Minister for Finance statement on the Annual Increase of Carbon Tax until 2030

The Minister states:

Finance Act 2020 legislated for annual increases in the carbon tax rate of €7.50 until 2029 and a final increment of €6.50 bringing the rate to €100 per tonne of carbon dioxide in 2030, with current rates based on charging € 63.50 per tonne of carbon dioxide emissions.

Under the Programme for Government, it has been agreed to continue with the planned carbon tax increases, aligning with recommendations from the Climate Change Advisory Council and scientific experts, and to continue to use the additional revenues to fund social welfare measures, agri-environmental schemes and retrofitting. This approach encourages a shift away from fossil fuels and ensures those who are most vulnerable receive targeted support, making the transition to a sustainable future fair and equitable.

There are three separate legislative frameworks within tax law to apply the carbon taxation regime across liquid fuels, natural gas and solid fuels: i.e. the carbon component of Mineral Oil Tax, Natural Gas Carbon Tax, and Solid Fuel Carbon Tax.

The carbon components of Mineral Oil Tax on petrol and auto-diesel are legislated to increase each October up to and including 2029. MOT rates for other liable fuels such as heating kerosene and marked gas oil, along with Natural Gas Carbon Tax and Solid Fuel Carbon Tax rates, will increase annually in May up to and including 2030 to allow for the Winter heating season.

Mineral Oil Tax rate increases, up to the final year of the trajectory, will annually add 1.7 cent to a litre of petrol, and approximately 2 cents to a litre of auto-diesel, heating kerosene and marked gas oil/farm diesel. Natural Gas Carbon Tax rate increases up to 2029 will add just under €15.00 each year to the average household natural gas bill, based on annual usage of 11,000 kilowatt hours. Annual Solid Fuel Carbon Tax increases up to 2029 will add just under 80 cents exclusive of VAT to a 40kg bag of coal. In the final year, these increases will be slightly less.

I am advised by Revenue that the carbon tax receipts collected in 2024 were €1.067 billion.