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Carbon tax, transport investment: The main climate measures at the centre of today's Budget

The minister for finance said that “future generations will not tolerate inaction” on the climate.

THE BUDGET ANNOUNCEMENT today outlined a slew of financial measures across society, but on climate, it gave the first significant preview into the government’s priorities ahead of the upcoming Climate Action Plan.

The government is soon to announce the new Climate Action Plan that will outline how it intends to try to address Ireland’s role in the climate crisis.

It will come alongside a carbon budget setting out limits for greenhouse gas emissions, both for the country overall and for specific sectors.

With a target of cutting emissions in half by the end of the decade, there’s little time to spare – but opposition TDs have said the Budget is “underambitious” on climate measures.

‘Future generations will not tolerate inaction’

Opening the section of his speech on climate action, Minister for Finance Paschal Donohue said: “Future generations will not tolerate inaction from the leaders of today.”

“By future generations, I do not just mean children that are yet to be born. Children, teenagers, the younger adults of today, demand action, they deserve action,” the minister said.

“The science is unambiguous. The world is burning and the only chance we have to control those fires is through coherent and effective policies.

He named carbon tax – a policy that has sown division between the government and opposition – as one such policy.

The carbon tax is rising by another €7.50 this year to €41 per tonne, which will increase the cost of petrol, diesel and home heating fuels.

In last year’s budget, Donohue said that the rate of the tax will continue to rise over the decade until it reaches €100 per tonne.

The fuel allowance is also increasing in a bid to protect the vulnerable from energy price hikes.

But for households that generate electricity and sell any surplus back to the grid, there will be a “modest tax disregard” on that income.

That measure follows a recommendation in the 2019 Climate Action Plan to develop a framework for microgeneration – the creation of power on a small-scale through renewable technologies.

Additionally, €200 million has been allocated to retrofitting 20,000 homes to make them more energy efficient in line with the Housing For All strategy.

“Permanently reducing a household’s energy needs is the best way to tackle energy poverty and protect people from the impact of high energy costs,” McGrath said.

“It will also reduce greenhouse gas emissions and create thousands of additional jobs.”

“To ensure that workers can avail of these jobs, additional funding is being provided through the Department of Further and Higher Education to expand training programmes and apprenticeships in this area.”

€210 million has been allocated to conserving and managing heritage, including in biodiversity programmes.

Fossil fuels

“Finance Act 2020 extended the accelerated capital allowance scheme for energy efficient equipment. In accordance with wider government policy to reduce reliance on fossil fuels, I am providing that equipment directly operated by fossil fuels will no longer qualify,” Donohue said.

“The scheme seeks to support the transition to lower emission fields in the heavy duty land transport sector,” he said.

Therefore, I’m extending the Accelerated Capital Allowance (ACA) scheme for gas vehicles and refueling equipment for three years. As a transport fuel, renewable hydrogen offers significantly higher carbon savings when compared to fossil fuels,” he said.

“I’m also extending the scheme to include hydrogen powered vehicles and refueling equipment. This policy is aligned with wider government policy to reduce our emissions to achieve net zero by 2050.”


In a key area for reducing emissions, €360 million is being put towards active travel measures and greenways to encourage walking and cycling.

€1.4 billion will go into plans to “further develop our public transport networks and to support the transition to a decarbonised and climate resilient transport system”, McGrath said.

That includes investment in capital projects like BusConnects, MetroLink and the Dart+, as well as electric vehicle grants and carbon reduction measures.

For young adults aged 19 to 23, a new Youth Travel Card will give a 50% discount on public transport “in order to promote modal shift in the transport sector”.

Meanwhile, in a bid to incentivise the use of electric vehicles where cars are used, changes to the vehicle registration tax (VRT) will be introduced from January: a 1% increase for vehicles that fall between bands nine and 12; a 2% increase for bands 13 to 15; and a 4% increase for bands 16 to 20.

The Budget also extended the €5000 relief for battery electric vehicles to the end of 2023.

However, the climate measures in Budget 2022 have been criticised by opposition TDs as not going far enough to address the crisis.

Labour spokesperson for climate Ivana Bacik said that the Budget lacked a “transformative vision” on climate and is “underambitious”.

Bacik said there needs to be “more ambitious provision”, such as providing free public transport for all children and students, as opposed to the new half-price fares proposed for 19 to 23-year-olds.

The Social Democrats’ climate spokesperson Jennifer Whitmore tweeted: “The world is burning Minister, let’s act like it.”

“Teeny tiny steps are not going to address the ecological collapse we face if we don’t protect / enhance / increase our biodiversity… urgently,” Whitmore said.

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