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Carbon Tax

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.

Is the carbon tax subject to VAT?

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

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?

The rate for Carbon tax is 0.42 c/kWh inc. VAT (0.37 c/kWh ex. VAT). For the average residential customer based on usage of 11,000 kWh per annum (as per CRU guidelines) the carbon tax means €46.20 annually or €7.70 per bi monthly bill.

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 which includes information on the carbon tax methodology, figures and calculations.