Kevin McPartlan: Reliance on fuel taxation to drive change in Ireland is 'flawed'

In Ireland, the liquid fuels industry is crucial to the nation’s energy supply, providing over 50% of the country’s energy needs, which encompasses not only transport and heating, but also industrial processes, aviation, and maritime activities.

Transport fuel prices in Ireland have been rising steadily with taxes making up the majority of the price increase. Since this Government assumed office, it has implemented a tax increase of 20c per litre on both petrol and diesel.

This tax hike adds €12 in cost for every full tank of fuel, placing a significant financial burden on drivers. We are told these taxes are intended to discourage fossil fuel consumption and promote a shift toward renewable energy sources. However, as seen since the war in Ukraine when oil prices spiked, fuel consumption doesn’t decrease when prices increase.

Electric cars remain financially out of reach for many, and the infrastructure to support them, particularly in rural areas, is insufficient. As a result, many groups are effectively being penalised for continuing to rely on fossil fuels, without viable alternatives.

High fuel costs are also driving up the price of goods and services, and businesses are left with little choice but to pass these costs on to consumers.

Consumers, particularly those in rural areas, are also feeling the pinch. With limited access to public transport and a reliance on personal vehicles, rising fuel costs are hitting hard. For these communities, the idea of shifting to greener energy options remains more theoretical than practical.

The Government’s current approach to fuel taxation is, in essence, a stealth tax on mobility — punishing those who can least afford to adapt.

As Ireland works toward its climate goals, it’s clear that the current reliance on fuel taxation as a means of driving change is flawed.

We need a more balanced approach that recognises both the urgency of transitioning to renewable energy as well as the economic challenges being faced.

The first step toward a more balanced policy is the creation of an expert group on energy taxation.

It should focus on how to support the energy transition without placing an undue burden on businesses and vulnerable consumers.

This expert group would also explore how fiscal measures can support reducing carbon emissions.

A dedicated minister of state for energy is also essential for developing and implementing a cohesive energy policy. Centralising responsibility for energy management would ensure a strategic approach to energy security and infrastructure development.

The Government must adopt a more open-minded approach to technologies that can decarbonize the fuel sector in the short and medium term. Advanced and synthetic biofuels, such as hydrotreated vegetable oil (HVO), offer an immediate way to reduce emissions using existing vehicles.

Advanced biofuels can, and should, be produced in Ireland. This would not only help meet the country’s climate targets but also stimulate rural economies by creating jobs.

While the government’s attention is primarily focused on heat pumps as a solution for reducing heating emissions, Fuels for Ireland is championing the consideration of additional measures, particularly advanced, synthetic, and biofuels.

Ireland’s current fuel taxation strategy is economically and socially unsustainable. It disproportionately impacts small businesses, border regions, and consumers who have little choice but to rely on fossil fuels. The Government’s reliance on ever-increasing fuel taxes as a means of reducing emissions is not only ineffective, but also unjust.

A more balanced fiscal approach to the fuel sector is urgently needed.

• Kevin McPartlan is the chief executive of Fuels for Ireland