WE AT FRIENDS of the Earth welcome the incremental increases in climate investment announced in Budget 2025, but we are deeply frustrated by the Government’s failure to implement the innovative measures needed to make the climate transition truly fair and inclusive.
One of the most glaring missed opportunities is the decision to allocate €500 million to untargeted universal energy credits, money that could have been targeted to those most in need this winter.
Friends of the Earth had hoped that Budget 2025 would represent a step-change in how the Government tackles both climate action and energy poverty. We wanted to see the targeted investments needed to bring more people into the climate transition, especially those at risk of being left behind.
One of the biggest disappointments is the Government’s decision to allocate €500 million to giving every household €250 regardless of financial need. This costs more than the total retrofitting budget for the entire year, yet it provides only temporary relief without addressing the root causes of energy poverty or reducing our reliance on fossil fuels.
We are disappointed that the Government has chosen this path again, especially after last year’s Central Statistics Office (CSO) data showed that despite €1.2 billion in energy credits, over half a million people still went without heating due to cost. The €500 million could have been used much more effectively.
For example, increasing the Fuel Allowance to restore its purchasing power or doubling the funding for the Warmer Homes Scheme, which provides fully funded retrofits for low-income households. This approach would have reduced energy bills permanently for those most at risk of energy poverty, while also helping us lower our emissions.
The Government also failed to extend the Fuel Allowance to 50,000 families on the Working Family Payment. This would have cost just €80 million, yet it would have helped keep these families warm this winter. It’s baffling that the Government continues to ignore the needs of these households, particularly when targeted supports are so clearly more effective than one-size-fits-all solutions like universal energy credits.
Another area where Budget 2025 falls short is in addressing the needs of renters and those in social housing. Low-income renters, particularly those on Housing Assistance Payment (HAP), are locked out of retrofitting opportunities despite often living in the least energy-efficient housing. We have called for HAP recipients to be made eligible for free retrofitting through the Warmer Homes Scheme, conditional on a long-term lease being offered, but the Government has once again ignored this group.
Renters are one of the groups most vulnerable to energy poverty, yet they are consistently excluded from schemes that could significantly improve their living conditions.
Equally concerning is the Government’s decision not to increase the budget for retrofitting social housing. At €90 million per year, the current plan will only allow for 25% of social housing to be upgraded by 2030. We’ve advocated for a much more ambitious plan to upgrade all social housing by 2030, which will need an increased and multi-annual funding strategy. Polling from Ireland Thinks showed strong public support for this proposal, and yet, despite the resources available, the Government has passed up the opportunity to make a real difference for thousands of households.
Budget 2025 does include some positive measures that we welcome. The reduction in VAT on heat pumps to 9% is a good step in the right direction. Ireland currently has the lowest rates of renewable heat in Europe, and any measure that improves the affordability of renewable heat solutions is welcome. The extension of free public transport to 6, 7, and 8-year-olds is another positive move, though we would like to see this extended to all children under 16.
We also welcome the €750 million investment in the electricity grid, provided this is used to support renewable energy to heat our homes and power our transport. The increase in retrofitting funding to €469 million, including €240 million for fully funded home energy upgrades for low-income households, is also significant.
As we inevitably turn our attention from Budget 2025 towards the upcoming general election, it is clear that more needs to be done to ensure that the climate transition is both effective and fair. Friends of the Earth will continue to push all political parties to detail how they will cut pollution fast enough to stay within the legally binding limits set by this government while also reducing poverty and inequality.
In the end, Budget 2025 is a missed opportunity. The resources were clearly there to make bold, innovative changes that would have permanently lifted people out of energy poverty while reducing emissions. Instead, we have an incremental approach that lacks the ambition and innovation needed to make the climate transition truly inclusive.
Clare O’Connor is Programme Coordinator for Friends of the Earth.
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