Position Climate agreement – Coalition agreement 2021-2025
On 28 June 2019, the Cabinet presented the Climate Agreement. In it, the Netherlands’ commitment to the Paris Climate Treaty was made concrete. This commitment entails: phasing out greenhouse gas emissions by 2050 as a contribution to limiting temperature rise to as close to 1.5 degrees Celsius as possible. The agreement contains a package of arrangements between companies, social organizations and governments. These arrangements should contribute to a 49% reduction by 2030 compared to 1990. In other words, 116 megatons of emissions in 2030 as opposed to 165 megatons without the agreement. Agreements were made by sector and should also result in reductions for each sector.
The Coalition Agreement 2021-2025 raised the ambitions. The carbon reduction to be achieved should be at least 55%. The policy is aimed at as much as 60%. With this refinement, the Cabinet wants to ensure that the Netherlands is climate-neutral no later than 2050. This also aligns with the EU ambition Fit-For-55 which was presented in 2021.
Energie-Nederland fully endorses the goals for achieving a sustainable, reliable, and affordable energy supply. Energie-Nederland asks the government to provide a clear, stable, and easily implementable policy that enables the necessary acceleration.
Position Climate Act
The Dutch climate goals are established in the national Climate Act. Beside these climate goals, the Climate Act also describes the policy framework surrounding these goals. It includes three policy instruments: the five-year Climate Plan, the bi-yearly Climate and Energy Report (KEV), and the yearly Climate Memorandum.
Energie-Nederland supports the ramp-up of the ambitions at national level that have been set out in the refined Climate Act. The ambitions are 55% less greenhouse gas emissions by 2030 compared to 1990 and climate-neutrality by 2050. In doing so, the Dutch Climate Act aligns with the European Climate Act which is legally binding.
During the consultation for the refined Act, Energie-Nederland made the following suggestions:
Set clear intermediate targets for greenhouse gas emission reductions. As far as Energie-Nederland is concerned, the interim targets are 70% reduction by 2035 and 80% reduction by 2040. This also clarifies the medium-term objective for all stakeholders. At the same time, it safeguards the alignment of the Climate Act with the objectives according to article 3 of the Climate Act.
Include the correction mechanism for electricity imports and exports. This correction mechanism should prevent the ‘waterbed effect’ in European carbon emissions.
Position Interdepartmental Policy Research (IBO) on the Climate
IBO Climate report ‘Sharp objectives, sharp choices’. Energie-Nederland is enthusiastic about the IBO Climate report of April 2023. We endorse the advice that rapid and clear choices are required now. The low-hanging fruit has already been picked. Each subsequent mega-reduction will be more difficult to achieve than the megatons that went before. What’s more, 2030 is just around the corner. Policy programs not started by now will not take effect until 2025 at the earliest. And that while most large-scale projects take at least 7 years to be implemented. That is why the focus should primarily be on consolidating and accelerating existing policies.
The IBO solely reviewed standardization and charging measures. This offers too limited a picture of the possible measures for achieving the climate goal.
Energie-Nederland warns of the risk of an ‘excel reality’. The industry association urges acceleration by way of a focus on implementation and pragmatic solutions. The IBO ignores the practicality of the transition. Crucial preconditions are not resolved or tackled. The biggest bottleneck of the transition, for example, is the energy infrastructure, which requires planning capacity, (nitrogen) permit issuance, manpower equipment. These are details that need to be resolved. Otherwise, charging and standardization will not have the intended effect.
Support for the transition would benefit from a balanced cohesion between carrot and stick. As such, consider the full package of measures. Including the subsidies.
To successfully make other sectors more sustainable, the electricity sector must be fully carbon neutral even before 2040. This also includes the adjustable output. The measures proposed in the IBO do not bring about the desired acceleration in this area.
One of the proposed measures is to charge or standardize the remaining operational gas power plants in the Netherlands. Due to the deteriorated competitive position and possible early closure of plants, this would pose a risk of emissions leakage and decreased security of supply.
Position Jetten Climate Package 2023
On Wednesday April 26 2023, Minister of Climate and Energy Policy Rob Jetten presented the Climate Package that should bring the Netherlands in line with the goal of 55-60% carbon reduction. He did this at the first of a series of climate press conferences. In the package, the minister outlines the measures to be taken in each sector. It also describes the decision-making process. Both for the past and the future. The package is to result in 22 megatons of carbon reduction by 2030. The package also contains 120 measures in addition to the existing policy. For this, 28 billion euros will be made available by the Climate Fund.
Energie-Nederland is satisfied with the extra measures being taken to bring the policy in line with the ambitious climate goals. This is sorely needed given the short time remaining until 2030. It is now imperative to focus on the feasibility and the practicality of all measures. The sector should be engaged in further shaping these measures.
In his speech on April 26, minister Jetten emphasized that the transition must be shaped in such a way that everyone can take part. Including people with a smaller budget and/or a rental property. Energie-Nederland is satisfied that a combination of bitter measures (standardizing and charging) and sweet measures (incentivizing and subsidizing) is chosen. Energie-Nederland also supports the plans to incentivize the use of hydrogen. Hydrogen is necessary for a good balance with wind and solar. What’s more, it is an important raw material for industry.
A point of concern is the choice of normative measures in the electricity sector. This is because these measures could put Dutch gas producers at a disadvantage in relation to foreign plants. If the business case of the Dutch gas power plants deteriorates, this could possibly further endanger the security of supply – which is already under pressure.
Position Energy Act
Energie-Nederland supports the proposed Energy Act. The draft legislation merges the Electricity and Gas Acts. This is a major modernization based upon the Directives and Regulations of the EU Clean Energy Package. The new Act contributes to the energy transition. It encourages clean, carbon-free energy supply that is spatially compatible, safe, reliable and affordable.
Energie-Nederland believes the Energy Act should be aimed at proper functioning of the mature Dutch energy market. This should be an integral part of the (Northwest) European energy market. The Energy Act should be specifically aimed at the energy market and the energy transition. As such, it should not become a means to implement a different policy. Social policy must not be filled with, for example, price regulation in the Energy Act.
The fact that the balance of responsibility is consistently placed with each market participant is a good development. The clear and unambiguous allocation of costs from the energy system is also positive. What’s more, Energie-Nederland is satisfied with the confirmation of the facilitating role the grid operator will play for all market participants. This emphasizes the premise of efficient operation of the market for organizing connection and transportation. The possibility of including prioritization frameworks for this in the Act should be treated with caution.
Energie-Nederland is still worried about a number of issues. For example, about sharing self-generated energy. On the one hand, market responsibilities must be properly distributed. On the other hand, unnecessary administrative burdens should be avoided.
In addition, the Energy Act offers a good structure for sharing energy data. However, the independent direction and execution of the task undertaken by the data-sharing entity needs to be better substantiated. It goes without saying there are many other topics in the Act that Energie-Nederland considers important.
The draft legislation provides a good basis, but could be clarified and refined in a number of areas.
Position Collective Heat Supply Act
The new Collective Heat Supply Act (Wcw) is aimed at accelerating the heat transition. Energie-Nederland supports the objective of this new Act which will come into force in 2025. The public interests the Act is intended to safeguard are: increasing sustainability, affordability, and security of supply. A precondition for securing these interests is more public direction. Energie-Nederland is actively contributing to shaping the Act to enable the necessary acceleration of the heat transition. Energie-Nederland does this together with more than 25 members who are active in collective heat.
At the end of 2022, the Minister of Economic Affairs and Climate Policy decided to mandate a public majority stake in heat infrastructure. Energie-Nederland believes this decision is unwise for several reasons. Particularly because it delays the transition of the built environment. The minister also acknowledges this. After all, there’s insufficient public executional power. This is according to a survey by PwC (Aug. 2022) commissioned by the minister. Moreover, the executional power of private companies serving 80-90% of the market with dozens of years of experience is hardly utilized.
Following the minister’s decision, Energie-Nederland held intensive consultations with the Ministry of Economic Affairs and Climate Policy (EZK), the Association of Dutch Municipalities (VNG) and the Association of Provincial Authorities (IPO) at the end of 2022 and the start of 2023. The purpose of this consultation was to make arrangements to allow as many ongoing projects as possible to continue. This will prevent projects from coming to a standstill and putting the climate goals for 2030 out of reach.
Position Transition of the built environment
The current energy crisis makes accelerating the transition and sustainability in the built environment even more important. This is true for both security of supply and the affordability of energy.
The main points for Energie-Nederland in this regard are:
More specific and quantified objectives are needed for homeowners, landlords, local authorities and businesses. This will give all those involved more action perspective towards the established climate goals. It calls for a robust and simple set of tools. This will help people take measures to be more sustainable.
Energie-Nederland is puzzled and disappointed that, firstly, there will be no new subsidies for biomass and, secondly, that the heat infrastructure will be transferred into public ownership. These two decision were made in 2022, while it was clear beforehand that it would slow down the heat transition of the built environment.
Crucial legislation and subsidies must come into force as soon as possible. To wit: Municipal Instruments for Heat Transition Act (WGIW), Collective Heat Supply Act (Wcw), Energy Act and Heat Network Investment Subsidy (WIS). Concise legislation is important for all stakeholders involved, such as local authorities, housing corporations, businesses, grid operators and local energy cooperatives.
When evaluating the sustainability of a home to determine its energy label, a connection to district heating is given a default score of 0.9, regardless of whether the heat supplied is generated by gas or by renewables. Maintaining this rate hinders sustainability. It means housing corporation homes are not being rewarded, or not rewarded sufficiently, for their sustainable energy use. This is in contrast to homes with their own heat pump.
The erroneous termination of the Energy Investment Allowance (EIA) should be corrected and the implementation deadline extended. This would mean complex and long-term heat projects could also take advantage of the scheme. Until such time the WIS comes into force, Energie-Nederland proposes to reverse the termination of the EIA, safeguarding the investment security of current and future projects. What’s more, with adequate conditions, extending the permitted time frames would also ensure that these types of complex and long-term (heat) projects remain interesting.
Position Energy saving
In order to keep energy affordable and available, and to limit carbon emissions as much as possible, it is necessary to use less energy. Rising energy prices have further emphasized the importance of energy saving. Often more is possible than people think. The members of Energie-Nederland like to engage with their customers.
Lower energy consumption This is true for both households and industry. Energy suppliers and the government can both play a role in this, for example, by providing good information about energy-saving options, and by encouraging people and businesses to take measures. This could include shorter showers, turning down the boiler a few degrees, and making tailored agreements with the business community.
Insulation The greatest and quickest gains when it comes to savings can be made with insulation. The Cabinet has help available through the National Insulation Program for insulating properties. This program is specifically aimed at insulating badly insulated rental and owner-occupier homes in a fast and smart manner. The aim is for 2.5 million residences to be tackled by 2030. The Cabinet has set aside 4 billion euros for this. Energie-Nederland urges rapid implementation of the National Insulation Program and home insulation.
In March 2023, the Cabinet accelerated the availability of 200 million euros to combat energy poverty. This is to be achieved through the use of energy fixers for vulnerable households in rental and owner-occupied homes. Energy fixers help to reduce energy consumption in the short term. They do this by way of energy advice and small to medium-sized energy-saving measures. In addition, 100 million euros will be available from the National Insulation Program sooner. This money is earmarked for local insulation approaches by municipalities.
Trade association of almost 90% of the market for producers, suppliers and traders of electricity, gas and heat.