Tánaiste and Minister for Finance Simon Harris has outlined the proposed carbon tax increases on fuel until the end of the decade.

In response to a parliamentary question from Sinn Féin TD Matt Carthy, the Tánaiste said that under the Finance Act 2020, legislation was introduced to provide for annual increases in carbon tax rates up to May 2030.

"Carbon tax rates on petrol and auto-diesel are legislated to increase at budget time each year up to 2029 with the increase delayed until May 1, for all other fuels up to 2030," he said.

In April, the government deferred the planned May 1, 2026 carbon tax increases until October 14 this year in light of increased fuel prices at that time driven by the war between the US and Iran.

In addition, the fuel allowance was extended by a month, meaning that a typical household in receipt of the payment will have received €1,216 over the season.

Earlier this week, the government also confirmed that reductions on fuel excise and the National Oil Reserves Agency (NORA) levy will remain in place until September, before being gradually phased out.

Carbon tax

The Tánaiste said that for petrol, the carbon tax increase, inclusive of VAT, will total to 8.1c/L over the remainder of the carbon tax trajectory.

"This gradual increase will be 2.1c/L for each of the next three years, and 1.8c/L in 2029.

"For auto-diesel the carbon tax increases over the remainder of the trajectory will total to 9.6c/L. This gradual increase will be 2.5c/L for each of the next three years and 2.1c/L in 2029," he said.

Simon Harris said carbon tax rate increases on heating kerosene, most commonly used for home heating, will total 10.7c/L, including VAT.

The annual amounts will be 2.2c/L for each of the next four years and 1.9c/L in 2030.

For marked gas oil (MGO), also known as green diesel, the remaining five carbon tax rate increases will total 11.2c/L, inclusive of VAT.

The annual increases will be 2.3c/L for each of the next four years and 2c/L in 2030.

Climate

The Tánaiste told Deputy Carthy the "carbon tax trajectory is a central pillar of Ireland’s climate policy framework".

He said this provides a "clear and credible long-term signal to households and industry of the need to transition away from fossil fuels and towards a low-carbon economy".

The government has said that revenues raised from the tax are allocated for just transition and climate measures, such as social welfare measures, agri-environmental schemes and retrofitting programmes.

Over €4.2 billion in carbon tax revenue has been allocated for such purposes since 2020.

Budget 2026 saw an allocation of over €1.1 billion for climate action measures, which was up €163 million on the previous year.

"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," the Tánaiste said.

However, Sinn Féin has consistently opposed the carbon tax with Deputy Carthy stating that "carbon taxes don’t help the environment- they just make people’s lives harder".

He highlighted that many people have "no option" but to use their car, particularly in rural Ireland.

He added that many households across the country are dependant on kerosene to heat their homes.