In Budget 2027, the Irish government plans to reduce the carbon tax on kerosene used for home heating to the lowest level allowed under EU rules. Taoiseach Micheál Martin told his party that the cut aims to ease fuel costs for households, but the reduction is constrained by existing derogations under the EU Emissions Trading System, which prevent going below a certain threshold without compensating the EU. This move will likely affect the economics of switching to heat pumps and other low-carbon heating options, since a lower tax on oil weakens the price signal that encourages fuel switching. The budget is scheduled for October 6, and the exact details on income thresholds for social housing and other measures were also discussed at the parliamentary party meeting.
