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Carbon Tax

Why is the rate increasing?

The increase was announced in the December 2011 Budget and is a Government tax. We have no control of the setting of carbon tax prices. All gas suppliers are obliged to pass on this charge to its customers.


When is the rate increasing?

The new rate will be effective 1st May 2012.


What is the new rate of carbon tax?

The new carbon tax is levied at a rate of €20 per tonne of CO2. This translates to natural gas as a rate of €0.00370 (ex VAT) or €0.00420 (inc VAT) per kWh consumed. All suppliers of natural gas in Ireland must levy the carbon tax charge on its customers.


Is the carbon tax subject to VAT?

Yes, carbon tax is subject to a VAT rate of 13.5%.


Is the same tax increasing for electricity?

No, electricity is not subject to this carbon tax because the cost of carbon is already built into the electricity price.


What is Carbon Tax?

The carbon tax is a Government tax introduced in the 2010 Budget applicable to all CO2 emission sources. The carbon tax was levied on natural gas customers from the 1st May 2010.


Why was it introduced?

The imposition of a carbon tax is seen by Government as an effective way of encouraging behavioural change by incentivising companies to bring low carbon products and services to the market. Natural gas is the cleanest of all the fossil fuels as it has the lowest carbon content of any fossil fuel.


What does this mean for me and my bill?

For the average residential customer (based on usage of 13,800 kWh per annum – as per CER guidelines) the carbon tax increase means an additional €14.63 annually or €2.44 per bi monthly bill. This represents a 1.67% increase in an average customer's natural gas bill.


What happens if my bill is spread between the old carbon rate and new carbon rate?

For any consumption prior to 1st May you will be charged at €0.00314 (inc VAT) per kWh. Any consumption after 1st of May will be charged at €0.00420 (inc VAT) per kWh.


Are any natural gas customers exempt from having to pay the tax?

Fully exempt:

    Any natural gas which is consumed for the purpose of:
  • a) Electricity generation (this does not include CHP generation)
  • b) Chemical reduction
  • c) Electrolytic or metallurgical processes

Partially exempt:

    Partial tax relief, where Carbon Tax will be charged at a rate of 0.00054 €/per kWh, will apply where gas is used:
  • a) In an installation that is covered by a greenhouse gas emissions permit issued by the Environmental Protection Agency (EPA); and
  • b) For environmentally friendly heat and power cogeneration, other than micro-cogeneration. This relief applies where it is determined that the cogeneration meets the requirements for high-efficiency cogeneration by a competent authority as designated by the Minister for Finance.

Where can I find more information on the carbon tax?

Further details about the carbon tax can be found at www.revenue.ie which includes information on the carbon tax methodology, figures and calculations.