In advance of Budget 2019, my Department commissioned the Economic and Social Research Institute to examine the environmental and economic impacts of increasing the Carbon Tax. This research examined how producers and consumers may react to increases in the Carbon Tax. The study estimated that increasing the Carbon Tax by €10 would lead to overall emissions reductions of 2.4% in the non-ETS sector. A more recent ESRI study estimated that CO2 emissions could reduce by 10.2% following an increase in the carbon tax from €20 to €100 per tonne.
The Department of Finance is continuing to work with the ESRI to build an improved evidential base for assessing the environmental, economic and social impacts of putting in place a long term carbon tax trajectory.
This ongoing research will contribute to Carbon Tax policy options which will be examined by the Tax Strategy Group prior to Budget 2020.