Fossil subsidies were €2.4 billion in 2019

Published by Kayle Crosson on

30 March 2021 

Fossil fuel subsidies amounted to €2.4 billion in 2019, a one per cent increase from 2018. 

The Central Statistics Office (CSO) released the figure today as part of its fossil fuel subsidies statement, and also found that the total amount of subsidies allocated to fossil fuels have increased by 69 per cent since 2000.

The data revealed that petrol, mainly used by private motorists, had the highest average effective carbon rate of €259, a €1 increase from 2018. 

The average effective carbon rate on autodiesel was €183 per tonne of carbon dioxide, which the CSO attributed to a lower excise duty rate being applied to it. 

The CSO warned that increasing the effective carbon price of autodiesel would probably have a greater impact on rural households than their urban counterparts, due to fewer public transport options available and longer commuting distances for rual communities.  

Household electricity allowances came in at €105 million in 2019, and the household fuel allowance was €94 million, both of which are used as social supports. 

Jet kerosene had a total amount of revenue foregone of €634 million in 2019. The fuel is exempt from excise and carbon taxes in commercial use, and has an average effective carbon rate of less than €1 per tonne of carbon dioxide emitted. 

This figure has continued to increase over the past decade, as it amounted to €626 million in 2018, up from €580 million in 2017 and €419.5 million in 2010. 

Jet fuel continues to remain exempt from taxation in the EU, and was essentially exempt from EU policies until a 2003 EU Directive was brought in and permitted fuel to be taxed for domestic aviation, subject to a bilateral agreement amongst member states. 

Airlines, however, still do not have to pay tax on commercial aircraft fuel and no member states have agreed to increase taxation on kerosene since the Directive came into effect. 

Fossil fuel subsidies, explained 

Subsidies for fossil fuels are preferential tax treatment, meaning that either the tax isn’t charged as an attached expenditure or there’s a tax incentive allocated to them. 

They can also relate to the production of fossil fuels, or they can be around their consumption. 

Subsidies can also be direct or indirect. The former type impacts the bills of households, which would include fuel allowances and the PSO levy. 

Indirect subsidies are applied industry-wide and involve taxes not collected on certain fuels, as is the case with jet kerosene. 

According to analysis by Colette Bennett of Social Justice Ireland, lower income household subsidies have remained relatively steady and have not risen at the same level as the indirect ones. 

Direct subsidies have grown from €100 million in 2000 to €300 million in 2018, while indirect subsidies grew from €1.3 billion to €2.1 billion in that same timeframe. 

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