THE CARBON TAX will increase by a further €7.50, bringing it up to €41 per tonne of carbon for some fuels from tonight.

Finance Minister Paschal Donohoe announced the change as part of the 2022 Budget released this afternoon.

The minister said the climate crisis is “one of the most important issues of our era”. He said future generations and young people today “will not tolerate inaction” from current leaders. 

“The science is unambiguous, the world is burning,” the minister said, adding that young people demand and deserve action.

This was the lead-in to the planned increase in carbon tax which he said is likely the most effective climate policy for governments, but that it alone won’t deliver the required reduction in emissions.

The minister said the tax increase will take effect tonight for petrol and diesel and for all other fuels from 1 May 2022.

The price increases from the carbon tax broken down. Government Government

This will increase the cost of petrol, diesel and home heating fuels. The tax is set to increase by the same amount in every Budget until 2029. 

The increase means that the price of filling a 60-litre tank of petrol will increase by €1.28. A 60-litre fill of diesel will rise by €1.48 and a 900-litre tank of Kerosene will increase in cost by €19.40. 

Peat will increase by 20c for a 12.5kg bale and a 40kg bag of coal will rise by 89c. 

11,000 kWh of natural gas will also rise by €16.85 when the increase kicks in. 

The government estimates that the tax will take in a total of €412 million in 2022. 

Minister Donohoe said the government is “conscious” about how this increase will impact those most vulnerable to fuel poverty. 

The additional funding raised through the carbon tax will be directed to targeted social welfare initiatives to prevent fuel poverty. 

The fuel allowance will thereby rise by €5 per week from midnight tonight, the government confirmed. This means it will be €33 per week for the rest of the season. 

The means test will also be increased to allow more people to avail of the allowance.

Donohoe said it will also be used to invest in the national retrofitting programme and other climate-focused measures.

Minister for Public Expenditure Michael McGrath said that the government wants to ensure that the net impact of the carbon tax is progressive and that the most vulnerable are not negatively affected. 

Minister Donohoe also proposed a “modest tax disregard” of €200 for personal income of households who sell leftover electricity that they generate back to the grid. 

This will be of use to those who generate small-scale electricity from technologies like solar panels, windmills and other renewable means. 

A landmark report from the Intergovernmental Panel on Climate Change released in August showed that the scale of recent changes to the climate system are “unprecedented” over hundreds and thousands of years.

It also set out that human influence is the primary driver of global warming. 

In 2019, atmospheric carbon dioxide concentrations were higher than at any other time in at least two million years and concentrations of methane and nitrous oxide at their highest for in at least the past 800,000 years.

“Deep reductions” in carbon dioxide and greenhouse gas (GHG) emissions are crucial to prevent the planet from warming by more than 1.5 or 2 degrees Celsius compared to pre-industrial levels.