Silage season is around the corner, and if you’re farming anywhere across Offaly, Laois, or Westmeath, you already know the story: fuel costs keep creeping up, margins stay tight, and every litre of agri diesel matters more than it did last year. Between the carbon tax increases and the price of green diesel in Ireland in 2026, it pays to look at where your fuel is going and whether you can stretch it further. This guide covers the practical stuff — what you’re actually paying for, how much your tractor burns through, and straightforward ways to reduce diesel usage on your farm without cutting corners on the work that needs doing.
How Is Green Diesel Taxed in Ireland?
If you’re buying fuel for tractors and farm machinery, you’re buying what’s officially called Substitute Fuel for General Use, or SFGO. Most people call it green diesel, marked gas oil, or just agri diesel. It’s the same base product as road diesel, but it’s dyed green and sold at a lower tax rate because it’s restricted to off-road use — farm equipment, generators, construction plant, and the like. If you’re caught using it in a road vehicle, Revenue will come knocking, and the penalties are steep.
The tax on green diesel in Ireland is made up of excise duty, carbon tax, and VAT. The carbon tax is the one that’s been climbing year on year. As of now, it sits at €71 per tonne of CO2, which works out at roughly 17 cent per litre of green diesel. That’s a sizeable chunk of what you’re paying at the pump or on delivery.
Come May 2026, the carbon tax is set to increase again — adding approximately 2.4 cent per litre including VAT. The Government has kept an excise cut of 3 cent per litre in place until May 2026 to soften the blow, and there’s an enhanced rebate of 12 cent per litre running until the end of June 2026 (more on that below). But the direction of travel is clear: the carbon tax on green diesel in 2026 is going up, and it won’t be coming back down.
How Much Diesel Does a Tractor Actually Use?
It’s worth putting numbers on what your machinery actually burns through, because tractor fuel consumption in litres per hour adds up fast — especially during silage and harvest.
A utility tractor in the 50 to 100 HP range typically uses between 6 and 17 litres per hour, depending on the load. Step up to a larger machine, 100 to 200 HP, the kind doing heavy tillage or pulling a mower conditioner and you’re looking at 11 to 30 litres per hour. A busy silage contractor running a full fleet can go through up to 3,050 litres in a single day.
Across the country, Irish agriculture uses approximately 350 million litres of agri diesel every year. That’s a serious amount of fuel, and even small percentage savings on individual farms add up to real money over a season.
5 Practical Ways to Cut Fuel Consumption on Your Farm
None of these are magic tricks. They’re the kind of common-sense adjustments that experienced operators already know, but they’re easy to let slip when you’re flat out during the busy months.
1. Gear Up and Throttle Back
This is the single biggest fuel saver most farmers can apply straight away. When the load on your tractor requires less than 70% of its available power — spreading fertiliser, for example, or light haulage, shift up to a higher gear and bring the engine RPM down. You’re still covering the same ground speed, but the engine is working more efficiently. Studies consistently show this technique can reduce fuel use by up to 25%. It takes a bit of getting used to, but your tank will thank you.
2. Match the Tractor to the Job
It’s tempting to use the big tractor for everything because it’s there and it’s handy. But a 200 HP engine doing a job that only needs 80 HP is burning fuel for nothing. Use the smallest tractor that can handle the task comfortably. Save the heavy iron for the jobs that actually demand it.
3. Plan Your Fieldwork and Routes
Time spent turning at headlands or doubling back over ground you’ve already covered is time spent burning diesel for no return. Think about your run patterns before you start. On bigger farms or for contractors, GPS guidance systems have come down in price enough that the fuel savings on reduced overlap can pay for themselves within a season or two.
4. Stay on Top of Maintenance
A well-maintained tractor is a fuel-efficient tractor. Replace air and fuel filters on schedule — a clogged air filter alone can increase consumption noticeably. Check tyre pressures regularly; under-inflated tyres create more rolling resistance, which means more fuel. Get injectors serviced and inspect fuel lines for leaks. A dripping injector or a loose connection might not look like much, but over a season it all adds up.
5. Manage Your Fuel Storage Properly
Good farm diesel storage tips are worth repeating every year. Don’t store diesel for more than six months — it degrades, picks up moisture, and can cause injector problems. After winter, check your tank for condensation before you start drawing from it for spring work. Water in diesel is bad news for modern engines. And if you know silage season fuel demand is coming, order fresh fuel ahead of time rather than relying on old stock sitting in the tank since last autumn.
Understanding Your Green Diesel Costs in 2026
When you look at the green diesel price in Ireland in 2026, it helps to understand what makes up that per-litre cost. It’s not just the price of the product itself. On every litre, you’re paying:
- Product cost — the wholesale price of the fuel itself, which moves with international oil markets
- Carbon tax — currently about 17 cent per litre, and rising
- Excise duty — a fixed Government charge (currently reduced by 3c/L until May 2026)
- VAT — charged on top of all of the above
Carbon tax alone accounts for roughly 17 cent of the approximately 22 cent total tax burden on each litre of agri diesel. For a farm using 10,000 litres a year — not unusual for a mid-sized tillage or livestock operation — that’s over €170 in carbon tax alone. On a larger farm or for a contractor burning 50,000 litres or more, the numbers get serious quickly.
Tax Relief and Rebates Every Farmer Should Know About
The good news is there are two schemes in place right now that can claw back a decent portion of your fuel tax bill. If you’re not already claiming both, you should be.
Section 664A: Carbon Tax Deduction for Farm Diesel
Under Section 664A of the Taxes Consolidation Act, farmers can claim an income tax deduction for the carbon tax paid on farm diesel above the 2012 base rate. This is claimed through your annual tax return, so make sure your accountant knows about it. One important catch: agricultural contractors do not qualify for this deduction. It’s only available to farmers using fuel on their own farm holding.
Enhanced Diesel Rebate Scheme (2026)
The Diesel Rebate Scheme allows qualifying users to claim back a portion of the mineral oil tax paid on marked gas oil in Ireland. For 2026, the Government has increased the maximum rebate to 12 cent per litre, up from the standard 7.5 cent per litre. This enhanced rate runs until 30 June 2026.
Claims are submitted quarterly through Revenue Online Service (ROS). To claim, you need to keep all your fuel receipts and delivery dockets — every single one. If you’re ordering bulk agri diesel, your supplier should be providing detailed dockets with each delivery. Hold on to them.
Between Section 664A and the enhanced rebate, a farm using 10,000 litres a year could be looking at several hundred euro back. It’s not a fortune, but it’s money that’s yours if you do the paperwork.
Keep Your Farm Running This Season
Silage season fuel demand waits for nobody. If you’re farming in Offaly, Laois, or Westmeath, Lambe Oil delivers agri diesel across the region with a 48-hour delivery guarantee. We run mini tankers that can get into tight yards and hard-to-reach tanks, and our pricing is competitive — we’re a local family business, not a faceless corporation.
Whether you need a top-up before first cut or a regular supply through the busy months, give us a call on 057 932 1522 or order online at lambeoil.ie. We’ll look after you.