Carbon tax explained

The carbon tax was introduced to Ireland in the 2010 budget and has been charged to all natural gas consumers since 1 May 2010.

Since that date all CO2 emission sources have had to pay carbon tax. This energy tax was introduced as a means to incentivise manufacturers and suppliers to provide low carbon services and products to the household consumer market. Low carbon products would use natural gas as this has the lowest carbon content of any of the fossil fuels, and, therefore, it is seen as the cleanest.

How much does the carbon tax cost?

Since 1 May 2012 the rate of carbon tax has been €0.00370 per kWh, with added VAT of 13.5%, so making a total of €0.00420 per kWh. All natural gas suppliers in Ireland have to levy the carbon tax on their customers, with the exception of the few exemptions noted below.

What this means to the average customer

On average, the increased carbon tax will mean increases to the annual gas bill for typical householders. The increases will be in the region of €12.83 (excluding VAT) and €14.57 (including VAT). This increase amounts to about 1.67% of the average customer’s natural gas bill. On average the typical household uses 13,800 kWh per year of natural gas.


Some natural gas customers are exempt from paying carbon tax. These include:

  • natural gas consumers who use it for the purpose of generating electricity.
  • natural gas manufacturer consumers, where it is used for the purpose of chemical reduction.
  • natural gas manufacturing customers where it is used in electrolytic or metallurgical processes.

Partial exemptions from paying carbon tax apply to:

  • Industrial and manufacturer consumers covered by a greenhouse gas emissions permit that has been issued by the Environmental Protection Agency.
  • Suppliers dealing with the cogeneration of environmentally friendly heat and power, as decided by the Minister for Finance.

If you should require any further information about the tax and how it affects you, then you can check out which also has further details regarding calculations, methodology and figures.