The Green Party leader John Gormley has announced plans for new legislation which aims to commit Ireland to an 80% reduction in greenhouse gases by the year 2050.
Ireland will be among the first countries in the world to set such ambitious targets.
The Environment Minister has also promised to use a considerable portion of the €250m which will be raised from the carbon levy next year to fund insulation schemes in old houses.
Delivering his Carbon Budget Minister Gormley said the carbon tax will help to fund important enviornmental initiaves.
"In my contribution to the Budget debate yesterday I emphasised the importance of putting a price on carbon which will raise revenue that can be channelled into making our economy and society more energy-efficient," Minister Gormley told the Dáil.
"The introduction of a carbon tax is central to our continued efforts to move towards a low-carbon economy."