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The carbon tax in Ireland is currently €71.00 per tonne of CO₂ emitted. The rate was increased from €63.50 per tonne of CO₂ as outlined in Budget 2026. This charge is applied to carbon-emitting fuels such as coal, peat, oil, and natural gas. Introduced in 2010, the tax is intended to reduce carbon dioxide emissions and is part of Ireland’s strategy to support a greener and cleaner environment.
The carbon tax is currently €71.00 per tonne of CO₂ emitted, having been increased by €7.50 per tonne in the 2026 Budget.
This adjustment is part of the government's plan to gradually raise the carbon tax by €7.50 annually to €100 per tonne by 2030, aiming to reduce carbon emissions and promote cleaner energy sources.
The increase to €71.00 applied to petrol and diesel immediately (October 2025), but will apply to home heating fuels from 1 May 2026.
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The Carbon Tax is placed on all carbon emitting fuels, primarily gas, with a breakdown of the estimated average cost found below using the new €71.00 rate:
| Fuel | Estimated Additional Annual Cost (including VAT) |
|---|---|
| Natural Gas | Around €154 per year (Effective from May 2026) |
| Petrol and Diesel | Petrol (per litre): Approx. 16.43c and Diesel (per litre): Approx. 19.00c (Effective Oct 2025) |
| Home heating oil | €157 per 900 litres (Effective from May 2026) |
| Coal | €7.46 per 40kg bag (Effective from May 2026) |
| Peat briquettes | €1.41 per bale (Effective from May 2026) |
Last updated: October 2025 (Following Budget 2026)
Based on the €71.00 per tonne rate (effective from May 2026), gas providers will charge roughly €0.0128 per kWh of gas consumed to cover the carbon tax.
For the average household, which consumes 11,000 kWh of gas per year, that's an extra €154 a year, or €12.83 a month (including VAT) on the average gas bill.
The carbon tax is not applied to electricity bills, but this is compensated by the PSO levy, which is applied to electricity bills.
The carbon tax adds about 16.43c to a litre of petrol and 19.00c to a litre of diesel (at the new €71.00 rate).
Given that the average Irish motorist drives around 17,000 km in a petrol car and 24,000 km in a diesel vehicle, the carbon tax is now adding €182 a year for petrol drivers and an additional €210 a year for diesel drivers.
The aim of the Carbon Tax placed on vehicle fuel is to encourage motorists to switch to electric vehicles in order to reduce overall CO₂ emissions.
Have a look at our electric vehicles in Ireland guide to see how switching to an electric vehicle can help you avoid paying additional costs on your transport needs.
The carbon tax is also applied to other home heating fuels (from May 2026), with an additional cost of:
Similar to transport fuel, the carbon tax is aimed at encouraging people to move away from fossil fuels as a source of home heating towards more sustainable methods.
Examples of alternatives to fossil fuels include:
Given that the carbon tax is only going to increase year-on-year, it is worth considering investing in some of these home heating upgrades to reduce consumption of fossil fuel energy.
Grants are available from the SEAI to help cover the cost of these home heating upgrades.
While the carbon tax applies to most carbon-emitting fuels, certain exemptions exist, primarily for specific industrial and commercial uses:
The carbon tax is a tax applied to fossil fuels, such as gas, coal, oil, petrol, diesel, and peat.
These fuels emit carbon dioxide, or CO₂, which is one of the main causes of global warming and extreme heat waves since it reflects heat and traps it in the Earth's atmosphere.
The theory behind a carbon tax is that levying charges against users of carbon-emitting fuels will do the following:
The continuous increase in the carbon tax is one of the factors why Irish gas bills have become so high in recent years when compared with European gas prices.
This is why it is more important than ever to compare the market in order to get the cheapest deal possible.
The revenue earned from the carbon tax has increased significantly since it was introduced over 10 years ago. By the end of 2023, almost €5.288 billion in carbon tax revenue had been collected since its introduction.
This funding is distributed through various socially progressive programmes, grants, and schemes:
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