Budget 2021: Eamon Ryan defends carbon tax amid claims it will lead to 'energy poverty'

Minister for the Environment, Climate and Communications and Minister for Transport Eamon Ryan at the Press Conference in Government Buildings, Dublin. Picture: Julien Behal 

Environment minister Eamon Ryan attempted to push back against the idea that carbon tax increases are punitive for the most vulnerable, as critics blasted plans to hike prices on petrol, diesel and oil.

He urged people to look at longer-term saving costs, but measures immediately implemented, such as the increase in carbon tax by €7.50 per tonne, will mean an extra €1.50 to fill a diesel car and €1.30 for a petrol one.

The revamped Vehicle Registration Tax (VRT) will see bands jump to 20 from 11 that already exist, and would mean an extra €1,000 on a new family car, according to industry bodies.

The hike in carbon tax will also impact the price of home heating considerably out to 2030, according to the industry — although it will not apply until May next year. 

Active Retirement Ireland, Family Carers Ireland, and AA Ireland were just some of the groups to criticise the measures, while People Before Profit TD Bríd Smith claimed it will not help the fight against climate change "but runs the real risk of increasing levels of energy poverty".

"We know nearly 28% of households in the country are in energy poverty, we know some 400,000 people go without heating at some stage because of costs and we know that payments like fuel allowance do not cover many of those affected," she said.

Sinn Féin spokesperson on climate action, Darren O'Rourke, claimed it was a "lazy cop-out", and that Mr Ryan and his party "can dress this unfair tax increase up however they want, but the truth is it is a brutal, punitive tax that will impact those who can least afford it".

Mr Ryan insisted there were a number of measures that would offset fuel poverty, as well as incentivise more people towards walking, cycling, greenways and public transport.

The Department's budget for 2021 includes more than €221m funding for residential and community retrofit schemes, with the €100m increase funded through carbon tax revenue.

In total, €286.5m has been committed to retrofit activity, including social housing, while €1.8bn in funding was announced for sustainable transport, cycling, walking and greenways, he and junior transport minister Hildegarde Naughton said.

The €221m represents an 82% increase on the 2020 allocation and is the largest amount ever allocated for the schemes, allowing a kick-start of the first phase of the national retrofit programme, they said.

Some €109m is provided to support lower-income households to retrofit their homes and participate in the transition, an increase of €47m on the 2020 allocation for energy poverty schemes, and means that almost half of the total residential and community retrofit budget will support people vulnerable to energy poverty, according to the department.

More households will receive free energy efficiency upgrades making their homes "warmer, healthier and cheaper to run", it added.

A €360m investment in walking and cycling will support major projects in all main cities, including strategic cycle corridors in Cork, increased funding for greenways to €50m, and the roll-out of the Safe Routes to School Programme.