The carbon bill

Most of Cyprus's electricity is made by burning oil. Under EU rules a power station must buy an allowance for every tonne of carbon dioxide it emits. The price of those allowances rose from about €25 in 2020 to more than €80 in 2023, and the cost went straight into bills.

What the numbers say

The Electricity Authority paid €75 million for allowances in 2020 and €211 million in 2024. Over the five years from 2020 to 2024 the total was €955 million, which the Audit Office describes as "a cost passed on to the consumer". In 2024 it was 19% of everything the Authority earned from selling electricity.

Until April 2026 it appeared on a bill inside the fuel adjustment. Averaged over 2025 it was 5.8 cents for each kilowatt-hour, before VAT. Eurostat's price statistics give the same figure, and from them it comes to 20% of what a household paid. Since bills of May 2026 the tariff's base price covers part of the cost and the fuel adjustment the rest; on bills of October 2026 we estimate the whole at about 7 cents, as The tax you never see explains.

The state is on the other side of this market too. Each EU country is given allowances to sell at auction, and Cyprus collected €113 million that way in 2024. The budget bill expects €152.5 million in 2027.

The two sums are not the same money. The Authority buys on a Europe-wide market, not from the Cyprus state. But both grow with the same price, so when carbon gets dearer, households pay more and the state collects more.

What it means for you

A household using 4,000 kilowatt-hours a year paid about €230 for emission allowances in 2025, and VAT on top of that. It is not shown as a tax on your bill, though statisticians class it with taxes. The tax you never see counts it, as an estimate.

At the petrol pump you pay excise duty and VAT, and, as of October 2026, nothing for carbon. That may change twice. The government promised the EU a carbon tax on motor fuel in its recovery plan; in March 2026 the President announced it would not be imposed, though the EU milestone, amended in July 2026, still includes it. And from 2028 an EU-wide system will make fuel suppliers buy allowances for petrol, diesel and heating oil. The government's own energy and climate plan, written when that system was due a year earlier, estimates that petrol and diesel will be 11.5% to 14.2% dearer by 2030 as a result of it and of other climate measures.

What people argue

Where does the auction money go? Cyprus law says the budget must set aside an amount equal to the auction proceeds for climate and energy purposes. The cash itself goes into general revenue. Cyprus has reported to the European Commission that it spends more than the proceeds on such purposes through the general budget; the largest item it reported for 2023 was public transport, €79 million. We found no published national statement listing what each year's proceeds paid for, so the claim cannot be checked line by line. The alternative that is often proposed is to return the money to households through lower electricity bills.

Why is there no carbon tax? In 2021, as a condition of its EU recovery money, Cyprus undertook to bring in three green taxes by mid-2023: a carbon tax on fuel, a levy on water and a charge on landfilled waste. A draft bill in 2024 set the fuel tax at 5 cents a litre, rising to 25 cents by 2033. It was never passed, and the deadline was moved twice. In July 2026 Parliament was reported to have voted down the landfill charge by 26 votes to 19.

What has the delay cost? Only higher water charges were introduced. On 2 March 2026 the European Commission suspended €46 million of a recovery payment until the other two are in force. It gave Cyprus six months, which ended on 2 September 2026; after that the Commission may reduce the grant for good. On 2 October 2026 no such decision had been published. The case for the delay is that €46 million, even if lost, is less than a tax that would take about €50 million a year from drivers and businesses, and more as the rate rose. The case against is that a carbon price on fuel arrives in 2028 anyway through the EU system, and that Cyprus has put EU money at risk and passed up its own revenue to postpone it.

How we know

What the Electricity Authority paid is from the Audit Office's special report on the Authority of February 2026 and the Authority's annual reports; the 2024 figure is unaudited. The cost per kilowatt-hour is the average of the monthly figures in the Authority's fuel adjustment workbook for low-voltage customers. Since May 2026 the Authority has published only part of this cost, so there is no full figure for later bills.

The share of the household price is Eurostat's, for a household using 2,500 to 5,000 kilowatt-hours a year; it calls the item "environmental taxes" and does not itemise it. The €230 is our multiplication.

Auction revenue is from the Statistical Service's list of taxes and the 2027 budget bill. The European Commission gives a lower figure for 2024, €95.5 million, on a different basis. The history of the green taxes is from the Council and Commission decisions on the Cyprus recovery plan; the vote on the landfill charge is as reported by the Cyprus News Agency. The €50 million a year is the Ministry of Finance's own estimate from 2024 of what the fuel tax would raise from all payers at 5 cents a litre.