Fuel hikes from today as carbon tax increase on heating oil, coal and gas prices comes into effect

The move will add €17 to the annual cost of an average bill for the 600,000 households that use natural gas. The average gas customer will now be paying around €122 a year in total in carbon tax.

However, those in homes with three or more bedrooms or with a poor energy rating are likely to end up paying more.

The increase in the carbon tax will add around €19 to the fill of a 900-litre home-heating oil tank.

It means filling a 900-litre tank will now cost households around €140 in carbon tax in total, calculations by price-comparison site Bonkers.ie show.

Today's News in 90 seconds - 1st May 2024

A bag of coal currently costs around €5.85 in carbon tax, while the tax on every bale of briquettes now equates to around €1.25. This is an increase of around 75c to a bag of coal and 17c to the cost of briquettes.

Carbon tax hikes on petrol and diesel were imposed just after October’s Budget, but the tax on gas, coal, peat and home-heating oil does not come into effect until May 1 each year.

The tax already adds around 15c to every litre of petrol and diesel. The cost at the pumps went up last month, when the second-last move to restore the full excise duty on motor fuels was implemented by the Government.

The charge is applied to carbon-emitting fuels such as coal, peat, oil and natural gas. Introduced in 2010, it is intended to reduce carbon dioxide emissions.

The tax was increased by €7.50 to €56 per tonne of CO2 in last October’s Budget. The rate of carbon tax is set to almost double between now and 2030.

The carbon tax does not apply to electricity, where the public service obligation levy is applied. This is currently zero but is likely to increase from October.

Daragh Cassidy, of Bonkers.ie, said: “With energy prices still at extremely high levels, it’s fair to say this tax increase won’t be welcomed by many.

“There is also concern that it affects those on lower incomes the most.”

But he said the tax was here to stay and an increase to €100 per tonne has essentially been legislated for already.

“In terms of offsetting the tax, the easiest thing for gas customers to do is to switch supplier,” he said.

Customers who switch can get discounts of up to 20pc or more from their new supplier for an entire year, which would more than negate the increase.

Mr Cassidy said that investing in a retrofit and looking for ways to make the home more energy efficient were also options.