The Carbon tax introduced in the December budget which covers all fuels, excluding solid fuels at present, came into full effect on May 1^st. The tax is now imposed on Petrol, Diesel, Agri-Diesel, Fuel Oil, Marked Gas Oil, Kerosene, LPG and Natural Gas.

The tax applied is €15 per tonne of CO₂ not including VAT, and aims to generate €330 million in revenue.

A report (“Strive”, February 2010) published by the Environmental Protection Agency/Economic and Social Research Institute, shows the impact of the tax varies from €25 per household per year (inner city) to €275 in some rural areas.  The homes of country dwellers are generally less well insulated than their urban counterparts and they do not have the advantage of being connected to a piped gas supply. Many use peat or coal so will not be affected yet because the tax on solid fuels has been delayed but this is likely to be greater.

The tax will increase fuel prices by between 3.5% and 11%. Natural gas customers who benefited from an 8% price cut as recently as February 2010 will see most of their savings essentially cancelled out with this carbon levy. Energy Solutions can provide consultancy services to their clients offering them a range of options to help them reduce their energy consumption and hence reduce their overall fuel bills.

Carbon tax is a fiscal incentive that directly links external environmental impacts to the source of the emissions. It will serve to promote the attractiveness and use of alternative, renewable and energy efficient technologies in all sectors. Revenue earned from this tax may be reinvested in renewable energy projects and schemes that promote carbon reduction and energy efficiency. 

Sources: Money Guide Ireland, Irish Examiner – Feb 2010.