Ireland’s new government plans to increase the carbon tax by €7.5/tCO2 in every budget until 2029, as the coalition government intends to levy €100/tCO2 on carbon by 2030, against €80/tCO2 under the current trajectory. 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. The government plans to spend €3bn on 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.
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.