Paschal Donohoe (Dublin Central, Fine Gael)

The Finance Act 2020 legislated for annual increases in the carbon tax rate of €7.50 until 2029, along with 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 CO2 emissions. Under the programme for Government, it has been agreed to continue with the planned carbon tax increases, which align with recommendations from the Climate Change Advisory Council, 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, namely, the carbon component of mineral oil tax, MOT, the natural gas carbon tax and the solid fuel carbon tax. The carbon components of MOT on petrol and auto-diesel are legislated to increase each October up to and including 2029. The MOT rates for other liable fuels such as heating kerosene and marked gas oil, along with the natural gas carbon tax and the solid fuel carbon tax rates, will increase annually in May up to and including 2030 to allow for the winter heating season.

The mineral oil tax rate increases up to the final year will annually add 1.7 cent to a litre of petrol, and approximately 2 cent to a litre of diesel, heating kerosene and marked gas oil or farm diesel. The natural gas carbon tax rate increases up to 2029 will add just under €15 each year to the average household natural gas bill, based on annual usage of 11,000 kWh. The annual solid fuel carbon tax increases up to 2029 will add 80 cent to a 40 kg bag of coal.

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