Matt Carthy (Cavan-Monaghan, Sinn Fein)
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26. To ask the Minister for Finance the amount by which he intends to increase excise on motor and home heating fuel through the carbon tax in each year of Government; and if he will make a statement on the matter. [16107/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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Budget 2010 announced the introduction of a carbon tax on fossil fuels in Ireland. Carbon taxation of petrol and auto-diesel came into effect in December 2009. It was extended to other liquid fuels and natural gas in 2010, and to solid fuels in 2013. Ireland’s carbon tax regime is a carbon pricing mechanism which directly links the taxation of fossil fuels to carbon dioxide emissions: a single price is set for a tonne of carbon dioxide, and this price is then applied as a tax to each fuel according to the level of carbon dioxide emitted by that fuel when it is combusted. In this way, the carbon tax applying to each fuel reflects the level of emissions that it causes when used.

Legislation was introduced in Finance Act 2020 to provide for annual carbon tax rate increases up to 2030: annual increases of €7.50 per tonne of carbon dioxide up to the final year increase of €6.50, meaning that carbon tax rates on all liable fuels will be based on charging €100 per tonne of carbon dioxide by May 2030.

Three separate legislative frameworks apply the carbon tax regime across liquid fuels, natural gas and solid fuels, in the form of Mineral Oil Tax (MOT), Natural Gas Carbon Tax (NGCT) and Solid Fuel Carbon Tax (SFCT).

Carbon taxation of liquid fuels and vehicle gas is applied as MOT which comprises a carbon and a non-carbon component. The carbon component is also referred to as carbon tax. MOT carbon component rates for petrol and auto-diesel, which are currently based on charging €63.50 per tonne of carbon dioxide, are legislated to increase each October up to and including 2029. Rates for other fuels liable to MOT (such as heating kerosene and Marked Gas Oil) are currently based on charging €56 per tonne of carbon dioxide. These rates are legislated to increase on 1 May 2025 and each May thereafter up to and including 2030. A table of current MOT rates, broken down into their carbon and non-carbon components, is available in the Excise Duty Rates - Energy Products and Electricity Taxes Manual available at www.revenue.ie/en/tax-professionals/tdm/excise/excise-duty-rates/energy-excise-duty-rates.pdf.

Inclusive of VAT, carbon tax rate increases, up to the final year of the trajectory, will annually add approximately 2.1 cents to a litre of petrol, 2.5 cents to auto-diesel, 2.2 cents to heating kerosene and 2.3 cents to Marked Gas Oil. I am advised by Revenue that a non-statutory consolidation of MOT law, which includes total MOT rates and MOT carbon component rates up to 2030, is published on the Revenue website at www.revenue.ie/en/companies-and-charities/documents/excise/legislation/mot-primary-law.pdf. Carbon tax rates as set out in Schedule 2A of Finance Act 1999 (as amended) are published on page 40 of this document.

Natural Gas Carbon Tax (NGCT) and Solid Fuel Carbon Tax (SFCT) rates are currently based on a charge of €56 per tonne of carbon dioxide emissions. This amount is legislated to increase to €63.50 on 1 May 2025 with further increases each May to 2030. On 1 May this year the NGCT rate will increase from €10.13 to €11.48 per megawatt hour. Exclusive of VAT, this will add just under €15.00 annually to the average household natural gas bill, based on usage of 11,000 kilowatt hours. On 1 May the SFCT rate on coal will increase from €147.49 to €167.24 per tonne which, inclusive of VAT at 13.5%, will add 90 cents to a 40 kg bag of coal.

Tables with current and future NGCT and SFCT rates, as provided for in legislation, are available in the Excise Duty Rates - Energy Products and Electricity Taxes Manual which is published on the Revenue website at www.revenue.ie/en/tax-professionals/tdm/excise/excise-duty-rates/energy-excise-duty-rates.pdf.