Carbon Tax – Mineral Oil Tax (MOT) Carbon Component (CC), Natural Gas and Solid Fuel
Carbon taxes on auto fuels which were due to increase on 14 October 2026, to €78.50 per tonne of CO2 emitted, have been deferred to 1 May 2027. A further increase will take place on 13 October 2027 whereby these fuels will be back on the trajectory to €100 per tonne of CO2 as set out in Finance Act 2020.
The carbon tax applied to kerosene (home heating oil) and Natural Gas Carbon Tax have been reduced to €48.50 t/CO2 and paused at this rate. This is the same rate that applied in 2023.
The scheduled increase of carbon tax on Marked Gas Oil (MGO, also known as green diesel) originally for 1 May 2026 has been deferred to 1 May 2027. The scheduled increase for 1 May 2027 has been deferred until 13 October 2027. At that point, MGO will be back on the trajectory to €100 per tonne of CO2, as set out in Finance Act 2020.
For other fuels (including solid fuels), where those fuels’ carbon tax increases were first deferred on 1 May 2026, there will be a double increase in the rate on 1 May 2027 such that the rate increases from €63.50 per tonne of CO2 to €78.50 per tonne of CO2. Where those fuels’ carbon tax increases were scheduled to take place on 14 October 2026, this increase has been deferred until 1 May 2027, with a further increase scheduled for 13 October 2027. At that point, these fuels will be back on the trajectory to €100 per tonne of CO2, as set out in Finance Act 2020.
MOT Non-Carbon Component (NCC) Reduction Extension
Budget 2027 deferred the phased restoration of the MOT NCC rates for petrol, auto diesel, and MGO of 25 cents, 30 cents and 5.4 cents per litre respectively, with the first increase due on 28 February 2027. The full restoration of MOT Non-Carbon Component Rates for MGO – 5.4 cent per litre on a VAT inclusive basis - will occur on 28 February 2027.
There will be further increases to petrol and diesel MOT Non-Carbon Component rates on 8 April 2027 and 1 May 2027 (that will include the Carbon Tax increase on petrol, diesel and MGO), with the final increase to take place on 30 June 2027 when there will be full restoration, inclusive of the 2.1 cent and 2.5 cent carbon tax increase, for petrol and diesel, respectively. A further Carbon Tax increase scheduled for 13 October 2027 will bring the MOT Non-Carbon Component rates for petrol, diesel and MGO to 29.2 cents, 35 cents and 10 cents per litre, respectively.