Friends of the Earth criticises Budget 2027 tax cuts over permanent climate solutions - says Government missed crucial opportunity to end energy poverty and fossil fuel dependence

Friends of the Earth Ireland has expressed strong disappointment with Budget 2027, warning that the Government’s reliance on excise duty cuts and fossil fuel tax freezes fails to address the root causes of energy poverty or accelerate Ireland’s move away from costly imported fossil fuels.

While welcoming targeted measures like the €5 weekly increase to the Fuel Allowance, the climate justice group stated the budget prioritises short-term political relief over the permanent, structural transition needed to protect households from fossil fuel price volatility and climate breakdown.

The group also welcomed the record funding allocation of €1.3billion to the Department of Climate and the increased funding to energy transition schemes from €700million in 2026 to €950million in 2027, however without a plan to protect households from structural fossil fuel dependence, they would likely be left vulnerable to future shocks.

Clare O’Connor, Programme Coordinator at Friends of the Earth, said:

Opting for further excise duty cuts and pausing carbon tax increases as a solution to the energy crisis is a short-sighted strategy. Fuel tax cuts do nothing to insulate families from global fuel shocks in the long term, while simultaneously draining the exchequer of the funds needed to get off fossil fuels for good. Tax cuts will not keep a cold home warm this winter and beyond - increased investment in deep retrofitting, electrification, and homegrown renewable energy can do that.

Current geopolitical conditions have created uncertainties, but climate breakdown and fossil fuel volatility are absolute certainties. Instead of chasing more short-term relief, the Government should be directing revenue into permanent solutions: insulating homes, rolling out heat pumps, and a plan to phase out fossil fuels.

The organisation pointed to a glaring gap between climate policy ambitions and delivery, highlighting unspent carbon tax funds during an active energy crisis as an unacceptable failure.

Ms O’Connor added:

Allowing carbon tax revenues to sit unspent while 27% of gas-dependent households remain in arrears is baffling. ESRI research showed that lifting households out of energy poverty requires targeted, permanent support -roughly €480 a year per struggling household. Band-Aids like tax cuts cost hundreds of millions yet leave people trapped in fossil fuel dependency year after year.

Friends of the Earth also expressed frustration over the absence of any measures to curb energy consumption or apply higher tax levies to data centres.

"Rapidly growing electricity demand from data centres leaves ordinary households carrying a disproportionate share of grid expansion costs," Ms O’Connor noted. "Recent research shows data centre demand cost the Irish economy €715 million over the last decade in higher electricity prices- a figure that could rise by €1.4 billion over the next eight years if left unchecked. Budget 2027 completely ignores this burden."