Sustainability

Key measures for sustainability

The sustainability measures are shaped by two linked themes: short-term energy affordability and long-term decarbonisation. The Budget recognises that repeated energy price shocks have strengthened the case for moving Ireland away from imported fossil fuels and towards secure, affordable and cleaner domestic energy.

However, the most immediate tax measures are relief-focused, creating a clear tension with the ambition for a cleaner Ireland. Carbon tax on home heating oil and natural gas will be reduced, rather than rising, and these rates will be maintained for the lifetime of the Government.

Temporary reduced fuel excise rates will also remain in place before being restored in phases by 30 June 2027. Alongside this, the Budget includes targeted lower-carbon measures, including extended VRT relief for electric vehicles, higher VRT for more polluting cars, an increased microgeneration income tax disregard and potential future tax support for Hydrotreated Vegetable Oil.

On the expenditure side, Government is increasing investment in climate action, energy infrastructure, public transport, retrofitting, solar PV, boiler scrappage, water infrastructure, social housing retrofits and port infrastructure to support offshore renewable energy.

Additional funding for just transition and environmental programmes supports communities as the transition progresses, while infrastructure delivery reforms are intended to accelerate implementation.

Who will be affected?

Budget 2027 affects households, commuters, farmers, businesses and communities, with immediate energy relief and longer-term benefits as low-carbon infrastructure and upgrade schemes are delivered.

What now?

Most funding measures will be delivered through the National Development Plan and departmental programmes, with further details expected on project timelines, eligibility and access. Businesses and individuals should monitor these announcements, particularly for retrofitting, solar PV, boiler replacement, microgeneration, transport and energy efficiency supports.

Near-term energy relief may ease pressure, but should not delay planning for lower-carbon alternatives. The practical impact of Budget 2027 will depend on how quickly funding moves from allocation to accessible schemes and delivered projects.

Deloitte's view on Budget 2027 measures

Budget 2027 is best understood as managing a difficult trade-off: easing immediate energy cost pressures while still pointing Ireland towards a cleaner, more secure energy future. The reduction in carbon tax on home heating fuels and extension of fuel excise relief will be welcomed by many households and businesses, particularly where alternatives are not yet practical or affordable. However, there is a risk that repeated short-term relief normalises continued dependence on fossil fuels and weakens the urgency to change.

This matters because Ireland’s climate challenge is not only one of policy design, but also of behaviour. Many people are concerned about climate change, but can struggle to turn that concern into higher-cost or higher-effort decisions, such as retrofitting a home, replacing a heating system or changing transport habits. Short-term pressures, convenience and the tendency to stick with familiar choices can all slow progress, even where the long-term benefits are clear.

That is why the positive capital measures in the Budget are important. Funding for retrofitting, solar PV, boiler scrappage, public transport, water infrastructure, social housing upgrades and offshore renewable energy infrastructure can help make lower-carbon choices more accessible and realistic. The key test is delivery: how quickly funding becomes available, projects are delivered and people can act.