Currently they are allowed to use green diesel that is duty-free and has a lower Vat rate, but under EU rules this should be available only to fishing vessels, farm vehicles and for heating.
The green, duty-free diesel costs about €1.10 a litre, and with duty could bring it closer to €1.50. The Vat rate on green diesel is also lower at around 13%, while for clear diesel it is 23%, which, according to the Cruising Association of Ireland, could bring the cost closer to €2 a litre.
Ireland was allowed to have an exception to the EU rule up to 2008 when the Government announced that those buying green diesel for their yachts and pleasure boats should keep the receipts and pay the duty to the authorities each year.
Britain introduced a similar system, but is also under pressure from the EU to collect the duty on diesel which they dye red to prevent it being sold on the open market.
Sailing clubs and pleasure craft charter companies, such as those that operate on the Shannon, have been lobbying for no change.
The Government has two months to respond to the European Commission’s warning letter and tell them what arrangements they are making to bring the rules into line, or face court.
Social Justice Ireland asked the Government to eliminate green diesel altogether in the budget for his year, saying it would save the State around €480 million a year.
Instead, they suggest a rebate system be introduced for farmers, fishermen, hauliers and bus operators that are entitled to cheaper fuel which would cost the State €122m. The State dyes 1.25 billion litres of fuel green each year at a cost of €600m. It would also end the illegal laundering of green diesel, which is costing millions of euro in lost revenue when criminals remove the dye and sell it to retailers.
Last year, the Criminal Assets Bureau, with 300 gardaí and military, broke up what was believed to be the biggest illegal fuel operation in the country at Hackballscross in Co Louth, operated by a former IRA chief.
CAB said they believed the plant was robbing the exchequer out of €5.5m a year.
The European Commission has also issued a warning to the Government to bring Irish law into line with the EU directive that recognises professional qualifications of people from Croatia.
Croatia became an EU member in July last year and other member states were obliged to apply the same conditions to the country as to all other member states.
It covers allowing Croatian-trained lawyers and others to set up and provide services as a self-employed person. Ireland, Italy, Romania, Cyprus and Luxembourg have two months to reply before they are referred to the EU Court of Justice.