Dáil Éireann Debate, Tuesday - 9 December 2025
299. Deputy William Aird asked the Tánaiste and Minister for Finance the way in which his Department is supporting investment in green infrastructure and sustainability projects through tax incentives or funding mechanisms; and the opportunities for counties such as Laois to benefit from these initiatives; and if he will make a statement on the matter. [69557/25]
View answerThe Programme for Government set out the clear ambition to prioritise the delivery of transformative, critical and growth-enhancing infrastructure over the next five years. Ensuring this infrastructure is resilient to our changing climate is a key consideration. In the recently published National Development Plan (NDP) 2026-2035, Ireland's long-term strategic investment plan, sets out a total public investment of €275.4 billion over the period to 2035, with significant efforts made to ensure that the Plan will support the Government’s climate ambitions. Government has prioritised increased investment levels in green infrastructure, with particular focus on water, energy, transport and housing to meet the housing needs of our population and economy – all aiming to support future economic growth and to improve the living standards of the people across the country.
In the area of tax incentives, there are two accelerated capital allowance schemes within the tax system with a specific focus on green investments. Section 285C of the Taxes Consolidation Act (TCA) 1997 provides for an accelerated capital allowances scheme for capital expenditure incurred on gas and hydrogen propelled vehicles and refuelling equipment used for business purposes. Section 285A of the TCA 1997 provides for an accelerated capital allowance scheme for capital expenditure incurred by businesses on energy efficient equipment.
In addition, following amendments to Annex III of the VAT Directive, agreed in April 2022, the Government introduced a zero rate for the supply and installation of solar panels on private dwellings. It subsequently extended this to the supply and installation of solar panels on schools. The amendments also provided scope for Member States to reduce the VAT rate for the supply and installation of highly efficient low emissions heating systems to a reduced VAT rate. Ireland introduced a reduced VAT rate of 9% with effect from 1 January 2025 for heat pump systems.
There are no geographic limitations on these reliefs, they are equally available across the State.
The Deputy may also be aware that, in order to incentivise the uptake of more sustainable and renewable fuels, the legal frameworks for Mineral Oil Tax, Natural gas Carbon Tax and Solid Fuel Carbon Tax provide that biofuels are relieved or exempted from carbon taxation.
The additional yield raised by Carbon Tax is ring-fenced for climate action and just transition measures. Budget 2026 provides for a €1,114 million allocation toward such measures, an additional €163 million on 2025’s allocation.
As of Budget 2026, the Government has allocated over €4.2 billion in carbon tax revenue for these purposes since 2020. ESRI analysis consistently shows the lower income deciles are better off as a result of the social protection measures funded by the increased carbon tax.
