Fossil Fuel Subsidies 2021

Average Effective Carbon Rates

The average effective carbon rate of a fuel is the amount of energy tax paid per tonne of carbon dioxide emitted through combustion of the fuel. Energy taxes include excise duty on fuels, carbon tax, electricity tax, the National Oil Reserves Agency (NORA) levy, the Public Service Obligation (PSO) levy and emission permit purchases under the EU Emissions Trading Scheme (EU-ETS).

Figure 1.1 shows effective carbon rates by sector for 2020 and 2021. In both years, petrol had the highest effective carbon rate due to the higher rate of excise duty applied to petrol compared with other fuels, and the smaller number of tax exemptions and repayments available to consumers of petrol compared with other fuels. In 2021, the effective carbon rate on petrol was €269 per tonne of carbon dioxide. The lowest effective carbon rates were on marine and aviation fuels due to excise, carbon tax, and NORA levy exemptions. For example, the effective carbon rate on jet kerosene was estimated at €3 per tonne of carbon dioxide emitted in 2021.

The effective carbon rate on most fuels was higher in 2021 than in 2020. For most sectors and fuels this was due to an increase in the rate of carbon tax. In the case of jet kerosene and the electricity generation sector, the increased rate was due to a rise in the price of emission permits under the EU-ETS, while a higher PSO levy in 2021 compared with 2020 was the reason for the increase in the effective carbon rate on electricity consumption. Although the rate of carbon tax on aviation gasoline rose in 2021 this was more than offset by an increase in excise repayments resulting in a fall in the effective carbon rate from €187 to €177 per tonne of carbon dioxide.

Table 1.1 shows average effective carbon rates by sector for 2012-2021. Tables 1.3, 1.4 and 1.5 contain data on excise fuel volumes and rates, as well emission factors used in the calculation of effective carbon rates.

Net Energy Tax per Litre

Figure 1.2 and Tables 1.2A and 1.2B show net average energy taxes per litre on selected fuels. In 2021, energy taxes on petrol were 63 cent per litre, of which 54 cent was excise duty (excluding carbon tax), 8 cent was carbon tax, and 2 cent was the NORA levy. Net energy tax per litre is calculated by dividing net excise, carbon tax and NORA levy receipts by fuel excise volumes.