Pearse Doherty (Donegal, Sinn Fein)
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283. To ask the Minister for Finance the estimated cost to the Exchequer in each of the years 2025 to 2030 to not proceed with any additional carbon tax increases, to undo 2024 carbon tax increases, to not proceed with any additional carbon tax increases and to undo 2023 and 2024 carbon tax increases and to not proceed with any additional carbon tax increases, in tabular form; and if he will make a statement on the matter. [44742/24]

Jack Chambers (Dublin West, Fianna Fail)
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As the Deputy will be aware Finance Act 2020 is the legislation underpinning the Programme for Government approach to carbon tax. Finance Act 2020 provides for multiannual increases in the carbon tax from the Budget 2020 headline rate of €26 per tonne of Carbon Dioxide emitted to a headline rate of €100 per tonne legislated to apply as a headline rate in 2030.

Annual carbon tax rates apply with effect from October each year for auto fuels with commencement delayed on other fuels until May of the headline year to allow for the winter heating season.

The estimated cost of not proceeding with carbon tax rate increases in each year from 2025 to 2030 and of undoing the 2023 and 2024 carbon tax rate increases would involve holding the carbon tax rate at the 2022 headline rate of €41 per tonne of carbon dioxide. As the Deputy will be aware in 2023 the carbon tax headline rate was €48.50, in 2024 it was €56 and the equivalent 2025 rate is €63.50 (applying with effect from 9 October 2024 to auto fuels and from 1 May 2025 to other affected fuels).

In July 2023 my Department published a paper examining the Potential Fiscal Impacts of the Transition to a Lower Carbon Economy in Ireland. The paper examined the potential fiscal impacts of current domestic climate action policies including commitments in the Climate Action Plan 2023 and the Programme for Government. The analysis provides an overview of the potential exchequer revenue which may be impacted either negatively or positively by current domestic climate action policies and is available online: www.gov.ie/en/publication/dd671-potential-fiscal-impacts-of-the-transition-to-a-lower-carbon-economy-in-ireland/.

Building on this work, my Department published a further paper in September 2024 focussing on carbon tax; Carbon Tax Projected Exchequer Revenue Estimates 2024-2030. This paper examines trends in carbon tax exchequer yields in Ireland over the last decade, and provides forward projected estimates of carbon tax yields over the next six years to 2030, in order to provide timely analysis of estimated trends and levels of expected exchequer receipts from carbon taxation. This paper is also available on my Department's website: www.gov.ie/en/publication/8e2d0-carbon-tax-projected-exchequer-revenue-estimates-2024-2030/.

The analysis in this paper examines how domestic climate change policies are expected to impact carbon tax yields, as our economy transitions to a low carbon economy in line with current climate action plan 2024 (CAP 24) measures. To examine the potential fiscal impacts that the transition may have on carbon tax yields in Ireland over the next six years, the analysis first identifies and provides an overview of carbon tax yields to date. Then, to provide some fiscal insights to inform policy, findings are presented from a scenario analysis of the potential impact that implementing CAP24 policy measure targets may have on carbon tax revenues from 2024 to 2030. This scenario analysis maps and links forward projected estimates of energy use and expected fuel requirements from the Sustainable Energy Authority of Ireland (SEAI) to carbon tax rates and exchequer net carbon tax receipts to examine the potential impact of the implementation of CAP24 actions between 2024 and 2030 based on the SEAI and the Environmental Protection Agency (EPA) ‘With Additional Measure’ (WAM) scenario and ‘With Existing Measure’ (WEM) scenario analysis.

On the basis of the WAM scenario and holding the carbon tax rate at the rate of headline 2022 rate of €41, the table below sets out the associated estimated cost of holding the carbon tax rate at the rate of €41 per tonne of carbon dioxide in years 2025 to 2030.

Estimated Cost (€ millions)

1 Estimate of additional carbon tax generated as per analysis of September 2024 Department of Finance Paper (Annex Table 4)

It should be noted that this estimate is based on analysis which is a point in time exercise. As forecasted revenue is estimated using forward projected estimates of energy use from the SEAI and, any changes to projected energy use will impact forecasted revenue.