ONLY 61% OF funds from carbon taxes have been put towards the “ring-fenced” schemes to improve the environment that they were intended for, a report by the Comptroller and Auditor General (CAG) has found.

The remaining funds were either given to the Department of Social Protection or given back to the Department of Public Expenditure because other departments underspent their portion of the money.

Of the 17% of funds which were given to the Department of Social Protection, auditors noted that the payments were “not recorded in specific ‘carbon tax funding’ subheads” and it was not “possible to confirm” independently if they were spent correctly.

Separately, no central tracking system currently exists within the Department of Public Expenditure for carbon tax receipts. This means there will be no way to determine that all carbon tax receipts were allocated to the targeted areas in 2030.

As part of measures included in Budget 2020, the carbon tax rate increases, incrementally, by €7.50 each year until 2029, when it will increase by €6.50 thereafter.

At the time, there was much debate to ensure the funds from the taxes were being used to offset the impacts of climate change. Then-Taoiseach Leo Varadkar committed to do so and the tax funds were ring-fenced until 2030.

In total, the State will spend €3 billion to prevent fuel poverty and fund targeted social welfare initiatives, €5 billion to fund a national retrofitting programme and €1.5 billion to encourage farmers to farm in a greener, more sustainable way.

The public account auditors have said a total of €1.36 billion has been received by the exchequer from carbon tax receipts to date.

Of that, just €82.96 million has been put towards schemes the funds are intended for.

Additionally, the CAG report states that the lack of a central tracking system means it “will not be possible” in 2030 to determine how much of the €9.5 billion, due to be received from carbon tax payments, “will actually have been spent in the targeted areas”.

Five departments over the last four years have received portions of carbon tax receipts from the Department of Public Expenditure. Departments consistently underspent the funds between 2021 and 2023.

The CAG notes external matters, such as the Covid-19 pandemic and the war in Ukraine, may have had an impact on the priority to use those funds.

Of the around 39% of funds that did not go towards carbon offsetting and environmental protection schemes, 19% was made up of the unspent money from the five departments and was given back to the Department of Public Expenditure. 

The remaining 17% – or approximately €23.1 million – was given to the Department of Social Protection, the CAG found.

The CAG adds that there was no way to determine whether the funds received by the Department of Social Protection were spent towards Carbon Tax funding as its accounts did not label them as such. It was also not possible to confirm it independently.

The report says that though the linkage between the payments and the target spending areas has been “effected in the vote estimates process”, the use of the funds is “difficult to identify”.

The CAG added that “it appears that a significant part of the planned spending has not been achieved”.

The CAG says flaws in reporting transparency can be resolved by creating a separate Carbon Tax Receipt annual report, but it does not go as far to recommend doing so as it is a “policy matter” and outside of its remit.

The reveal has already sparked calls by members of the opposition for further probing.

Brian Stanley, Sinn Féin TD and chair of the public account committee, has said the destination of the 39% of funds which did not go towards the intended schemes must be revealed. 

His party have already called for the next incremental increase to be offset over cost-of-living concerns. Stanley said the CAG’s latest audit has “highlighted more shocking government expenditure across multiple departments and projects”.