Irish motorists and households are facing a series of annual fuel tax increases between now and the end of the decade, as a result of the Government’s legislated carbon-tax trajectory.
Under the Finance Act 2020, the carbon component of Mineral Oil Tax (MOT) rises every year until 2030, with the increases applied to petrol and diesel each October, and to heating fuels each May.
These increases happen regardless of global oil prices or inflationary pressures; they are fixed statutory changes in the carbon component of MOT and are applied regardless of the state of the wider energy market.
Because VAT is charged on top of the fuel’s total cost, every carbon tax increase also triggers a VAT increase on each litre of fuel, so every figure here includes VAT.
According to new figures supplied by Tánaiste Simon Harris in response to a parliamentary question this week, the total carbon-tax-driven increase in MOT on petrol will reach 8.1 cent per litre by 2029. For a typical 50-litre tank, this means motorists will be paying an extra €4.05 per fill solely due to these scheduled tax hikes.
Auto diesel will see a larger rise, with a cumulative increase of 9.6 cent per litre by 2029. Filling a 50-litre diesel tank will therefore cost an additional €4.80 once the final annual increase is applied.
Heating fuels face even steeper increases. Heating kerosene is due to rise by 10.7 cent per litre by 2030. A standard 1,000-litre delivery would therefore cost households €107.00 more in tax once the trajectory is fully implemented.
The biggest increase applies to marked gas oil – commonly known as green diesel and widely used in agricultural machinery – which will rise by 11.2 cent per litre by 2030. For a farm ordering 1,000 litres, the tax component of that delivery will be €112.00 higher than today.
All these increases come from the rising carbon component of MOT; the non-carbon excise rate remains unchanged.
The scheduled hikes will continue annually until 2029 for petrol and diesel, and until 2030 for home-heating fuels and marked gas oil.
Carbon tax has risen sharply over the past decade, and the increases scheduled for the years ahead are part of a wider trajectory set in law under the Green Party-Fianna Fáil-Fine Gael Government of 2020. Carbon tax has already added several cents per litre to fuel costs since that time.
As of 2025, the carbon tax rate is €71 per tonne, and it is scheduled to rise to €100 per tonne by the end of the decade.
The Government’s stated rationale for the policy is that a steadily rising carbon price changes societal behaviours in line with the CO₂ output of each fuel type, and supports the State’s wider climate targets.
The money gathered from carbon tax is then ringfenced and used to retrofit houses for heat efficiency.