The Year Ahead – Fuels for Ireland’s View Towards the Establishment of an Expert Group on Taxation
By Kevin McPartlan, CEO of Fuels for Ireland
As we move further into 2025, it is important for the State to prioritise and implement key focus areas for the fuel industry and retail forecourts this year.
The liquid fuels industry provides over 50% of the nation’s energy needs, employing around 16,000 people directly, with another 50,000 indirectly. Ensuring the sustainability of these services is crucial to our economy.
Fuels for Ireland has identified four strategic policies to support the fuel industry amid a changing governmental landscape:
- The creation of an expert group on fuel taxation
- Supporting the forecourts sector (including low-carbon liquid fuels, EV charging infrastructure, and planning permission reforms)
- Policies to significantly reduce greenhouse gas emissions
- Support for domestic production of advanced biofuels
We welcome the new Minister for Climate, Environment and Energy, Darragh O’Brien, and champion the naming of the department to now include the word ‘energy’.
Over the next four articles, I will explore each of these pillars, starting with the need for an expert group on taxation and its impact on energy for transport and heating.
The Need for an Expert Group on Taxation
It is no surprise that the pricing and taxing of petrol and diesel across Ireland has been a primary concern for motorists and fuel suppliers over the last year, particularly coming into the spotlight with the change in government in January 2025, and the increase in petrol and diesel prices from 1st October 2024.
Since 2020, Irish drivers have paid an additional €12 in fuel taxes, making Ireland’s fuel tax the highest in the EU. On Budget Day 2024 alone, petrol and diesel prices rose by 2.1c and 2.5c per liter, respectively, exacerbating price disparities between the Republic and Northern Ireland. Many motorists now travel north to refuel, raising the question: why hasn’t the government established an expert group to ensure fair and sustainable fuel taxation?
FFI have continuously proposed the expert group, that should, in good practice, comprise of government officials, economists, environmental specialists, and industry representatives.
This diverse panel would provide a balanced, data-driven approach to fuel taxation, aligning economic, environmental, and consumer interests.
Logistically speaking, it is important to balance certain concerns of priority when looking at developing policies for the expert group; supporting the transition to sustainable energy, maintaining fair revenue for the State, as well as ensuring Irish people and businesses are not priced out of their current lifestyle and operations.
Supporting the Transition to Sustainable Energy
The urgent need to transition away from fossil fuels and replace them with sustainable, renewable energy sources is undeniable.
The global community is facing a climate crisis, and the reliance on fossil fuels, which have long been a huge part of history, is no longer viable in the face of growing environmental concerns, as the narrative has now begun to shift.
While electric vehicles are an essential part of the solution, they alone are not enough to meet the ambitious targets set for reducing emissions from the transportation sector. Despite their growing popularity and environmental benefits, EVs still face significant barriers, such as limited infrastructure relating to charging, range anxiety, and the high cost of production (hindering adoption). A broader approach is needed, encompassing advanced synthetic and biofuels, as well as e-fuels, which are produced using renewable electricity. These alternatives can decarbonize sectors like aviation and heavy transport, where electrification is less viable. Government policies, such as tax incentives and research funding, are essential to facilitating this shift.
Investing in the development of biofuels and e-fuels will also create opportunities for domestic production, reducing dependency on fuel imports and enhancing Ireland’s energy security. The establishment of an expert group on taxation can help identify the best fiscal measures to support this transition, ensuring that new energy sources remain cost-competitive for consumers while aligning with national climate targets.
Maintain Fair Revenue for the State
Fuel taxation currently accounts for approximately 6% of Ireland’s total tax revenue.
As the adoption of EVs accelerates, this revenue stream will decline, creating a fiscal gap that challenges ongoing state-funded projects and services. While the government has invested heavily in EV adoption incentives, it must now develop a new taxation model that ensures long-term revenue stability. Alternative taxation strategies will be necessary to maintain fairness while supporting Ireland’s net-zero ambitions.
One possible approach is the introduction of road usage taxes or mileage-based taxation for EVs. By shifting the taxation focus from fuel consumption to road usage, the government can maintain necessary revenue levels while promoting sustainable energy adoption. The expert group would evaluate the feasibility of such models and their impact on both urban and rural drivers.
Additionally, considering the disparities in fuel pricing between the Republic and Northern Ireland, policymakers must assess cross-border implications. Higher fuel prices in the Republic have already driven many consumers to refuel in the North, impacting revenue collection. A balanced taxation approach that accounts for competitive pricing while supporting sustainability goals is essential.
Protecting Irish Consumers and Businesses
The future of Irish motorists and forecourts depends on the policies set by the Government and industry representatives. Forecourts are more than refueling stations; they serve as economic lifelines for rural communities and essential retail hubs for citizens. Therefore, it is crucial to support both consumers and businesses that operate in conjunction with the fuel sector.
In recent years, expectations that rising costs would prompt widespread behavioral change have not materialized. The anticipated shift towards greener alternatives has been slow, demonstrating that increasing fuel taxes alone is not an effective strategy. Instead, a reassessment of policies surrounding fossil fuel consumption is necessary to develop solutions that genuinely drive sustainable progress.
Raising fuel taxes under the guise of environmental policy functions more as a ‘stealth’ tax, disproportionately impacting consumers while failing to produce meaningful environmental benefits. A more direct and holistic approach is required—one that addresses the real barriers to sustainable transition rather than placing financial burdens on motorists and businesses. Comprehensive policy reforms, including investments in low-carbon fuel alternatives and infrastructure development, should take precedence over punitive tax increases.
The creation of an expert group on energy-related fiscal policies can play a key role in Ireland’s journey toward a net-zero carbon future. Such a group should include representatives from various sectors, including the fuel industry, motoring organizations like AA Ireland, consumer advocacy groups, economists, environmental campaigners, and rural community representatives, who are often the most affected by fuel price increases. Special consideration must also be given to vulnerable populations, such as the elderly, who rely on affordable energy sources for daily needs.
As we move into spring and summer 2025, Ireland’s new government has the opportunity to reshape its approach to fuel and energy taxation. While the goal of reaching net-zero emissions by 2050 remains imperative, the strategies employed must be practical and equitable. By forming a well-rounded expert group, policymakers can ensure that fiscal policies support the transition to sustainability while maintaining affordability and economic stability.
Fuels for Ireland urges a meeting with Minister for Finance Paschal Donohoe to discuss this vital initiative and explore how it can benefit the entire island in the long term. By addressing taxation, pricing disparities, and sustainability challenges through informed and inclusive decision-making, Ireland can create a more balanced and forward-thinking energy future.
See the full article in the Ireland’s Forecourt & Convenience Retailer 2025 Yearbook – coming soon…
