How Much Is the Carbon Tax in Ireland 2025?

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Cormac is Selectra.ie's energy expert along with being the chief content and editorial manager for the website. His aim is to help find the best deal for you and your home energy needs so that you save money on your annual bills. His knowledge and experience of the Irish energy market allows him to offer the best advice and insight into current prices, emerging trends and overall energy saving tips.

Updated on 01/10/2025

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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.

How Much Is the Carbon Tax in Ireland?

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.

How Much Does the Carbon Tax Add to My Bills?

The Carbon Tax is placed on all carbon emitting fuels, primarily gas, with a breakdown of the average cost found below:

💶 Carbon Tax at €63.50 per tonne of CO₂
Fuel	Additional Cost (including VAT)
Natural Gas	Around €138 per year
Petrol and Diesel	Petrol (per litre): Approx. 14.69c and Diesel (per litre): Approx. 16.99c
Home heating oil	€141 per 900 litres
Coal	€6.68 per 40kg bag
Peat briquettes	€1.27 per bale

Last updated: October 2025

How Much Does the Carbon Tax Cost Me on My Gas Bill?

Gas providers currently charge roughly €0.01148 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 the PSO levy, which is applied to electricity bills.

How Much Does the Carbon Tax Cost Me on Petrol and Diesel?

The carbon tax adds about 14.69c to a litre of petrol and 16.99c to a litre of 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.

How Much Does the Carbon Tax Cost Me on Other Fuels?

The carbon tax is also applied to other fuels, with an additional cost of:

Home heating oil — €141 per 900 litres.
Coal — €6.68 per 40 kg bag.
Peat briquettes — €1.27 per bale.

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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Are There Any Exemptions from The Carbon Tax?

While the carbon tax applies to most carbon-emitting fuels, certain exemptions exist, primarily for specific industrial and commercial uses:

EU Emissions Trading Scheme (ETS): Large industrial emitters, such as those in the energy, manufacturing, and aviation sectors, are part of the EU Emissions Trading System (ETS). Because they must already purchase permits for their emissions, they are generally exempt from the Irish carbon tax to avoid double taxation.
Specific Uses: Fuels used solely for electricity generation, chemical reduction, or in electrolytic/metallurgical processes are also exempt. This is done to ensure the tax targets consumer behaviour directly, rather than being passed on through the electricity supply chain.

What Is the Carbon Tax in Ireland?

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:

Act as a financial disincentive to using fossil fuels as an energy source.
Encourage an uptake of renewable energy.
Provide financing for offsetting CO₂ emissions and investing in renewable technology.

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.

How Is The Carbon Tax Reinvested?

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:

Social Supports: A significant portion of the revenue helps to offset the impact on vulnerable households. For example, some funding is used to increase the Fuel Allowance and other social welfare payments, such as the Working Family Payment. This "just transition" approach aims to ensure that the costs of climate action do not disproportionately burden those on lower incomes.
Residential and Community Retrofitting: A major investment area is the National Home Retrofit Programme. The funds support SEAI grants for home heating upgrades, insulation, and the installation of heat pumps. These grants help homeowners make their homes more energy-efficient, reducing their reliance on fossil fuels and lowering their bills in the long run.
Climate Action and Agricultural Transition: The revenue also funds broader climate action initiatives, including the Community Climate Action Programme and schemes that support the agricultural sector in reducing emissions. These projects are crucial for Ireland to meet its national and EU climate targets.

Learn More About Energy Saving Our energy guide articles contain lots of useful information on saving energy, the electricity market and having a more positive impact on the environment.