Several measures were included in Budget 2026 to accelerate Ireland’s energy transition and underpin Ireland’s journey to a net-zero future.
Residential buildings were arguably the greatest beneficiaries of the almost €1.1 billion allocated to the Department of Climate, Energy and the Environment. Funding of €558 million – an increase of €89 million on last year’s corresponding allocation – was allocated to Sustainable Energy Authority of Ireland (SEAI) residential and community energy upgrades, including the Solar PV (photovoltaic) Scheme.
Public sector building retrofits will also benefit from continued investment, with €21 million allocated for public sector retrofitting for 2026 under the first phase of ICNF (Infrastructure, Climate and Nature Fund). This purpose of this fund is to support State expenditure where there is a significant deterioration in the economic or fiscal position of the State, and in the years 2026 to 2030, on designated environmental projects.
The Finance Act 2020 legislated for annual increases in carbon tax to reach €100 per tonne of CO2 emitted by 2030. This year’s increase – announced yesterday in Budget 2026 – brings the tax to €71 per tonne of CO2 emitted. The tax is applied to auto fuels with effect from the 8 October 2025, and to all other fuels from the 1 May 2026. The additional revenue arising from the carbon tax increase is estimated at €121 million in 2026 and the full year additional yield is estimated at €157 million.
Commenting, Susan Rossney, Institute Sustainability Advocacy Manager, said
“Chartered Accountants Ireland has consistently advocated for taxpayers to be shown a direct link between the carbon tax collected and how they benefit. Therefore, the decision to ring-fence the revenue expected from carbon tax in 2026 to spend on social welfare measures and other measures to prevent fuel poverty, and to ensure a just transition, is welcome.
However, more detail will be needed on the distribution of funds to Government’s planned projects, particularly the €209 million which has been allocated to accelerate climate action and prepare Ireland for the impacts of a changing climate, to understand whether the risks from climate change and biodiversity loss have been properly accounted for.
This is especially important given the warning from the Irish Fiscal Advisory Council that failing to meet EU climate targets could cost Ireland between €8 and €26 billion by 2030.”
The measures funded, relevant Departments, and the allocation for each is outlined in Budget 2026 – The Use of Carbon Tax Funds.
Budget 2026 also includes investment in offshore renewable energy site data surveying to assist in the de-risking of future projects. €30 million has been allocated for the Landfill Remediation Programme, described by Department of the Climate, Energy and the Environment as “support[ing] Ireland in transitioning to a Circular Economy, whilst protecting our natural resources, environment and health on the national journey to net zero by 2050”.
The extension to 2030 of the Accelerated Capital Allowances scheme for energy-efficient equipment also means that companies investing in, among other things, electric cars for their fleets will be able to write 100 percent of the asset value of those vehicles off against tax in the first year of ownership.
Other EV measures include the extension to 2026 of the €5,000 VRT relief for EVs, and the creation of a new vehicle category for zero-emission cars only, where the lowest BIK rates will apply. Connected to this is the extension of the 9 per cent rate of VAT on gas and electricity bills until the 31 December 2030 which will be welcomed by EV drivers keen to avoid an increase in EV charging prices.
The extension to 2028 of the Income Tax disregard of €400 for income received by households who sell electricity from micro-generation back to the grid is to be welcomed, includes electricity sold back to the grid from EVs enabled with Vehicle-to-Grid or V2G technology. To help reinforce the electricity grid, ESB and Eirgrid will receive €3.5 billion.
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