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Sustainable energy system
Energy market
End consumers
Taxation & Financing
Positions taxation & financing
Position Energy tax
Energie-Nederland advocates for a durable and sustainable energy tax. In the Netherlands, the supply of both electricity and gas are taxed in accordance with a degressive system with different rates. This means electricity and gas are taxed unequally within this system. Firstly, different tariff bands are used for electricity and gas, whereby the limits of consumption volumes are far apart. What’s more, the tariff per unit of energy supplied are not equal.
Energie-Nederland believes that supplied gas should be taxed marginally higher than electricity. This would effectively mean shifting a portion of the tax burden from electricity to gas. This should encourage electrification. In addition, this would align the Dutch energy tax system with the ETD revision as proposed in the Fit for 55 package. A durable energy tax will ensure a stable tax environment which benefits investments. Furthermore, energy bills would be more understandable to end-users if they included energy taxes.
Position Preventing double taxation
Energie-Nederland believes that double energy taxation must be prevented. Energy should only be taxed at final consumption. Energy used for conversion, transportation or energy that is lost should be exempt from energy taxes. The desired situation would be for the government to introduce and/or enforce input exemptions for energy taxes on the production and storage of electricity, green gas and hydrogen.
Position Tax incentives
The number of projects in energy transition should be scaled up to achieve the Dutch climate objectives. Energie-Nederland will discuss two tax schemes.
1. The 20% interest deduction restrictionÂ
Corporate income tax includes a generic interest deduction restriction since January 1 2019. The scheme was originally set at 30% of adjusted taxable income (EBITDA). On January 1 2022, this was lowered to 20%. This means the Netherlands has a stricter restriction on interest deduction than its surrounding countries. The Netherlands maintains a 20% EBITDA rule while most countries around us use 30% EBITDA.
Interest has risen sharply in recent years. In addition, investment costs have increased due to higher prices for raw materials and labor. With its 20% interest deduction restriction, the Netherlands is at a substantial disadvantage with regard to the profitability of investments compared to surrounding countries. Because of this restriction, Energie-Nederland has noticed that investors and developers of new energy projects more often prefer similar projects in surrounding countries. This is to do with additional opportunities for tax deductions.
To achieve the energy transition in the Netherlands, the interest deduction restriction should at least be brought into line with surrounding countries. Included in this should be a consideration of an exemption for interest deductions for infrastructural projects, including energy.
2. The crisis measure for discretionary depreciation
At the end of 2022, the Ministry of Finance introduced a crisis measure to encourage investments in 2023. This measure was announced and implemented rather late. The measure only applies to investments made in 2023. The crisis measure means that a discretionary depreciation of 50% of the investment amount may be taken on investments. Provided the investment is implemented before 2026.
Energy projects are often characterized by long lead times. Several years may pass between the start of a project, the investment decision, and the implementation of the investment. Because of the 12-month time restraint of the crisis measure, it has little or no effect on incentivizing new projects in the energy transition. The effect of this measure is that existing and planned projects will receive a tax windfall in 2023.
Energie-Nederland believes that this instrument could make a substantial contribution to the energy transition. Then, firstly, this measure should have been announced in a timely manner, secondly, run for a longer term, and thirdly, the implementation period of the investment should be extended by at least 1 year. As such, Energie-Nederland calls for this measure to be extended until, for example, 2027. In addition, it should be announced in a timely manner, so that it encourages new investments and brings the climate goals closer. In this, Energie-Nederland also offers the consideration that this measure should only be introduced for infrastructural and energy-related projects.
Position Subsidies
Sustainable Energy Production incentive scheme and Climate Transition (SDE++)
The SDE++ is a subsidy scheme for businesses and non-profit organizations to encourage large-scale renewable energy generation or reduction of carbon emissions. This scheme subsidizes the ‘value gap’. The value gap is the difference between the cost price of the technology and the average market remuneration for the generated energy of reduced carbon emissions. As such, the subsidy depends on the level of market remuneration. As a rule, the State opens up a time period to apply for subsidy once a year. Such an opening usually lasts from 1 to 3 months and is made up of several phases. During this period, applications can be submitted for increasing subsidy intensity. In other words, the amount of the subsidy in euros per ton of CO2). For more information about the methodology, go to SDE++ 2022 brochure, version 06/27/2022
For the opening of the SDE++ for the year 2023, Energie-Nederland drew attention to the following:Â
- A decoupling of the natural gas price in the SDE++ for the deployment of renewable heat sources. Indeed, this also maintains the link between natural gas prices and heat supply tariffs.
- Innovations and further development of heat concepts. These often do not align with the existing SDE++ categories, which means they are not eligible for subsidy under the SDE++ and must wait until these are added a new SDE++ category.
- Temperature regimes within the different categories of sustainable heat technologies. These regimes make the incorporation of these technologies as heat sources for district heating unnecessarily complicated. The same is true for the scope of application for air source heat pumps. Here, only a building-specific installation of an existing building is eligible. Energie-Nederland would like to see a broadening of the application of air source heat pumps to include non-building-specific heat systems. This could accelerate the further sustainability of both larger and smaller heat systems.
- Better support for aquathermal energy through the SDE++. For this to happen, the subsidy method for aquathermal energy must also include an electricity component.
