Paul Kehoe (Wexford, Fine Gael)
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225. To ask the Minister for Finance his views on the likelihood of Ireland having the most expensive diesel in Europe once the carbon tax increase is levied on 1 October 2024; his plans to reduce the financial burden on the transport industry; and if he will make a statement on the matter. [43182/24]

Paul Kehoe (Wexford, Fine Gael)
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253. To ask the Minister for Finance his views on the likelihood of Ireland having the most expensive diesel in Europe once the carbon tax increase is levied on 1 October 2024; his plans to reduce the financial burden on Irish consumers; and if he will make a statement on the matter. [43179/24]

Jack Chambers (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 225 and 253 together.

The Government is conscious of the implications of fuel costs for all sectors of society.

A number of factors affect the final retail price of fuels including energy market dynamics, wholesale pricing, individual retail pricing policy, transport costs, exchange rate fluctuations and taxation. While taxation affects the final retail price, amendments to tax rates may not fully absorb price shocks given the larger impacts of energy markets, embedded costs as well as pricing policy at wholesale/retail level and involve a significant cost to the Exchequer in terms of revenue foregone.

The best way of insulating our economy and society from fuel prices shocks is to reduce our dependence on fossil fuels. Carbon taxes were introduced in Ireland to incentivise the development and use of alternatives to fossil fuels. Finance Act 2020 introduced a ten-year trajectory of annual carbon tax increases which will result, by 2030, in rates being based on charging €100 per tonne of carbon dioxide emissions. The trajectory delivers on the 2020 Programme for Government commitment, is an important element of Ireland’s Climate Action Plan and features as a key reform measure in Ireland’s National Recovery and Resilience Plan. A significant portion of carbon tax revenue is allocated for targeted expenditure on welfare and energy efficiency measures, to prevent fuel poverty and ensure a just transition to a low carbon economy.

The carbon tax rate on petrol and auto-diesel increased on 9 October from €56.00 to €63.50 per tonne of carbon dioxide. The increases added, inclusive of VAT, 2.5 cents per litre to auto-diesel. According to the European Commission’s weekly oil bulletin published on 17 October 2024, the average retail price for a litre of auto-diesel in the State was €1.62, placing Ireland 7^th most expensive amongst Member States. The table below details the Mineral Oil Tax (MOT), National Oil Reserves Agency (NORA) levy, and VAT costs, totalling €0.92, included in an auto-diesel retail price of €1.62 per litre.

The position is much improved from June 2022 when diesel prices were €2.15 per litre.

You should also be aware that despite the restoration of excise rates which occurred in August 2024, and the recent carbon tax increase, national average retail prices have shown steady decreases in recent weeks. While average prices in May 2024 were approximately €1.84 and €1.78 per litre for petrol and diesel respectively, prices as of 14 October are €1.69 and €1.62 per litre respectively, approximately 15 cent and 16 cent cheaper.

In line with the Programme for Government policy approach to carbon tax and commitments to protect the vulnerable, a targeted package of social protection interventions has been developed.

Budget 2025 provides for a €951 million allocation toward this end, an additional €163 million on 2024’s allocation. This expenditure will provide:

• €306 million for the Department of Social Protection for targeted social welfare interventions – which includes a €300 lump sum payment to be made to recipients of the Fuel Allowance, and €200 to be paid to recipients of the Living Alone Allowance.
• €477 million to the Department of the Environment, Climate and Communications for retrofitting, just transition, and ODA;
• €143 million for the Department of Agriculture, Food and the Marine for green & sustainable farming measures
• €20 million for the Department of Transport for continuation of carbon tax-funded programmes since 2020.
• €5 million for Department of Housing, Local Government and Heritage for continuation of carbon tax-funded programmes since 2020.