Finance Bill 2026 [Certified Money Bill]: Committee and Remaining Stages Seanad Éireann — 2026-07-07 ============================================================ Robert Troy (FF), Longford-Westmeath I will respond to Opposition recommendations Nos. 3 and 5 to 7, inclusive, together. Recommendations Nos. 3, 5 and 6 from Senators Sarah O'Reilly and Conor Murphy effectively propose an end to the carbon tax trajectory at the rates applicable prior to the rate cuts introduced in March and April of this year. Recommendation No. 7 from Senator O'Reilly asks that the Minister for Finance examine the implications of abolishing the carbon tax, assess the estimated reduction in tax receipts that would result, and assess options to replace these tax receipts by other means. I am not sure what other means she is talking about. On 30 June, Government announced an extension of the temporary reductions to the mineral oil tax. These temporary reductions, which were due to expire on 31 July, will now be extended to 31 August for petrol and auto diesel and to 31 October for marked gas oil. The mineral oil tax rates will be restored on a phased basis, starting from 1 September for petrol and auto diesel and 1 November for green diesel, with all rates fully restored from 1 December. The Government recommendations included as part of the Bill are reflective of the current macroeconomic and energy market situation. The restoration of mineral oil tax rates will be done on a gradual basis, commencing on 1 September. We continue to monitor the situation closely and continue to reserve the right to adjust the response as required. As regards carbon tax, the mineral oil tax comprises non-carbon components and a carbon component, which is commonly referred to as the carbon tax. Legislation currently provides for multi-annual increases to the carbon component of the mineral oil tax, as well as increases to the natural gas carbon tax and solid fuel carbon tax rates. As the Senators will be aware, the programme for Government committed to continuing with the planned carbon tax increases, aligning with recommendations from the Climate Change Advisory Council and scientific experts, to using the resulting revenues raised to support climate action measures and to ensuring the most vulnerable are protected from unintended impacts of the tax increases. This includes funding from retrofitting and agri-environmental schemes, alongside targeted social welfare and other initiatives to prevent fuel poverty and to ensure a just transition. These measures are designed to be progressive. To give effect to the programme for Government commitment to protect the vulnerable, a targeted package of social welfare protection interventions was developed, informed by ESRI research commissioned to address this issue specifically. As part of budget 2026 the Government was allocated over €4.2 billion in carbon tax revenue for these purposes since 2020. ESRI analysis consistently shows that the lower income deciles are better off as a result of the social protection measures funded by the increased carbon tax. In budget 2026, over €1.1 billion was allocated to climate action measures and to ensuring the most vulnerable are protected from unintended impacts of the increase. This was an increase on the 2025 allocation and included funding of €566 million for retrofitting programmes, just transition and the ODA green climate fund, €350 million for targeted social welfare interventions such as fuel allowance, and €173 million for green and sustainable farming measures. In relation to the retrofitting programme, Senator O'Reilly seems to welcome deep retrofitting because she is complaining that people are waiting too long. I agree with her and I would like to see it happening much quicker but the reason there is an extended waiting list is because it is hard to get tradespeople to do it and because of the success of the scheme. I am sure all of us here who operate offices can speak of the huge number of people availing of this scheme. More and more people come to know about it when they see their neighbours accessing it. From my experience in my constituency people are quite thankful for the scheme. It is one of the best ways to drive down energy costs for low-income families. On average we are speaking about savings on energy costs in excess of €1,000 a year when the deep retrofit is completed. As Senator O'Reilly knows, people on the fuel allowance do not pay a penny towards the deep retrofit. It is a really progressive scheme. Pausing the carbon tax trajectory would decrease the funding available for schemes such as this. Rather than speaking about expediting it and cutting down the waiting lists, it would only prolong them. Our need to decouple from fossil fuel dependence and achieve energy security is even more apparent now, given the levels of volatility in the international energy markets. Ireland's long-term commitment to tackling climate change remains strong. A further consideration for the Government is Ireland's derogation request in respect of the EU emission trading system for buildings, road transport and additional sectors, also known as ETS2. The ETS2 directive provides for member states that operate a national carbon tax in the buildings, road transport and additional sectors to apply for a derogation from obligations under the EU ETS2 once certain criteria are met. The derogation allows a member state with a carbon tax rate equivalent to or higher than the average ETS2 auction price to exempt regulated entities from the obligation to surrender ETS2 allowances between 2028 and 2030. Ireland has applied for a derogation from ETS2 on the basis of the national carbon tax, which is currently higher than the expected average auction price for allowances. To fulfil derogation criteria, Ireland’s carbon tax must, on average, remain above that of the ETS2 allowance price. Otherwise, Ireland would be effectively opting into the ETS2 arrangements. Pausing the carbon tax trajectory would increase the possibility that Ireland would be opted into ETS2. The proposed recommendations from Senators O’Reilly and Murphy would come at great cost to the Exchequer and could potentially jeopardise other areas of investment. The package of Government support measures, which now totals over €1 billion, is helping to reduce the cost burden at the petrol pump, supporting those most at risk of energy poverty and assisting key sectors, including agriculture and haulage, that are critical to keeping our economy moving. These measures are deliberately time-bound and targeted because our approach must be both responsive and responsible. The Government will continue to act in a way that protects the most vulnerable and sustains our economic stability. As I said earlier, we will continue to monitor the situation and act accordingly, just as we have from the get-go. For the reasons I outlined, I am not in a position to accept the recommendations. --- Source: Houses of the Oireachtas. Licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). The Official Report is revised after first publication; the fetch timestamp below identifies the version quoted. Record URI: https://data.oireachtas.ie/akn/ie/debateRecord/seanad/2026-07-07/debate/main Retrieved: 2026-08-14T04:55:09+00:00 Sitting date: 2026-07-07