Budget 2021: Carbon tax to result in increased cost of diesel

Minister for Finance Paschal Donohoe has announced that the carbon tax will increase from midnight tonight (Tuesday October 13) by €7.50/t as part of Budget 2021.

Speaking at the Convention Centre in Dublin, Minister Donohoe said the increase on carbon tax will mean a cost of €33.50/t.

The carbon tax will continue to increase by €7.50/t per year up to 2029 and by €6.50/t in 2030 with the aim of eventually costing €100/t.

The increase will mean a rise in the cost of diesel and agri-diesel; approximately €1.4/L on a tank of regular diesel and about 1.93/L for agri-diesel.

This increase will be applied to auto fuels from tonight and all other fuels from May 01, 2021.

Minister Donohoe referenced the aim of becoming ‘carbon neutral’ by 2050.

He said: “This increase is another important step in our collective efforts to decarbonise our economy. Measures which help to reduce our emission levels also help to improve air quality and public health.”

Last week, the Government published the draft text of the Climate Action and Low Carbon Development (Amendment) Bill 2020.

Last month it was announced that €20 million from carbon tax will go towards retrofitting homes in the midlands.

Minister for Housing Darragh O’Brien welcomed the approval given at cabinet for the allocation to eight local authorities under the Midlands Retrofit Project.

Under the proposed allocations, local authorities in counties Offaly, Laois, Kildare, Westmeath and Longford are to receive €3.33 million each and Roscommon, Galway and Tipperary are to receive €1.11 million each.

The Individual Farmers of Ireland (IFI) had described the expected rise in carbon tax on agricultural diesel as a “pay cut for farmers and contractors” with “devastating consequences” for the economy of rural Ireland.