Matt Carthy (Cavan-Monaghan, Sinn Fein)
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76. To ask the Minister for Finance the total amount by which he intends to increase the carbon tax, by category, over the lifetime of the Government. [28016/25]

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 carbon dioxide emissions that it releases.

The 2020 Programme for Government committed to increase the basis of carbon tax rates from €26 to €100 per tonne of carbon dioxide by 2030, and to use the additional revenue generated in specific expenditure programmes. 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. Carbon tax rates are currently based on charging €63.50 per tonne of carbon dioxide emissions.

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.

Mineral Oil Tax comprises a carbon and a non-carbon component. The carbon component is also referred to as carbon tax. Under the carbon tax trajectory, Mineral Oil Tax rates on petrol and auto-diesel are legislated to increase each October up to and including 2029. Mineral Oil Tax 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, are legislated to increase each May up to and including 2030.

Exclusive of VAT, 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 the final year 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 for the same period will add just under 80 cents exclusive of VAT to a 40kg bag of coal.

During Programme for Government negotiations, it was 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.