Budget 2027 – A Step in the Right Direction for Decarbonisation

TEA welcomes the Budget 2027 allocation of €1.28 billion to the Department of Climate, Energy and the Environment, including a record €654.5 million for SEAI residential and community energy upgrade schemes. In a year of sharply higher energy prices, it protects both Ireland’s building decarbonisation ambitions and the capacity to deliver them.

This budget helps with heating bills now while continuing to fund the retrofits that cut how much imported fossil fuel households need. It does not yet deliver the step-change the 2030 targets call for, but it moves firmly in the right direction.

The timing of all this matters too. Ireland holds the Presidency of the Council of the EU until the end of December and has put energy security, home-grown renewables, stronger grids and a more efficient, electrified energy system at the centre of its programme. Retrofit is where that agenda reaches people directly.

Home retrofit at the centre

According to the Department, €647 million of the SEAI capital allocation comes from carbon tax receipts, so revenue raised on fossil fuels goes back into the homes that most need help moving away from them.

Several of the new supports were approved by Government in the week before the budget, through the National Energy Affordability Taskforce and opened on 6 October. Households switching from a fossil-fuel heating system to a heat pump or other renewable heating now receive an extra €2,000 on top of existing grants, bringing combined support to as much as €14,500. A battery grant of up to €600 brings back support for home storage and solar PV (up to 4 kWp) with a 5 kWh battery will be offered as standard under the fully funded Warmer Homes Scheme. These sit alongside the window and door grants introduced in March, which the Minister says had attracted around 30,000 applications by late August.

One-stop-shop retrofits bring simplicity to the process for homeowners and remain a critical support for households starting on the retrofit journey.

Delivery has picked up. SEAI reports that 2025 was its highest year on record, with €645 million invested across its programmes and more than 58,000 home upgrades, over 8,000 of them free upgrades for homes at risk of fuel poverty. Since 2019, more than 287,000 home energy improvements have been supported. On budget day, the Minister said this year’s target of 78,000 retrofits is on track and that he hopes to reach 100,000 in 2027.

Public buildings and the Pathfinder programme

The public sector has some of the most demanding targets in the Climate Action Plan. By 2030 it must cut energy-related emissions by 51% and improve energy efficiency by 50% and SEAI’s summary of the targets includes bringing its roughly 12,500 buildings to a BER of B or better.

SEAI’s Pathfinder programme, in place since 2017, works with the OPW, the Department of Education, the HSE, higher education and local authorities on deep retrofit and renewable heat projects that each sector can repeat across its estate. In 2024, SEAI provided over €61 million in Pathfinder capital, supporting €120 million of total investment and, by its estimate, more than 800 jobs.

For social housing, Budget 2027 allocates over €360 million for specific housing needs, including the retrofit of additional social homes, building on more than 11,000 local authority homes deep-retrofitted under the Energy Efficiency Retrofit Programme.

The carbon tax decision

The most significant climate decision in the budget was on carbon tax. The rate on kerosene and natural gas goes back to its 2023 level of €48.50 per tonne and will not rise again during the lifetime of this Government. Under the legislated path it would have reached €78.50 per tonne by May 2027. The Fuel Allowance also rises by €5 a week for more than 470,000 households.

The decision reflects a difficult year for rural households, with a 1,000-litre fill of heating oil rising from just under €1,000 earlier this year to more than €1,600.

There is a cost to this. A predictable, rising carbon price helps make the case for a heat pump or deep retrofit and the Department of Finance’s Tax Strategy Group had described keeping the annual increases as “in line with best international practice” in an energy crisis. We welcome that the SEAI allocation was protected and modestly increased, despite the lower carbon tax yield and that the Minister has said retrofit ambition and output will not be reduced.

Where the next budget must go further

There is still a sizeable gap to close. The National Retrofit Plan targets the equivalent of 500,000 homes at B2 and 400,000 heat pumps in existing homes by 2030. The Climate Change Advisory Council reports that 84,270 privately owned homes reached B2 between 2019 and 2025, against a target of 120,000 and that heat pump installations need to rise twentyfold.

In our view, Budget 2028 should build on this year in four areas.

Restoring a price signal: A published path back towards €100 per tonne by 2030, with the revenue ring-fenced, would give confidence that switching will pay off.

Reporting in greater depth: Tracking B2 outcomes and heat pump installations as headline measures would show progress against what the targets require.

Reaching social and rented homes: The Advisory Council estimates local authorities need to retrofit around 5,000 social homes a year to 2030. Private rented homes are harder to reach. Census 2022 recorded more than 330,000 households renting from a private landlord, where the tenant pays the energy bills but the owner decides whether to invest. This reflects what we have learned through our Solar Meitheal project in the Tipperary Decarbonising Zone, which you can read about here. The new package makes a start, with higher insulation grants for homes in HAP and RAS tenancies and a solar and battery pilot linked to the Rental Accommodation Scheme in Dublin.

Investing in delivery capacity: The constraint is increasingly delivery capacity rather than money and multi-year funding certainty would give firms the confidence to hire and train the people they need. TEA’s experience in EU LIFE funded projects like TRESS, has also identified this as key barrier. TEA’s partners on the project runs runs part-time, blended programmes for people already working in construction, including Residential Retrofit Site Coordination (Level 6), Near Zero Energy Buildings (Level 6) and Residential Energy Retrofit Management (Level 8). Training of this kind needs to grow alongside the funding.

Looking ahead to 2030

Perhaps the most important change in Budget 2027 is that retrofit is now treated as energy security policy as well as climate policy, in step with Ireland’s EU Presidency priorities. Every building that stops burning imported oil is better protected against the next price shock.

That matters in rural counties like Tipperary, where many households heat with oil and the new boiler scrappage, battery and solar supports are well suited to their needs.

The four years to 2030 will be decided by delivery. Reaching 100,000 home upgrades a year would be a major step up, though meeting the 500,000 B2-equivalent target also needs far more of them to reach B2 or include a heat pump. Public and commercial buildings need the same momentum.

We look forward to working with public bodies, businesses and our partners across Tipperary to put these supports to good use.