The Government should use next week’s budget to make the green diesel used by farmers and agri-contractors exempt from carbon tax, according to the chair of IFA’s farm business committee, Rose Mary McDonagh.

Farmers have no viable alternative to using agri-diesel, so carbon tax cannot achieve its stated aim of incentivising behavioural change, she said.

The programme for government proposes an increase in the carbon tax from the current level of €26/t to €100/t by 2030, she said.

“The IFA has estimated that the carbon tax on agri-diesel will cost farmers €27.3m in 2021.”

Cost

“The yearly cost on farmers by 2030 will be €81m. This will increase costs at farm level and across the supply chain.”

McDonagh said that the current rebate scheme operated by Revenue can help mitigate this cost but is too cumbersome, is not open to all farmers and is not open to agri-contractors.

If farmers’ green diesel is not exempted from carbon tax then this rebate scheme must be radically improved, she said.