Taxing carbon is seen as a method of reducing fossil fuel consumption that has appealed to governments because of its simplicity.

It is seen as a market-based approach to mitigating climate change, rather than a regulatory one; that is to say it puts a price on carbon rather than saying (hypothetically) that people could only use a certain amount of carbon in a year.

Increasing the cost of carbon products through taxation is seen as a way to encourage the growth of alternative energy industries by giving them a competitive advantage over existing ones.   

Economists argue that if the tax is introduced and raised over time, behaviours will gradually change and people will move towards alternative energy sources like solar power. This is a long-term process that gives people time to adapt, rather than a radical one which forces them to change their habits overnight. 

The tax is effective in changing behaviours and reducing CO2 emissions, according to ESRI economist Muireann Lynch. But she also warns that carbon taxes are not a comprehensive solution to rising emissions in and of themselves, and that they need to be paired with loan and grant schemes to offset the burden on lower income households.

Where they have been implemented, carbon taxes have been effective in bringing down emissions. In Sweden, the UK and Australia, emissions went down after a carbon tax in one form or another was introduced. 

In 2012, Australia’s then Labor government introduced a tax on carbon emissions. It was scrapped two years later by the succeeding Liberal Party government led by Tony Abbott, but in those two years emissions did go down. They climbed back up again once the tax was done away with.  

In the UK, the use of coal to generate electricity fell from 42% in 2012 to 7% in 2017 after the government introduced a Carbon Price Floor levy on the sector. 

Sweden offers perhaps the most promising example of carbon tax success, where emissions have fallen considerably since its introduction in 1991. Of course, the reduction cannot be put down to the tax alone as Sweden also has a number of other climate change mitigation measures in place.

When it comes to a direct link between carbon taxes and consumer behaviour though, the evidence is not conclusive. 

A 2019 Sustainable Energy Authority of Ireland (SEAI) literature review on the subject found that “there is little evidence available to directly link changes in carbon taxation to changes in behaviours”.

“This is not to say that carbon taxation does not impact on individuals’ behaviours or choices, but it does show that few studies have attempted to provide a causal link between macro changes in a carbon tax and specific behaviours at the micro level,” the review said.  

There have been a number of other arguments put forward against the implementation of carbon taxes.

These usually point to an uneven distribution of the financial burden across the population, suggesting that those on lower incomes may struggle to pay additional taxes compared to those on higher incomes, and that poorer households shouldn’t have to face going without heat because they can no longer afford it.

Because the tax is applied to carbon, it means everyone pays the same amount, but this can have an outsized impact on people on lower incomes. 

Poorer people spend a larger share of their income on things like petrol and heating than their wealthier counterparts do. It is also true that people living in rural areas without easy access to public transport also feel the brunt of the tax more than urban dwellers because they need to use their cars more often.

This is supported by ESRI research, which concludes that carbon taxing by itself is “regressive” but adds that “the fact that appropriate revenue recycling can reverse these regressive effects diminishes the validity of distributional issues as an argument against increasing carbon taxation”.

Some of those against the tax also claim that there are limitations to addressing climate change within the economic paradigm of capitalism.

They argue that an entire overhaul of the global economic system and people’s behaviour is needed, rather than tweaks to the current model which they say allows wealthier people - often the highest carbon emitters - to continue their lifestyles because they can afford to.

Critics say that carbon taxes do not necessarily reduce the amount of CO2 emitted because they maintain a level of societal dependence on fossil fuels.

On top of this, opponents often point to the fact that some large carbon-emitting industries, like aviation and farming, are usually not subjected to carbon taxes while individual consumers are. For example, in Ireland, there is no carbon tax on fuel used in electricity production.

Additionally, because the tax is paid by producers, critics argue that the added cost is passed on to consumers at the point of sale (ie when energy is bought or used), rather than absorbed by the polluting companies. 

While carbon taxes have proved a popular measure for some governments, they have not been met with the same enthusiasm by citizens. 

A notable example came when French president Emmenuel Macron attempted to raise the price of fuel in 2018, which sparked massive and repeated protests on the streets of French cities that became known as the Gilet Jaunes (Yellow Vest) movement. 

Carbon taxes have more recently led to political discord in Canada, where Prime Minister Justin Trudeau has introduced a three-year exemption for home heating oil as a way to alleviate cost of living pressures. Now the policy is facing wider criticism.

Ireland first introduced a tax on carbon-emitting fuels in 2010 and the levy has grown incrementally ever since under governments led by Fianna Fáil and Fine Gael. 

The Government has continued with its carbon tax strategy despite the prices of oil and gas rising due to external factors like the war in Ukraine. 

Green Party leader and Minister for Environment Eamon Ryan is noted as saying that he believes carbon tax is “progressive” because the funds which it generates are put towards helping the less well-off. 

“I believe the carbon tax has been the right thing to do not just on the climate side, where it is critical, among a whole range of different tools, but also because it is progressive. For the second year in a row we have produced a budget which shows that those in the lowest deciles and quartiles, particularly the last four, benefit most.” 

In September 2023, Sinn Féin’s Pearse Doherty said the increase announced in the Government’s 2024 budget should be “scrapped”, saying that the cost of living was already rising due to increased volatility in the international energy market. 

In People Before Profit’s alternative budget for 2024, the party said it would abolish the carbon tax and replace it with a tax on aviation fuel. 

Independents for Change leader Mattie McGrath condemned the Government’s raising of the carbon tax in October 2023, saying it disproportionately affected motorists, farmers and rural households.

The Labour Party, in its alternative 2024 budget, said it would increase the carbon tax by €7.50 and also introduce a €400 carbon tax credit to offset the burden on those facing fuel poverty. 

“This income tax credit would be targeted at ordinary working families in poorly insulated homes,” the document said, adding that “over time the credit would be phased out as homes are made more energy efficient”.