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Netherlands: Status Update on the Dutch Climate Agreement

  • United Kingdom
  • Energy and infrastructure

25-07-2018

Last week, the Dutch Minister of Economic Affairs and Climate Policy, Eric Wiebes, was presented with the draft Climate Agreement for the Netherlands after four months of negotiations by various discussion groups and key stakeholders on the Agreement’s objectives and main terms. The Climate Agreement seeks to outline programmes and measures through which the Netherlands can meet the government’s objective of reducing the country’s carbon dioxide emissions by 49% (from its 1990 levels) by the year 2030 and, in so doing, procure the country’s national transition to sustainable energy. It is expected that the Climate Agreement will be finalised and available for implementation at the start of 2019. While the Climate Agreement is separate from the proposed Climate Act (which is in the throes of being finalized by parliament), the Climate Agreement will go a long way in achieving the goals set out in the draft Climate Act of achieving a virtually carbon neutral country by 2050.

In achieving its set target of carbon dioxide reduction by 49%, the Climate Agreement wishes to see a national reduction of carbon dioxide by 48.7 megatons over the next ten years, which will be achieved through the imposition of specific carbon dioxide reduction targets on five specific sectors, which are proposed to be:

  • a reduction in the electricity sector of 20.2 megatons;
  • a reduction in the built environment sector by 3.4 megatons;
  • a reduction in the agriculture sector by 3.5 megatons;
  • a reduction in the industry sector by 14.3 megatons; and
  • a reduction in the mobility sector by 7.3 megatons.

The Dutch Government’s renewed emphasis on renewable energy and its impact on climate change is undoubtedly due to the new global climate change policies set by the Paris Treaty in December 2015 and also as a result of the landmark Urgenda judgment (now subject to appeal) which was handed down by The Hague District Court in 24 June 2015 (ECLI:NL:RBDHA:2015:7145) which saw an order being made against the Dutch Government requiring it be more proactive in the reduction of greenhouse gas emissions and to set and meet the higher climate change target of reducing greenhouse gas emissions by at least 25% (from 1990 standards) by the year 2020.

While the Climate Agreement is intended to bring about changes in all five of the above-mentioned sectors, it is envisaged that the high carbon dioxide reduction target set for the electricity sector will result in it being one of the sectors which will be subject to the most focus by the Climate Agreement and all stakeholders over the following years. It is intended that the Climate Agreement will place considerable emphasis upon the supply of solar energy and wind energy as the renewable supply sources for the electricity sector. In particular, it is desired that approximately 35 terawatt hours of renewable energy be produced on land and sea by 2030 through the construction of 500 new wind turbines on land, 700 new wind turbines at sea and 75 million solar panels by such date, which would then see 50,000 to 200,000 houses becoming sustainable and removed from the gas network each year thereafter.

Despite talks that the Dutch Government’s SDE+ subsidy scheme (which provides subsidies for the promotion of renewable energy production in the Netherlands) would be terminated early under the Climate Agreement, the discussion group (or ‘table’) for the electricity sector has requested that this subsidy remain available to candidates until the end of 2025 and that even after such date, alternative non-subsidy instruments be investigated at the end of 2021 (for example, methods to stimulate the demand for renewable energy) and implemented so as to guarantee such candidates’ investment security. It will be interesting to see what the consensus will be on this issue once each of the discussion group’s proposals have been considered.

It has been clearly acknowledged by the Dutch Government that the Climate Agreement will require drastic changes being made to the Dutch labour market. In particular, the implementation of the Climate Agreement will see a significant increase in employment in the renewable energy sector and a decrease in employment within the conventional energy sectors for coal, oil and gas (especially with the intended phasing out of gas networks and coal-fired power plants). Furthermore, it is expected that demand will increase for technicians and installers within the installation and construction sector. Seeing as both these sectors are already facing labour shortages, it is likely that there will be delays experienced in the implementation of the extensive (sustainable) construction projects envisaged by the Climate Agreement’s energy transition process. There are also concerns that the growth of the renewable energy economy may impact negatively on the quality and standards of employment for employees, for example, in cases involving temporary employment contracts of where there is an absence of collective labour agreements. It has been recommended that protection measures be implemented against such possibilities.

It is also undeniable that the entry into force of the Climate Agreement will have a significant impact upon the Dutch economy. Indeed, it is expected that the sustainable energy transition envisaged by the Climate Agreement will require considerable yearly investments being made by citizens, companies and public authorities alike, despite the emphasis on the Climate Agreement’s programmes and solutions being as cost-efficient as possible. Indeed, according to published estimates, it is foreseen that the energy savings to be implemented in the built environment sector alone will require an additional average investment of 12 – 14 billion Euros per year.

Nevertheless, while Eric Wiebes himself acknowledges that the reduction of carbon dioxide will constitute a significant and costly challenge, he firmly believes that the Climate Agreement offers an opportunity for the reinforcement and strengthening of the Dutch economy. Indeed, the Cimate Agreement will catapult the Netherlands to the forefront of sustainable development globally and will ensure a brighter and more durable future for us all. The impact of the proposed terms of the Climate Agreement on each of the five sectors will be analysed by Eversheds Sutherland (NL) in separate publication instalments over the coming months.

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