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The carbon tax is currently €63.50 per tonne of CO2 emitted. The rate was increased from €56 per tonne of CO2 in the 2025 Budget. The carbon tax is a charge 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 €63.50 per tonne of CO2 emitted, having been increased from €56 per tonne of CO2 in the 2025 Budget.
This adjustment is part of the government's plan to gradually raise the carbon tax to €100 per tonne by 2030, aiming to reduce carbon emissions and promote cleaner energy sources.
From 2030, the annual rate of increase will drop to €6.50 per year.
The Carbon Tax is placed on all carbon emitting fuels, primarily gas, with a breakdown of the average cost found below:
| Fuel | Additional Cost (including VAT) |
|---|---|
| Natural Gas | Around €138 per year |
| Petrol and Diesel | Petrol (per litre): Approx. 13c and Diesel (per litre): Approx. 15c |
| Bag of coal | €6.68 per 40kg bag |
| Home heating oil | €141 per 900 litres |
| Peat briquettes | €1.27 per bale |
Last updated: June 2025
Gas providers currently charge roughly €0.1 cent 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 €138 a year, or €11.50 a month (including VAT) on the average gas bill.
The carbon tax is not applied to electricity bills, but this is compensated by PSO levy, which is applied to electricity bills.
The carbon tax adds about 17c to a litre of petrol and diesel.
Given that the average Irish motorists drives around 17,000 km in a petrol car and 24,000 km in a diesel vehicle, the carbon tax is adding €159 a year for petrol drivers and an additional €188 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 fuels, 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.
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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 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.
For 2025, Budget 2025 has allocated €951 million in carbon tax revenues to support Ireland’s low-carbon transition through socially progressive programmes, representing a €163 million increase from 2024.
This funding is strategically allocated towards various key areas to achieve Ireland's climate goals. Looking at the broader commitments, a significant portion is earmarked for:
Revenue from the carbon tax also continues to fund various projects aimed at reducing Ireland's carbon footprint, with specific allocations for 2025 (and beyond) building on past investments like the 2024 programme.
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The services and products mentioned on this website may only represent a small selection of the options available to you. Selectra encourages you to carry out your own research and seek advice if necessary before making any decisions. We may receive commission from selected partner providers on sales of some products and/or services mentioned within this website. Our website is free to use, and the commission we receive does not affect our opinion or the information we provide.
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