Carbon tax will have to increase substantially – from €100 per person a year to €1,500 a year – if Ireland is to meet legally-binding targets on reducing greenhouse gas emissions by 2030, according to ESRI projections.
A new computational model developed by the institute that factors in economic data, environmental trends and energy consumption, has found carbon tax on fossil fuels will need to increase to €300 per tonne of carbon dioxide emitted over the coming decade to avoid substantial fines in the form of compliance costs.
The current rate of €20 per tonne was not increased in the budget as had been widely anticipated, although Taoiseach Leo Varadkar and Minister for Climate Action Richard Bruton have confirmed it is set to increase in coming years.
A rise to €30 a tonne as was envisaged would have added about €1 to a bag of coal and about 25 cent to a bale of briquettes, as well as increasing the price of oil and gas.
However, a €300 carbon tax would only be sufficient to enable Ireland to meet its targets if there were reductions in agricultural emissions in particular (currently accounting for a third of Ireland’s emissions), the ESRI analysis shows.