The carbon tax is a Government tax which is applicable to all CO2 emission sources. The imposition of a carbon tax is seen by Government as an effective way of encouraging behavioural change by incentivising companies to bring low or carbon free products and services to the market.

In 2010 a carbon tax was introduced in Ireland. The carbon tax applies to kerosene, oil, liquid petroleum gas (LPG), and piped natural gas. The tax does not currently apply to solid fuels.

In Budget 2012, carbon tax increased by €5 to €20 per tonne of CO2 emitted on fossil fuels. The increase was applied on the 1st May 2012, so you will notice this on your bill next autumn/winter 2012/2013.

The carbon tax increase will add about €15 on the price of 1,000 litres of kerosene or oil. Moreover, LPG will rise by about €9.50 for every 1,000 litres of fuel. Before the price increase the carbon tax per kWh of piped natural gas was €0.00277. This has increased to €0.0037, a 33% increase. Furthermore, carbon tax is also subject to VAT at 13.5%.

The Irish government plans to increase carbon tax again as part of the four year recovery plan. Coupled with the regular increases in fossil fuel prices, these forms of heating are becoming extremely expensive. There has never been a better time to switch to alternatives such as biomass, which is carbon neutral. This is especially true for businesses that are spending €1,000s a year on carbon tax alone!

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