Carbon tax to hit commuter belt the hardest – Irish Independant

COMMUTERS will bear the brunt of the carbon tax and are likely to be hit with annual bills more than 10 times higher than those paid by people living in cities.

A new analysis from the Economic and Social Research Institute (ESRI) and the Environmental Protection Agency (EPA) shows that the annual carbon tax likely to be paid by someone living in inner-city Dublin will be €25 — but people living in the countryside could face bills of up to €275.

This is because many living outside the major cities are forced to drive to work because there is little or no public transport available. The report also found that rural houses tend to be bigger, and cost more to heat and that in cities, apartments share heat as it travels through a building.

carbon tax

The analysis published yesterday shows that the carbon tax, a key Green Party demand in its negotiations to enter Government, will not affect most of the party’s constituents.

The party has five TDs, with four based in Dublin.

Last December the first tranche of the tax was introduced in the Budget which saw motorists hit with a hike in fuel prices as petrol rose by 4 cent per litre and diesel by 5c.

Further pain is expected in May when the tax is applied to oil and gas for home heating, and the tax will also extend to the use of coal and peat.

The move is designed to discourage use of fossil fuels and to force behavioural changes where people would use public transport instead of the private car, and heat their homes using more energy-efficient heating systems such as wood-pellet stoves.

If successful, it would reduce the State’s dependency on imported fossil fuels and help reduce greenhouse gas emissions — the primary cause of global warming.

Co-author of the EPA/ESRI Strive report, Richard Tol, said that commuting was the dominant reason why people living outside the cities would pay more, although house size and income also played a role.

“Transport, and the car commute, is the major factor,” he said. “Rural houses tend to be bigger, and cost more to heat.

“Also, people living in the country tend to be richer and have more gadgets which need to be powered.”


The report says that the tax rate would vary from €25 per household per year in the inner city to €275 in parts of the commuter belt. But “most” households would pay between €135 and €235 per year in carbon taxes. The tax is being introduced on a phased basis, with 4c already added to the cost of a litre of petrol.

The tax is due to be extended to home heating fuels on May 1 next and solid fuels, coal and peat will be taxed from September.

It was signalled in the Budget that the carbon tax would add an extra €43 to the cost of filling a 1,000-litre oil tank and it would add €41 to the average annual gas bill.

However, the final tax levels have yet to be set.

The delay is because of concerns about lower-quality fuels, which are exempt from the new levy, being imported from Northern Ireland.

– Paul Melia

Irish Independent

Carbon tax to drive up fuel costs – Last Updated: Wednesday, December 9, 2009, 18:59

Carbon tax to drive up fuel costs

HARRY MCGEE, Political Correspondent

The new carbon tax at a rate of €15 per tonne will result in increases of 4.2 cent in the price of petrol and almost 5c in the price of diesel from midnight tonight.

The Minister for Finance Brian Lenihan announced the measure in today’s Budget speech, saying it was designed to change behaviour to reduce greenhouse gas emissions.

“The most effective way to to put a price on carbon. This will encourage innovation by incentivising companies to bring low carbon products and services to the market,” he said.

The measure will yield a total of €250 million next year and some €330 million in a full year.

Notably, the Minister said that not all of the revenue would be ringfenced to encourage lower carbon emissions. He said some would be used to boost energy efficiency, some to support rural transport and some to alleviate fuel poverty.

He added that the tax “will also allow us to maintain or reduce payroll costs”, an indication that it will not be revenue neutral.

Some €50 million of the revenue will be used to fund measures for households at risk of fuel poverty to make their homes warmer.

The excise changes for oil, gas and kerosene will come into effect from tonight but price increases in coal, peat will not occur until May 2010.

The changes will lead to increase of an estimated 39 cent for a bale of peat briquettes and €1.79 for a 40kg bag of coal.

The latest study from the ESRI estimates the changes will cost households an average of between €2 and €3 per week, or up to €156 per year.