John Connolly (Galway West, Fianna Fail)
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159. To ask the Minister for Finance if he has plans to review the tax treatment of home heating oil. [68451/26]

Darren O'Rourke (Meath East, Sinn Fein)
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179. To ask the Minister for Finance the measures he will take to reduce the cost of home heating oil. [67871/26]

Pearse Doherty (Donegal, Sinn Fein)
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186. To ask the Minister for Finance the analysis he has undertaken to examine the tax measures available to reduce the cost of home heating oil. [68624/26]

Simon Harris (Wicklow, Fine Gael)
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I propose to take Questions Nos. 159, 179 and 186 together.

The Government is very conscious of the price increases in home heating oil as a result of the conflict in the Middle East. The spikes in the price of home heating oil are not as a result of taxes, nor Government policy, but due to the wholesale market price of crude oil, which is the globally traded benchmark commodity that is the main input into refined products like home heating oil. The disruption to commodity flows through the Strait of Hormuz has had a particularly large impact on some of these refined products, in particular diesel and kerosene.

In order to ease the financial burden on households, earlier this year the Government extended the fuel allowance by a further four weeks, resulting in additional payments of €152 to each of the 470,000 fuel allowance recipients. It meant that a typical household receiving the fuel allowance will have received €1,216 over the course of the fuel allowance season.

The Government also deferred the planned increase in carbon tax on home heating fuels, which was due to occur on 1 May, until 14 October.

It is also important to note that these measures were in addition to a range of measures included in Budget 2026 such as enhanced social protection payments including an increase to the Fuel Allowance rate, and an expansion in the Fuel Allowance eligibility rules, which is benefitting approximately 50,000 additional households.

Carbon tax remains an important part of Ireland’s overall commitment to tackling climate change and to lessen Ireland's dependence on fossil fuels, with successive annual budgets providing additional funds for targeted social protection payments, residential and energy efficiency measures, as well as funding to encourage green farming practices.

As of Budget 2026, the Government has allocated over €4.2 billion in carbon tax revenue for these purposes since 2020. ESRI analysis consistently shows the lower income deciles are better off as a result of the social protection measures funded by the increased carbon tax.

By incentivising a switch to cleaner energy sources and making funds available to help households to make that switch, it thus helps to tackle the significant threats and costs to society that our fossil fuel dependence perpetuates. Carbon Tax should not be looked at in isolation but as part of a broader suite of measures designed to reduce our fossil fuel dependence.

Government is examining the different levers available to it in relation to the cost of home heating oil. This analysis includes market and price trend monitoring, as well as tracking current and future global oil market prices and dynamics, an assessment of the household impact of potential policy measures on the cost of a fill of home heating oil, assessing the overall Exchequer cost of potential measures, and the reach and potential efficacy of these measures, as well as assessing their legality as regards EU regulations and directives.

The Carbon Tax is reviewed annually in the Tax Strategy Group papers. The Tax Strategy Group papers are published in advance of the Budget to facilitate informed discussion. The latest version is available on my Department's website at: www.gov.ie/en/department-of-finance/collections/budget-2027-tax-strategy-group-papers/.

Annually, a distributional analysis of the overall Budget tax and welfare package including the specific impact of the carbon tax policy is assessed in the Budget Publication Beyond GDP - A Quality of Life Assessment, previous versions of which are available on the budget website: www.budget.gov.ie.

Separately, the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation issues an annual publication on Budget Day titled The Use of Carbon Tax Funds, which contains detail on the allocation of Carbon tax funds, and includes information on the programmes funded from Carbon Tax amounts. The most recent version is available at the link below with all previous versions available on the www.budget.gov.ie website under Budget Publications for each respective year.

www.gov.ie/en/department-of-public-expenditure-infrastructure-public-service-reform-and-digitalisation/publications/budget-2026-the-use-of-carbon-tax-funds/.

To counteract any potential regressive impact of carbon tax and to give effect to the Programme for Government commitments to protect the vulnerable, a targeted package of social protection interventions is developed. This package is informed by ESRI research commissioned to ensure that the carbon tax policy is progressive and prevents fuel poverty.

Policy decisions are also informed by various interdepartmental and stakeholders groups and take consideration of pre-budget submissions and correspondence from individuals, and with due regard to Programme for Government commitments, such as continuing with the planned carbon tax increases, aligning with recommendations from the Climate Change Advisory Council and scientific experts.

Policy options in respect of home heating oil will have due regard to the overall budgetary position as well as EU legislative frameworks; these include the EU Energy Tax Directive (ETD), the EU VAT Directive, and the EU Emissions Trading System for buildings, road transport and additional sectors (ETS2), among others.

It is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on the specifics of any measures that might be the subject of Budget decisions.

Barry Ward (Dún Laoghaire, Fine Gael)
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163. To ask the Minister for Finance his views on the merits of financially incentivising the use of HVO fuel instead of diesel to support achieving our climate emission targets, and in the context of significant price increases on fossil fuels. [68250/26]

Simon Harris (Wicklow, Fine Gael)
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The Mineral Oil Tax treatment of biofuels, including HVO, already financially incentivises biofuels over fossil fuels such as diesel. Under section 100(5) of Finance Act 1999 (as amended), biofuels which are produced from biomass qualify for relief from the carbon component of MOT (Carbon Tax), thus incentivising the uptake of more sustainable and renewable fuels. In the case of blended fuels, the biofuel relief applies to the biofuel portion. The effective MOT rates on biofuels, along with comparable MOT rates for fossil fuels, such as auto-diesel, are published on Revenue’s website at: www.revenue.ie/en/companies-and-charities/excise-and-licences/mineral-oil-tax/liquid-substitute-fuels/index.aspx.

The rate of the carbon tax relief for biofuels such as HVO used in place of auto diesel is currently c. 23 cents per litre on a VAT inclusive basis.

As biofuels are relieved of the carbon component of MOT, they are not impacted by annual carbon tax increases. As a result, the MOT rate differential between biofuels and fossil fuels will continue to widen as the 10-year carbon tax trajectory up to 2030 is implemented. I am advised by Revenue that in 2025 the tax forgone under the MOT biofuel relief is estimated at approximately €80 million. This estimate is based on an analysis of MOT returns data across all fuel types and a breakdown in respect of specific biofuels, such as HVO, is not available.

In line with the Programme for Government commitment to support decarbonisation of road freight and commercial coaches with fuels such as Hydrotreated Vegetable Oil (HVO), the tax treatment of HVO in the freight sector and possible further incentives for its use was examined in my Department’s Tax Strategy Group paper on Energy, Environmental and Vehicle Tax ahead of Budget 2026, which is available on my Department’s website at: www.gov.ie/en/department-of-finance/collections/budget-2026-tax-strategy-group-papers/.

This was again examined in the Tax Strategy Group paper on Energy, Environmental and Vehicle Tax paper ahead of Budget 2027, which is also available on my Department's website at: www.gov.ie/en/department-of-finance/collections/budget-2027-tax-strategy-group-papers/.

While tax levers can support policy measures, it is important to acknowledge that there is a limit to the role they can play in terms of price leverage. The price of HVO is dependent on many market factors.

These matters remain under review.