Ireland: Smoking Down, Carbon Tax Up to €71, Aiming for €100 by 2030

High cigarette taxes in Ireland have successfully dampened demand, with the smoking rate dropping from 27% to 18% in two decades. Carbon emissions are a greater threat than tobacco, prompting the need for carbon taxes to avert a global calamity. Sweden introduced a carbon tax 35 years ago, starting at €23 per tonne and rising to €138, resulting in a halving of per capita emissions despite a doubling of national income.

Ireland introduced a carbon tax in 2010, starting at €15 per tonne, with a planned increase to €100 per tonne by 2030. As of last October, the tax reached €71 a tonne for motor fuels. Revenue exceeds €1 billion annually, funding retrofitting projects (€550 million), social welfare programs, and agricultural funding (€170 million). In 2023, Ireland's emissions were at their lowest level in over three decades, partly due to the carbon tax.

Between 2020 and 2025, the carbon tax raised €4.2 billion, benefiting half of Irish households, particularly those with lower incomes. The current tax of €71 per tonne adds approximately 16 cents per litre of petrol and 19 cents for diesel, costing the average driver €3.50 a week. The government offers up to €500,000 in support for companies transitioning to electric HGVs, with additional funding for charging facilities.

Despite opposition, particularly from the agriculture sector, the carbon tax is seen as essential for decarbonization. The OECD recommended removing VAT exemptions on agri-diesel. Denmark will extend the carbon tax to include livestock emissions from 2030.