In this week’s budget, the carbon tax has risen from €63.50/t to €71/t of CO2 emitted for auto fuels with immediate effect, with the tax set to hit other fuels such as green diesel from 1 May, 2026. As of yesterday, Wednesday 8 October, the cost of a litre of petrol and diesel has increased by around 2.5c/l. Additional revenue from this increase is expected to be €121m in 2026 and will be ringfenced for climate projects.

Farmers and contractors should be aware that the carbon tax on green diesel is also set to increase by a further €7.50/t, from €63.50/t to €71/t, from 1 May 2026. The price hike on green diesel or marked gas oil (MGO), as it’s more formally referred to is estimated by suppliers to add close to 2.5c/l plus VAT to the price of the fuel. This increase in carbon tax announced in the budget is part of the 2020 Programme for Government, in which the Irish Government committed to increase the basis of carbon tax rates from €26 to €100 per tonne of carbon dioxide by 2030.

The Finance Act 2020 legislated for the annual increases to the carbon tax of €7.50/t - up until 2029 and €6.50/t in 2030, when the rate will reach €100 per tonne of carbon dioxide. As many of our readers are aware, these increases impact on the main propellant fuels such as road diesel and petrol every October and on all other fuels, such as green diesel and kerosene, on 1 May the following year.