Motor Fuels
Dail Éireann — 2026-09-30
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Catherine Ardagh (FF), Dublin South-Central

I thank Deputy Ward for raising this matter in the House today. The Government recognises the environmental benefits of incentivising the uptake of transition fuels such as HVO in place of heavier pollutants such as auto diesel. While HVO has a part to play in the here and now, Ireland must, nevertheless, move to more sustainable methods of transport in the medium to long term.
In relation to private transport the Government remains committed to incentivising the uptake of more electric vehicles, something which Deputy Ward also welcomed, on the road in place of internal combustion engines. This must remain the ambition. In the first half of this year electric vehicles were the leading individual fuel type for new car registrations. That being said, the Government understands the transition to decarbonise Ireland's existing vehicle fleet will take some time.
As Deputy Ward may know, the mineral oil tax treatment of biofuels, including HVO, already financially incentivises biofuels over fossil fuels such as diesel. Biofuels produced from biomass qualify for a full relief from the carbon tax, thus incentivising the uptake of more sustainable and renewable fuels. In the case of blended fuels the biofuel relief applies to the biofuel portion. The rate of the carbon tax relief for biofuels such as HVO used in place of auto diesel is around 23 cent per litre on a VAT inclusive basis. This, it must be acknowledged, is already a significant relief. As biofuels are relieved of the carbon component of mineral oil tax, they are not impacted by annual carbon tax increases. As a result, the mineral oil tax rate differential between biofuels and fossil fuels will continue to widen as the ten-year carbon tax trajectory up to 2030 is implemented, thus incentivising further uptake of biofuels.
Furthermore, the renewable transport fuels obligation scheme under the remit of the Minister for Transport obliges suppliers of mineral oil to ensure that a percentage of the motor fuel they place on the market in Ireland is produced from renewable resources. The target by 2030 is to deliver a 20% biodiesel mix, which will help to significantly reduce emissions.
The programme for Government also committed to examining the taxation of HVO used for commercial freight to support sustainable transport solutions and decarbonisation of road freight and commercial coaches with fuels such as HVO, hydrogen and biomethane. Work on these commitments is ongoing, including the examination in this year's and last year's tax strategy papers published by the Department of Finance.
However, it must be pointed out that the availability of renewable transport fuels, including HVO, will remain constrained given the current global product production capacity, the need for sustainable feedstock and increasing demand from various sectors to use renewable fuels in the decarbonisation journey. While tax levers can support policy measures, it is important to acknowledge that there is a limit to the role they can play in terms of price leverage.
The price of HVO is dependent on many factors. However, I assure the Deputy that the Government is conscious of the programme for Government commitment and it will continue to examine the potential to increase existing supports for HVO in recognition of the positive role it can play in our decarbonisation journey, as he set out.

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Record URI: https://data.oireachtas.ie/akn/ie/debateRecord/dail/2026-09-30/debate/main
Retrieved: 2026-10-05T01:00:59+00:00
Sitting date: 2026-09-30