Budget 2027 slashes carbon tax fuel costs until end of government
Minister for Finance Simon Harris has unveiled significant fuel and energy measures in Budget 2027, aiming to ease the burden on Irish households amid a persistent energy crisis. Key highlights include a reduction in carbon tax on fuel and gas, which will remain in place for the duration of the current government. Harris emphasized that no tax increases will occur at the pump or in homes during the upcoming winter.
The carbon tax on home heating oil and natural gas will be slashed from €63.50 per tonne of CO2 to €48.50, reversing scheduled increases that would have pushed the rate to €78.50 by May 2027. Additionally, temporary reduced fuel excise rates, set to expire in November, have been extended until February 28, 2027, with a phased restoration completing by June 30, 2027.
These measures build on earlier extensions of reduced excise duties and the Diesel Rebate Scheme, which will now continue until the end of December 2026. Harris also announced efforts to secure a more favorable tax treatment for Hydrotreated Vegetable Oil (HVO) as part of Ireland’s transition to greener energy alternatives. The government is investing heavily in renewable energy infrastructure, with €1.5 billion already allocated to ESB and an additional €2 billion planned for Eirgrid.
Despite the relief measures, Harris reaffirmed the government’s commitment to decarbonizing the economy, citing recent energy price shocks as evidence of the urgent need to reduce reliance on fossil fuels. The National Energy Affordability Taskforce is expected to release its latest report soon, outlining structural reforms to lower costs for households and businesses.