Energy customers to be hit with carbon tax increase from tomorrow

Energy customers to be hit with carbon tax increase from tomorrow

From Saturday, the carbon tax on fuel will be €33.50 per tonne, up from €26 per tonne.

A €7.50 increase in carbon tax will come into effect from tomorrow, May 1, with an estimated 600,000 households seeing a rise in their energy bills.

The €7.50 per tonne increase will see the carbon tax on fuel rise from €26 per tonne to €33.50 per tonne. Originally announced in last October's budget, the rise was postponed until May and will apply to all solid fuels, such as coal and peat, as well as natural gas and home heating oil.

According to comparison website Bonkers.ie, the average Irish household uses 11,000kWh (kilowatt hours) of gas every year.

Effect on household bills

It says that the increase in the carbon tax will add an additional €17 to the average household's annual natural gas bill. It estimates that homes with three or more bedrooms or with a poor BER are likely to end up paying more.

The increase in the tax now also means that around €3.52 in total is added to a 40kg bag of coal, 76c in total added to every bale of briquettes, and €84 in total added to every fill of a 900-litre home heating oil tank.

The carbon tax already adds around 8.5c to every litre of petrol and diesel.

'Double whammy' of price rises

Daragh Cassidy, head of communications at Bonkers.ie, said the increase won’t be welcome in many homes.

“Gas prices have been increased by several supplies in recent weeks by up to 6.5%, meaning it’s a real double whammy,” he said.

There is still some debate as to whether a carbon tax is effective at reducing CO2 emissions by households, given people still need to heat their homes and use energy for the most basic of day-to-day tasks.

“However one thing that we do know is that the tax has raised around €4bn since it was first introduced and many hard-pressed Irish consumers will be asking themselves where that money has gone and what environmental initiatives have been achieved since the tax was first introduced.” 

Plans for extra revenues 

The Government announced last October that extra revenue raised by increases in the carbon tax will be allocated in line with the programme for government commitment to:

  • Ensure that the increases in the carbon tax are progressive through targeted social welfare and other initiatives to prevent fuel poverty and ensure a just transition;
  • Fund a socially-progressive national retrofitting programme targeting all homes but with a particular emphasis on the Midlands region and on social and low-income tenancies;
  • Allocate funding to a REPS-2 programme to encourage and incentivise farmers to farm in a greener and more sustainable way.

Customers urged to switch supplier

Mr Cassidy said that the easiest thing for gas customers who want to offset the increase is to switch supplier.

“Customers who switch can get discounts of up to 40% from their new supplier for an entire year, which would more than negate the increases.” 

 He said that retrofitting a home is also an option, but an expensive one.

“Investing in a retrofit and looking for ways to make your home more energy efficient is also an option and is one of the ultimate aims of the carbon tax in the first place.

“Retrofitting isn’t cheap of course. However the SEAI has a range of grant options available while many lenders now provide low-cost green loans for those who are making energy efficient upgrades to their home,” he added.

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