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The government of Ireland raise carbon tax by by €7.5/tCO2 to €33.5/tCO2

15 Oct 2020

The government of Ireland has increased the carbon tax by €7.5/tCO2 to €33.5/tCO2. Consequently, fuel prices are expected to increase by €2.1c/l for gasoline and €2.45c/l for diesel. To help vulnerable households, the fuel allowance will be increased by €3.5 to €24 per week.

The carbon tax was introduced in 2009 for gasoline and diesel at a rate of €15/tCO2 and extended to all oil products and gas in 2010. The rate was increased to €20/tCO2 in 2011 for gasoline and diesel and in 2012 for other fuels. The tax was further extended to solid fossil fuels (coal and peat) in 2013, at a rate of €10/tCO2, raised to €20/tCO2 in 2014 and has remained at this level since then. In October 2019, the Ministry for Finance announced a €6 annual increase in the carbon tax, as part of a government's commitment of raising the carbon tax price to €80/t in 2030. The increase applied immediately for transport fuels but was delayed for other fuels until May 2020, after the winter heating season.

In June 2020, the Irish government announced plans to increase the carbon tax by €7.5/tCO2 in every budget until 2029 to levy €100/tCO2 in 2030. According to the plan, all extra carbon tax revenue will be transferred to a Climate Action Fund, which is expected to raise €9.5bn over the next decade. €3bn should be directed to targeted social welfare and on other measures to ensure a just transition and avoid fuel poverty, €5bn to partly fund a national retrofitting programme with a focus on the Midlands region and on social and low-income tenancies and €1.5bn on a REPS-2 programme, which will encourage and incentivise farmers to farm in a greener and more sustainable way.

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