The Environmental Pillar has described calls to scrap or suspend the carbon tax as misguided (1).
Suspending or scrapping carbon tax would be a retrograde step which would hit farmers on the Agri-Climate Rural Environment Scheme (ACRES) and homeowners trying to get off fossil fuels by upgrading their houses through various SEAI-funded schemes (2), as well as damaging efforts to reduce greenhouse gas emissions, the Environmental Pillar said.
Carbon tax also represents a small part of the overall cost of fuel. While more than half of the price of a litre of fuel goes toward taxes, the bulk of this is excise and VAT, with Carbon tax accounting for just 9-10% of the costs.
VAT accounts for more than 20% and excise duty more than 30% of the cost of fuel. In March 2022, the Irish Government introduced temporary cuts to excise duty on fuel to mitigate price surges following Russia’s invasion of Ukraine. It would make much more sense to examine a similar measure today, as well targeted energy supports rather than tampering with the carbon tax, which is a transparent tax. Its usage is ring-fenced and clearly disclosed to help fund green initiatives and other climate-related policies such as home retrofits, green agricultural projects, as well as being used to tackle energy poverty.
Any suspension or abolition of carbon taxes would have severe knock-on effects on schemes funded by the tax which are helping people cut down on heating and energy bills. They include:
· The Warmer Homes Scheme prioritises the oldest and least energy efficient homes and provides free home energy upgrades to homeowners who get certain social welfare payments.
· The National Home Energy Upgrade Scheme provides grants to upgrade the energy efficiency of your property.
· The Solar Electricity Grant can help with the cost of buying and installing solar photovoltaic (PV) panels.
· SEAI Community Grant supports the upgrade of homes, community buildings and businesses across Ireland to become more energy efficient and reduce cost.
· Hundreds of millions of euros of funding from the carbon tax to the Department of Agriculture is spent on the ACRES scheme which enables thousands of farmers to introduce environmentally-friendly measures.
Oisin Coghlan, policy advisor to the Environmental Pillar said: “Clearly those advocating for this haven’t considered the impacts it will have on communities and households across the country who are accessing funding to upgrade their homes to make them warmer and more fuel and energy efficient, as well as farmers who rely on it for the actions they have taken to make their farms more environmentally friendly and sustainable.”
“By enabling people to retrofit their homes, generate their own electricity and empowering communities to become energy efficient, the carbon tax-funded schemes help cut their costs in the long-run, making us less reliant on imported fossil fuels and help us cut down on our emissions. The ultimate goal of carbon tax is to transition society away from harmful fossil fuels and towards sustainable forms of energy generation, heating and transportation.
“War may be dominating headlines, but climate change remains an urgent and growing threat, as shown by recent flooding. Measures to address rising prices driven by the war cannot be an excuse to diminish climate action.”
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Notes to the editor:
https://trans.info/en/irish-hauliers-protests-460379
https://www.shannonside.ie/news/scrap-carbon-tax-to-deal-with-soaring-fuel-prices-fitzmaurice-285169
- DPER and Finance guide to “The Use of the Carbon Tax Funds”: https://assets.gov.ie/static/documents/2c8f3efb/The_Use_of_the_Carbon_Tax_Budget_2026.pdf
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