Carbon tax scenarios and their effects on the Irish energy sector

Finally, in order to assess the macroeconomic effects of a carbon tax, the carbon tax scenarios were run in HERMES, the ESRI's medium-term macroeconomic model. The results from HERMES show that, a carbon tax of €41 per tonne CO2 would lead to a 0.21% contraction in GDP, and a 0.08% reduction in employment. A higher carbon tax would lead to greater contractions in output.