The cost of home heating oil and natural gas is set to rise from today (Wednesday, May 1) due to an increase in the carbon tax.
As part of Budget 2024, Minister for Finance Michael McGrath confirmed that the tax would increase as planned by €7.50 to €56 per tonne.
The increase was applied to petrol and diesel from October 11, however it was deferred for home heating fuels until today.
Carbon tax
The latest carbon tax increase means that a 900L tank of kerosene will now cost €19.40 more, while the average bill for households using natural gas will rise by €17 in a year.
It will also result in a 90c increase in the price of a 40kg bag of coal, and a 20c rise in the price of a bale of peat briquettes.
The carbon tax is due to increase by a further €7.50/t next year to €63.50/t and is set to almost double by the end of the decade to €100/t.
The tax, which was introduced in 2011, is part of the government’s strategy to tackle climate change and reduce greenhouse gas (GHG) emissions.
In 2024, the government is set to allocate €113 million to the Department of Agriculture, Food and the Marine (DAFM) from the carbon tax, with the majority (€110 million) earmarked for the Agri-Climate Rural Environment Scheme (ACRES).
Among the other allocations for the 2024 carbon tax are retrofitting and energy upgrades of houses (€380 million); the fuel allowance (€99 million); the living alone allowance (€45 million); greenways (€9 million) and peatlands restoration (€5 million).
Rural households
An analysis of indirect taxes carried out by the Parliamentary Budget Office (PBO) published earlier this year, found that the carbon tax liability of rural households is higher than it is for urban households.
The PBO is a unit within the Oireachtas that provides information and analysis on budgetary measures.
The paper found that the tax has a disproportionate burden on rural households, and is “particularly onerous” on rural households of lower incomes.
Rural households spend an average of €8.40/week on the tax, compared to an average spend of €5.50/week for urban households.