Experts have told politicians the most effective way to reduce carbon emissions is to increase carbon tax by €80 per tonne - which would add around €10 to a fill of diesel or petrol.
ESRI Researcher Dr Miguel Tover Reanos, told the Public Accounts Committee that if the carbon tax was increased by €80 per tonne there would be a reduction in emissions by nearly 11%.
He told the committee that a price had to be paid for the carbon that was being generated in the economy.
He said targets had to be reached and carbon tax was used across the world now.
He said a carbon tax and a revenue recycling mechanism was the best way to reduce carbon emissions and alleviate income inequality.
Mr Tover Reanos said that increasing carbon tax would disproportionately affect low income households because they spend more on energy compared to richer households.
However, Mr Tover said that this could be rectified by giving back some of the additional tax revenue to poorer households using a recycling mechanism.
He told the PAC that if revenue was recycled in a manner that targets poorer households it would reduce inequality.
Fianna Fáil's Bobby Aylward asked if carbon tax was the only way to encourage people to be environmentally friendly. He asked if there was any other alternative to get people to change from diesel and coal to more environmentally friendly options besides increasing tax.
In response, ESRI researcher Mert Yakut said increasing carbon tax stops people using fossil fuels and at the same time the Government collects revenue to finance investment.
Gerry Brady, statistician with the CSO, said retrofit schemes would result in lower emissions and lower energy use.
Mr Brady told the PAC that the contribution from renewables should keep climbing over time.
Independent TD Catherine Connolly said there were other ways of changing people's behaviour other than using what she described as "punitive" measures and punishment.
Mr Tover Reanos said information campaigns can change behaviour but he said it was not as strong as carbon tax.
Sinn Féin's David Cullinane asked if it would not be better to provide people with alternatives like public transport and making electric cars cheaper.
But Mr Yakut said the research did not include those details because they could not cover every aspect of the issue.
Fine Gael's Kate O'Connell said increasing tax was an "accountant solution" to a social, environmental and human issue.
She said the tax was unfair on citizens because companies who were profitable could buy their way out of it was profitable enough.
"Really what you're saying is the normal man can put on an extra jumper or walk in Waterford but the man or woman with a large company could buy their way out," she said.