Carbon tax on energy bills: who pays it, and why gas shows it

What is the carbon tax on energy bills?

The carbon tax is an excise duty the Irish Government charges on fossil fuels, scaled to the CO2 released when the fuel is burned. It applies to petrol and diesel, to kerosene in oil boilers, to coal and briquettes — and to natural gas, where it takes the form of the Natural Gas Carbon Tax, collected by your gas supplier and handed on to Revenue. It has been on gas bills since 2010, so it is not new; what changes is the rate, which has been climbing on a legislated schedule since 2020.

Two design features explain almost everything about how it shows up at home. First, it is charged per unit of fuel, so the more gas you burn, the more you pay — unlike a flat levy, it scales with your usage. Second, on natural gas it is charged at the point of supply to you, which is why it appears as its own labelled line on a gas bill, in a way it never does on petrol (folded into the pump price) or on electricity (more on that below).

The rate itself is set per tonne of CO2 emitted — €63.50 per tonne at the moment — and Revenue translates that into a per-megawatt-hour rate for gas. Every supplier must charge exactly that rate. It is the one line on your gas bill where Bord Gáis, Flogas and everyone else are, by law, identical to the cent.

How much is the carbon tax on a gas bill in 2026?

Revenue’s current rate, in force since 1 May 2025, is €11.48 per MWh at gross calorific value, excluding VAT — the per-MWh expression of €63.50 per tonne of CO2. Your bill charges in kWh, and adds VAT at 9%, so the arithmetic from Revenue’s figure to your bill line runs like this (the conversions are ours):

So on the average gas bill, the carbon tax is a real but secondary line: €137-odd a year against a total bill that is mostly unit charges and standing charge. A home burning 15,000 kWh pays proportionally more; an apartment on 7,000 kWh proportionally less — if you want to sanity-check your own bill, multiply your annual kWh by 1.25c. (Not sure what a kWh even is? Start here.)

One honesty note while we are talking money: matched.ie is not a CRU-accredited price-comparison site. We verify supplier pricing ourselves for pages like cheapest gas in Ireland, but if you want a regulated comparator, the accredited list is on cru.ie.

Which bill carries which charge — gas or electricity?

This is the table that untangles most of the confusion. Gas and electricity each carry exactly one of the two policy charges people mix up — never both, never each other’s.

Scales with usage versus flat: worth pausing on, because it decides what you can do about each. The carbon tax rises and falls with every kWh of gas you burn. The PSO is the same euro amount for every domestic electricity customer whether you run a heat pump or a single lamp. The full line-by-line anatomy of each bill has its own page — gas bill explained and electricity bill explained.

Why is there no carbon tax line on my electricity bill?

Not because electricity is carbon-free — a good share of Irish electricity is still generated by burning gas. The difference is where in the chain the carbon is paid for.

Power stations in Ireland fall under the EU Emissions Trading System: for every tonne of CO2 a generator emits, it must buy an allowance at the market carbon price. That cost goes into the price generators charge for power on the wholesale market, and your supplier’s unit rate is built on those wholesale costs. So the carbon cost of your electricity reaches you inside the c/kWh figure, pre-blended — there is nothing left for the bill to itemise. Charging a domestic carbon-tax line on top would tax the same emissions twice.

Your gas boiler, by contrast, is not in any emissions trading scheme — no household could be. The Natural Gas Carbon Tax exists precisely to put a carbon price on that side of the ledger, and since your supplier meters your kWh anyway, it can be charged transparently as a line. The upshot is tidy: every fossil kWh you buy carries a carbon price — you just only see it written down on the gas bill. And for the avoidance of doubt, going all-electric does not add a hidden line anywhere; whether it lowers your total cost is a different sum, which we walk through in gas vs electric heating.

What changes on 14 October 2026?

Two practical notes on the change. It needs nothing from you — the new rate applies automatically to gas supplied from that date, at every supplier, and your bill spanning mid-October will simply split the units either side of the line. And it is no reason to switch or not switch: since the rate is identical everywhere, the rise makes every supplier dearer by the same amount. What it does do is slightly raise the reward for burning fewer kWh.

Where is the carbon tax going between now and 2030?

The trajectory is not a rumour — it has been in legislation since 2020, when a ten-year schedule of increases was written into law (Finance Act 2020) to bring the charge to €100 per tonne of CO2 by 2030. Revenue publishes the resulting gas rates to 2030, with the standard caveat that “future rates are as currently legislated for and may be subject to change”. The per-tonne and per-MWh columns below are Revenue’s; the inc-VAT cent rates and annual figures are our arithmetic at 11,000 kWh.

* Our arithmetic: Revenue’s ex-VAT rate × 1.09, and × 11 MWh for the annual column. Assumes the 9% VAT rate, currently legislated to 31 December 2030.

The same story as a picture — what the carbon-tax line alone costs a typical gas home today, after the October rise, and at the end of the legislated road:

Read it plainly: between now and May 2030 the carbon-tax line on a typical gas bill is legislated to grow by about €79 a year (our arithmetic, €137.65 → €216.90) — roughly €16 added at each step. Not a cliff, but a steady ratchet, and unlike a supplier price rise there is no cheaper competitor to escape to.

Can you avoid or reduce the carbon tax?

Avoid it by switching supplier: no. The rate is set by law and collected identically by every supplier — the cheapest gas deal in Ireland and the dearest carry the same 1.25c/kWh line. Any supplier ad implying otherwise is selling you the unit rate, not the tax.

Reduce it: only by burning fewer kWh. Because the tax is per-unit, everything that cuts gas usage cuts it in exact proportion — heating controls and lower flow temperatures, insulation, shorter heating hours, moving cooking or water heating off gas. Cut 2,000 kWh off an 11,000 kWh year and you save about €25 in carbon tax at today’s rate (our arithmetic) — on top of the far larger saving on the units themselves.

Keep the proportions honest, though. The carbon tax is around €137.65 of a typical annual gas bill; the gap between a new-customer discount and a standard tariff can be several times that. If the October rise annoys you into action, the highest-value action is still the boring one: check who is cheapest for gas, mind the year-2 cliff, and switch the parts of the bill that competition actually touches.

Is the carbon tax the same as the PSO levy?

No — and mixing them up is the single most common error on this topic, so here is the clean separation. The carbon tax is a Government tax on fossil fuels: it sits on gas bills, it is charged per kWh, and it is going up on a legislated path to 2030. The PSO levy is a CRU-set charge that funds renewable generation support: it sits on electricity bills, it is a flat monthly amount however much you use, and it is about to go sharply down — from €1.46 to €0.51 per month ex VAT on 1 October 2026.

So a dual-fuel household pays both, one on each bill, and this autumn they move in opposite directions: the electricity bill’s levy falls on 1 October, the gas bill’s tax rises on 14 October. Neither can be switched away; both are the same at every supplier. If you can glance at a bill and name which line is which, you know more than most — and the rest of the bill, the part you can do something about, is covered in gas bill explained and electricity bill explained.

Where to next?

• The PSO levy explained — the electricity-bill counterpart, and why it falls by two-thirds on 1 October 2026.
• Gas bill explained and electricity bill explained — every line, decoded.
• Cheapest gas in Ireland — the part of the bill switching can actually cut.
• Gas vs electric heating — if the trajectory has you weighing a bigger move.
• What is an average gas bill? — to see where the carbon-tax line sits in the total.

About the author

Conor Ryan

Energy Switching Analyst

Conor Ryan has tracked Irish gas and electricity prices, tariffs and switching since 2019. He builds matched.ie’s energy comparison tools and tests how smart meters and time-of-use plans affect household bills.

7+ years analysing Irish energy marketsCertified in Energy Efficiency (SEAI) and Electricity SupplyFocus on SSE Airtricity, Electric Ireland, Energia and Bord GáisBased in Limerick, covers domestic and small-business tariffs