctuations in energy consumption are often attributable to changes in temperature or gross domestic product (GDP). Longer term, the decline in energy consumption for these purposes has largely been driven by the switch away from coal by the energy supply and manufacturing industries to other, more efficient fuels, such as natural gas and, more recently, renewable sources.

Data are provided by Ricardo Energy and Environment.

Worksheets 12.3 and 12.4 in our accompanying dataset (XLSX, 3.4MB) show emissions of greenhouse gases, acid rain precursors (ARPs) and other pollutants by industry for the UK.

Greenhouse gases (GHG) are covered by the Paris Agreement, which has superseded the Kyoto Protocol. These gases contribute directly to global warming and climate change because of their positive radiative forcing effect. The potential of each GHG to cause global warming is assessed in relation to a given weight of CO2, so all GHG emissions are measured as carbon dioxide equivalents (CO2e).

The greenhouse gases included in the worksheets are:

• carbon dioxide (CO2)

• methane (CH4)

• nitrous oxide (N2O)

• hydrofluorocarbons (HFC)

• perfluorocarbons (PFC)

• nitrogen trifluoride (NF3)

• sulphur hexafluoride (SF6)

Other important atmospheric emissions include acid rain precursors (ARPs). Acid rain is caused primarily by emissions of sulphur dioxide (SO2), nitrogen oxides (NOX) and ammonia (NH3), and can have harmful effects on the environment. For comparability, all figures are weighted according to their acidifying potential and presented as sulphur dioxide equivalents (SO2e).

Emissions levels are influenced by factors such as gross domestic product (GDP) and UK temperatures. They are also influenced by policy initiatives, for example, those encouraging adoption of cleaner technologies or emissions standards on motor vehicles. Changes in energy consumption, particularly energy from fossil fuels, directly influence air emissions.

Data are provided by Ricardo Energy and Environment.

Worksheet 12.5 in our accompanying dataset (XLSX, 3.4MB) presents economy-wide material flow accounts, which estimate the physical flow of materials through the UK economy.

Domestic extraction is divided into four categories:

• biomass, which includes material of biological origin that is not from fossil, such as crops, wood and wild fish catch

• non-metallic minerals, which are mainly construction and industrial minerals, including limestone and gypsum, sand and gravel, and clays

• fossil energy materials and carriers, which include coal, peat, crude oil and natural gas

• metal ores, which include precious metals, such as gold

For fossil energy materials and carriers (which include coal, crude oil, natural gas and peat), peat estimates were not available from 2016.

Data are compiled from multiple sources including the Department for Environment, Food and Rural Affairs (DEFRA), the United Nations Food and Agriculture Organisation (FAO), the British Geological Survey (BGS), Eurostat, HM Revenue and Customs (HMRC) and the Department for Energy Security and Net Zero (DESNZ).

Physical trade balance

The physical trade balance (PTB) shows the relationship between imports and exports, and is calculated by subtracting the weight of exports from the weight of imports. The PTB (imports minus exports) is defined in reverse to the monetary trade balance (exports minus imports). Physical estimates can differ quite substantially from monetary estimates.

The UK has a positive PTB, meaning that more materials and products are imported than are exported. This suggests that the UK may be becoming more reliant on the production of materials in other countries.

Material consumption

Direct material input (DMI) (domestic extraction plus imports) measures the total amount of materials that are available for use in the economy.

Domestic material consumption (DMC) (domestic extraction plus imports minus exports) measures the number of materials used in the economy and is calculated by subtracting exports from DMI.

Natural wealth is reflected in the productivity of soils, access to clean water, and recreational green space, for example. Any natural resource or process that supports human life, society, and the economy is an important part of our natural capital.

Natural capital accounting estimates the current value of natural assets and what ecosystem services provide for current and future generations.

These accounts are currently classed as official statistics in development.

In addition to physical flows, a measure of the output of the ecosystem service in non-monetary terms, natural capital is part of a wider move to better understand wealth. The total of what we are currently able to value is presented in our annual UK natural capital accounts.

Monetary estimates should be interpreted as partial or minimal value of the ecosystem services provided by the natural environment, as a number of these services are not currently measured. The ecosystem services that we can currently measure include:

• timber provisioning

• woodfuel provisioning

• agricultural biomass provisioning

• fish provisioning

• water provisioning (physical flows only)

• oil and gas provisioning

• coal provisioning (physical flows only)

• minerals and metals provisioning

• renewable electricity provisioning

• air pollution regulating

• greenhouse gas regulating

• noise regulating

• urban heat regulating

• recreation and tourism

• recreation (health benefits)

• aesthetics and recreation (house prices)

We will continue to work to include as much of the economic value of natural capital as possible. Our annual and asset values are market driven, following UN System of Environment-Economic Accounting guidance, and are not intended as an absolute or intrinsic "value" of the natural world. More details about the natural capital accounts are available in our UK natural capital accounts: 2025 bulletin and our UK natural capital accounts quality and methods guide.

With methodologies under development, these estimates within Blue Book are not comparable with those published in previous natural capital accounts. Users should note that they reflect a number of methods updates that follow, which will be applied to the next set of natural capital accounts planned for December 2026, with full details of these methodological updates published in the updated quality and methods guide.

Methodological updates since the 2025 natural capital accounts mean we have:

• where possible, moved towards using industry and product-specific deflators for estimating monetary values for the certain ecosystem services: agricultural biomass provisioning, fish provisioning, mineral and metals provisioning, oil and gas provisioning, renewable electricity provisioning, timber provisioning, woodfuel provisioning, recreation and aesthetic (house prices)  

• updated our recreation and tourism (expenditure) methodology, which revises estimates of the physical flow, annual and asset values  

• also updated our recreation (health benefits) methodology, which will also revise estimates of the physical flow, annual and asset values 

We no longer publish annual and asset value estimates for coal provisioning as coal will no longer be published as a separate industry, because of its size, within the supply and use and input-output tables, as noted in our Blue Book 2026: industry impact analysis article. We will continue to publish physical flow, which are based on different data sources.

We have also paused publication of monetary annual flows and asset values for water provisioning while we review our approach to monetary valuation for this ecosystem service. This is based on stakeholder feedback and our initial investigation of negative values in our UK natural capital accounts: 2025. We are currently reviewing alternative valuation methods, based on Economic Statistics Centre of Excellence (ESCoE) research and international research literature, and intend to resume publishing these values once this research phase has been completed and can be integrated into the annual natural capital accounts. We will continue to publish the physical flow for this ecosystem service in the meantime.

Environmental taxes are those for which the base is a physical unit, for example, a litre of petrol or a passenger flight, that has a proven negative impact on the environment. These taxes should reduce the activity, and therefore reduce negative environmental impacts. Increases in tax revenue can occur from either rising tax rates, increased activity, or both.

Other initiatives may promote environmentally positive behaviour, but are not considered an environmental tax under this definition. For example, charges on single-use plastic bags by retailers are not classified as a tax.

An environmental tax needs to be defined as a tax (and not another type of payment) in the System of National Accounts (SNA 2008). The National Tax List is published by the Office for National Statistics (ONS) using the European System of National and Regional Accounts (ESA 2010), which is consistent with the SNA. This definition is also explained in the Central Framework for the System of Environmental-Economic Accounting from the United Nations, which uses concepts, definitions and classifications consistent with the SNA.

Source data on aggregate revenue for each type of tax are provided to the ONS from HM Treasury, to enable compilation of public sector accounts. We produce a breakdown of the aggregate by industry, including allocation to households and the rest of the world. To do so, we use a number of sources, including supply and use tables.

More information on this environmental taxes measure can be found in our Environmental accounts on environmental taxes quality and methodology information (QMI).

More information about environmental accounts, including data rounded to a thousand tonnes, is available on our Environmental accounts release web page.

The residence adjustment is included, as the UK Environmental Accounts are based on a UK residence basis (as opposed to a territory basis). This is in line with national accounting principles, allowing environmental impacts to be compared on a consistent basis with economic indicators such as gross domestic product (GDP).

UK figures for energy and air emissions on a territory basis are published by the Department for Energy Security and Net Zero (DESNZ). Energy and air emissions bridging tables, which show the difference between these estimates, are available.

Further explanation of the differences can be found in our Energy consumption article and our Measuring UK greenhouse gas emissions methodology.