It is expected that offshore wind capacity in the North Sea should be between 38 and 72 GW in 2050. The target for onshore renewable energy sources pursuant to the Regional Energy Strategies (RES) is 55 TWhby 2030.

Regional Energy Strategies

The Regional Energy Strategies (Regionale Energiestratiegiëen) (“RES”) are a key feature of the National Climate Agreement. Currently, local governments, social partners, network operators, the private sector and residents collaborate in the energy transition with the aim of gaining regional support for project choices. In the RES, there is a particular focus on processing and creating local support as well as spatial implementation for future projects. On 1 July 2021, RES 1.0 was adopted for each of the 30 regions in the Netherlands. On 1 July the RES regions presented their progress documents, which indicate the status of achieving the relevant region’s goals. Up to 2030, the RES will determine the development of renewable energy sources in the relevant regions as well as the pace of the implementation of the wider energy transition at a local level. At the end of 2023, the PBL provided detail on its appreciation of, and the progress made with respect to RES 1.0. In the past years we have seen that grid capacity issues, scarcity of materials and personnel, the so-called Nevele ruling and Porthos ruling as well as the formation of new coalition parties at the level of the Dutch municipalities following local elections in March 2022 and November 2023, have had an impact on further implementation of RES 1.0.

In fact, certain regions will adopt a RES Review 2.0 (RES Herijking 2.0). The RES Review 2.0 sets out new or adjusted strategic choices. The RES ambitions are being monitored and evaluated in a bi-annual RES progress report (RES Voortgangsdocument). The second RES progress report is due in July 2025.

Notwithstanding the RES plans that the regions are working on, all 30 RES regions jointly proposed renewables projects to be developed that sum up to 55 TWh. In this context, the primary goal of RES 1.0, i.e., the generation of 35 TWh of onshore renewables (wind/solar), is on track. All stakeholders will strive towards accomplishing as much of the proposed electricity generation of 55 TWh as possible by 2030.

The Dutch government confirmed that it will stimulate the further roll-out of solar and wind energy on land. Incentives could be in the form of subsidies under Decree the Stimulation of Sustainable Energy Transition (Stimulering Duurzame Energieproductie en Klimaattransitie) (the “SDE++”) or by any other means (e.g., a two-sided contract for difference).

Offshore wind

On a national level, offshore wind is the key driver to reduce CO2 emissions by 2030. The Offshore Wind Energy Road Map 2030 (Routekaart windenergie op zee 2030) for the period 2024 up to 2030 lays down the sequence for the development of the wind farms in the Netherlands. In spring 2022, the Dutch government announced the doubling of its ambition for offshore wind to an installed capacity of approximately 21 gigawatts (GW) by 2030. In a further update on the additional road map offshore wind (Aanvullende route kaart windenergie op zee) the Minister of Energy and Climate announced in 2024 that the realisation of 21 GW of offshore wind will be completed by 2032.

This ambition dovetails with the ambition of the EC laid down in its REPowerEU plan for an accelerated rollout of renewable energy. New offshore wind locations have been designated in connection with the North Sea Programme 2022 – 2027 (Programma Noordzee 2022-2027) as published on 18 March 2022. In April 2024 it was confirmed that the following locations will be included in the Offshore Wind Energy Road Map 2030: Doordewind I (2 GW), Hollandse Kust West VIII (0.7 GW) and Nederwiek (North) III (besides IJmuiden Ver and Nederwiek (North and South) (6 GW) as locations that were confirmed previously). Locations for offshore wind for the period following 2031 will be identified in the Partial Revision North Sea Programme 2022 – 2027 (Partiële Herziening van het Programma Noordzee 2022–2027).

Read more: Offshore wind energy in the Netherlands up to 2030 and beyond, Gijs Smit, Maxim van Vessem (linklaters.com)

Read more: REPowerEU: reinventing Europe's energy architecture, Lothar Van Driessche (linklaters.com)

Since 2015, the Offshore Wind Energy Act (Wet windenergie op zee), as amended, has constituted the legal framework for the construction and operation of offshore wind farms. The Offshore Wind Energy Act provides a robust and future proof tender mechanism pursuant to which up to now almost 11 GW of offshore wind has been tendered. Under the legal introduced in 2015, a total number of 10 (ten) permits have been granted for the construction and operations of offshore wind farms. By the end of 2024 all offshore wind farms permitted (Borssele I - IV and V; Hollandse Kust South I – IV and Hollandse Kust North V) will be operational.

Most recently, the tenders for IJmuiden Ver, plots Alpha and Beta in aggregate totalling 4 GW, have been awarded to Noordzeker, a consortium of ABP and SSE Renewables and Zeevonk II, a consortium of Vattenfall and Copenhagen Infrastructure Partners (CIP), respectively.

The total investment costs for the offshore grid are estimated at approximately EUR 35.5 billion. At least half of these costs must be applied on site for the electrification of industrial processes and/or the production of green hydrogen. TenneT, the national transmission operator for the offshore grid, will install the grid connections for the new offshore wind projects. TenneT’s formal appointment is related to the enclosed development framework for offshore wind.

In the National Energy System Plan (Nationaal plan energiesysteem) published on 1 December 2023 targets have been set for offshore wind energy in 2035, 2040 and 2050. In summary, the Netherlands is looking towards realising 35 GW in 2035,50 GW in 2040 and 70 GW in 2050.

In June 2024, the Minister for Climate and Energy announced the outline of the Energy Infrastructure Plan North Sea 2050 (Energie Infrastructuur Plan Noordzee 2050). This plan intends to provide an outline of the further development of the energy infrastructure for renewable energy sources in the North Sea. Following 2030, not only offshore wind will be generated at the North Sea, but substantial volumes of hydrogen are also expected to be produced. This requires careful consideration from a system perspective and spatial planning of all energy activities in the North Sea: CO2 and hydrogen storage, gas and oil exploration and production and offshore wind generation. Currently, the Dutch government prefers a hub based approached regarding offshore wind and other types of generation and/or conversion of energy and molecules. Depending on the characteristics of the site, location, surroundings, water depths and (onshore) demand such a hub could comprise (artificial) islands or platforms or hybrid connectors being constructed to transport, convert or store electrons and/or molecules to land or transport the same to other hubs and/or neighbouring countries. The newly formed Dutch government which came into office in July 2024 will work out a more granular version of the Energy Infrastructure Plan North Sea 2050. A first full version is expected to be published early 2025.

In this context, the location of Nederwiek III enables combining an interconnector between the Netherlands and the United Kingdom which connects to a Dutch offshore wind farm as well. This hybrid interconnector with the UK has been announced as LionLink. Also, the offshore wind location Ten Noorden van de Waddeneilanden is the preferred location for a bigger demonstration project for offshore hydrogen production. Additionally, linking the permitting framework for offshore wind energy and renewable hydrogen production, for example in the form of combi-tenders, is seen as a useful instrument to bring system integration at the North Sea further.

It is not only the Netherlands that is committed to ambitious offshore wind targets. The same applies to our neighbouring countries. At the North Sea Summit in Esjberg, Denmark, held on 18 May 2022, the heads of government of Denmark, Germany, Belgium and the Netherlands jointly declared their intention to facilitate an exponential growth in offshore wind. The ambition was repeated and vowed by France, Ireland, Luxembourg, Norway and the United Kingdom as well in the Ostend Declaration dated 24 April 2023. Together, the countries have set ambitious combined targets for offshore wind of about 120 GW by 2030 in the North Seas. The North Seas should function as a ‘Green Power Plant of Europe’, and total offshore wind capacity should add up to at least 300 GW by 2050.

The SDE++ subsidy scheme currently is the main incentive scheme used by the Dutch government to make a transition to a greener future. The SDE ++ subsidy scheme and its predecessors have been a key driver for the increase of the generation of electricity by renewable energy sources in the Netherlands. In addition to renewable energy, also other CO2 reduction technologies have become eligible for incentives under the SDE++ subsidy scheme. Consequently, technologies no longer compete based on the amount of renewable energy produced, but rather on the amounts of CO2 that have been avoided. In fact, the SDE++ subsidy scheme offers an operating premium feed-in tariff subsidy for renewable energy and other CO2 reduction techniques compensating the difference between the cost price of the technology and the market price of avoided CO2.

For 2023 the SDE++ budget amounted to EUR 8 billion. As part of the 2023 SDE++ subsidy round so-called fences (hekjes) were introduced. Effectively, low temperature heat, high temperature heat and molecules qualify as domains for which EUR 750 million was set aside. for each domain. This feature will guarantee a certain budget for supporting projects in areas where decarbonisation is currently relatively expensive but that offer promising green potential. For 2023 domain fencing techniques had a maximum subsidy intensity of EUR 400 per tonne of CO2emissions reduction.

A budget of EUR 11.5 billion of SDE++ subsidies will be made available for 2024. This round of SDE++ subsidy will be open for applications from 10 September 2024 to 10 October 2024. Also, in this round the so-called fences will apply, albeit that these will amount to EUR 1 million for each of the domains regarding low temperature heat, high temperature heat and molecules.

Besides solar and green (bio)gas, carbon capture and storage (CCS) projects benefited to a great extent from SDE++ subsidies in the past years. The policy view is that we definitely need CCS in achieving the climate targets set for 2030. Now that the Dutch Council of State (Raad van State) ruled in favour of the Porthos in August 2023, the largest CCS Project of the Netherlands is currently being constructed. On 18 October 2023 the joint venture partners of Porthos (EBN, Gasunie, and the Port of Rotterdam Authority) announced the final investment decision. The Porthos infrastructure requires an investment of EUR 1.3 billion. Porthos is expected to be operational from 2026.

Netherlands on track for installing electrolysis production capacity in the Netherlands of 3-4 GW by 2030 with a potential increase to 8 GW by 2032.

Hydrogen policy

In its Government strategy on Hydrogen (Kabinetvisie waterstof), published in March 2020, the Dutch government envisages that hydrogen will be an indispensable part of the sustainability strategy for industrial clusters, ports and the transport sector generally. Within all industrial clusters in the Netherlands, market parties are preparing for renewable and low carbon hydrogen to play a growing role, including through feasibility studies, the development of business cases and proposed investments. In November 2022, the Minister of Economic Affairs and Climate confirmed that the Netherlands is on track to meet its ambition of having an installed electrolysis production capacity in the Netherlands of 500 MW by 2025 and 3-4 GW by 2030, and possibly realizing such production capacity sooner than originally planned. Dutch parliament agreed at the end of 2022 to target 8 GW of installed production capacity regarding hydrogen in 2032.

In January 2021 a National Hydrogen Programme (Nationaal Waterstof Programma) was launched. It describes in further detail the activities to be undertaken by the National Hydrogen Programme to facilitate and realise the potential of hydrogen as part of the energy transition in the Netherlands. The National Hydrogen Programme was succeeded by the Hydrogen Road Map (Routekaart Waterstof) which was published in November 2022. The hydrogen road map provides an overview of the current state of affairs on hydrogen and the sectors influenced by it. Additionally, it outlines the planned developments and hydrogen potential for long term (i.e., after 2030) as well as short term goals and actions to be taken for the periods 2022-2025 and 2025-2030.

Noteworthy recent developments

Hynetwork Services B.V. (“HNS”), a fully owned subsidiary of Gasunie (i.e., the transmission system operator of the Dutch gas network) has been (provisionally) appointed as hydrogen network operator of the Dutch hydrogen network.

The Netherlands and Germany will jointly organise a tender for a total of EUR 600 regarding procurement of imported hydrogen in 2024 through H2Global (whereby each country will contribute EUR 300 million). 

In early July 2022, Shell Nederland and Shell Overseas Investments took the Final Investment Decision (FID) to build the Holland Hydrogen I renewable hydrogen plant. This electrolyser of 200 MW will be constructed on the Tweede Maasvlakte in the Port of Rotterdam. The renewable hydrogen produced will supply the Shell Energy and Chemicals Park Rotterdam, by way of the HyTransPort pipeline, where it will replace some of the grey hydrogen usage in the Shell refinery.The last year we have seen some postponements and even withdrawals of announced hydrogen related projects such as H2Maasvlakte (Uniper), H2eron in Delfzijl (HyCC), H2Sines.Rdam (Shell/Engie) and the connection of the Chemelot industrial site to the Delta Rhine Corridor. 

Furthermore, we have seen a flurry of specific incentive schemes targeted at upscaling of the hydrogen value chain being proposed. In this context, on 20 June 2024 a subsidy scheme Hydrogen in Mobility (Subsidieregeling Waterstof in Mobiliteit (SWIM)) was published.  This subsidy scheme contemplates to arrive at a nationwide network of hydrogen refuelling stations. The Netherlands is working towards thirty (30) hydrogen fuelling stations spread across the country.  Also, the subsidy scheme Top Energy Sector (TSE) Industry studies has opened for applications until 31 March 2025. This scheme, with a budget of EUR 26.4 million, supports feasibility research of innovations that assists in reducing CO2 emissions in Dutch industry. Finally, until 31 January 2025 companies may apply for a subsidy for hydrogen infrastructure projects pursuant to the Accelerated Climate Investment in Industry (Versnelde klimaatinvesteringen in de industrie (VEKI)) subsidy scheme. Reservations have been made for a budget of EUR 130 million.

Market regulation

The market regulation of hydrogen will have various characteristics. First and foremost, the production of hydrogen through electrolysis will be a market activity. That said, large-scale electrolysis production could use steering and guidance (locatiebeslissingen) from the Dutch government. Therefore, the Minister for Climate and Energy intends to influence the location of large-scale onshore electrolysis production sites by means of: (i) spatial regulations; (ii) network planning; and (iii) establishing detailed policy frameworks (i.e. Energy Strategy Plans (Energiestrategieën) and the National Plan Energy System (Nationaal Plan Energiesysteem)).

Pursuant to the Programme Main Energy Structure (Programma Energiehoofdstructuur) that was adopted on 1 March 2024, preferable locations for large-scale onshore electrolysis production are:

• North Sea Channel area;
• Delfzijl and Eemshaven;
• Rotterdam and Moerdijk; and
• Borssele and Terneuzen.

Large-scale electrolysis plants (i.e., in excess of 100 MW) will qualify as projects of national importance under the project procedure for national energy projects. The Dutch central government may take a "project decision", which will ease the spatial burden and making it more efficient and faster to implement large scale electrolysis projects.

Further characteristics on the proposed market regulation include that private hydrogen networks established to date, and new geographically limited private hydrogen networks remain private. Newly developed large-scale private hydrogen networks on the contrary may become part of the national hydrogen transport network (see below). 

Finally, in the event of market failures, Dutch network companies (netwerkbedrijven) could play a role in developing underground storage facilities and import terminals for hydrogen. At a later development stage this should be a market activity and the Minister for Climate and Energy foresees a system of negotiated third party access regarding hydrogen import terminals and, subject to other EU Member States’ preference, either negotiated or regulated third party access with respect to hydrogen storage facilities.

Scaling up and incentivising parts of the hydrogen value chain

In autumn of 2023 the first round of the Subsidy Regulation Large-scale production of fully renewable hydrogen via electrolysis (Subsidieregeling grootschalige productie volledig hernieuwbare waterstof via elektrolyse (OWE)) opened. The OWE subsidy is for companies that build and use an electrolysis plant from 0.5 MW onwards to produce fully renewable hydrogen. A total amount of EUR 250 million was made available. In 2024 it was announced that seven (7) projects received subsidy grants: (i) H2 Hollandia (Nieuw-Buinen), (ii) Hysolar (Nieuwegein), (iii) Groengas asset (Amsterdam), (iv) Green gas asset (Groningen), (v) RWE Eemshydrogen (Eemshaven), (vi) Van Kessel Olie (Oude Tonge) and (vii) VoltH2 (Delfzijl). Together, the projects provide 101 MW of electrolysis capacity. A second round of the OWE subsidy will be launched in September 2024.

The main instruments to incentivize production of renewable hydrogen are subsidies. This includes budgets for innovative pilots and demonstration projects pursuant to a specific funding programme (Groeifondsprogramma GroenvermogenNL) and DEI (for innovative techniques) as well as the SDE++ subsidy scheme and stimulating the use of renewable hydrogen as part of refinery processes (the so-called refining route (raffinageroute). Noteworthy is the receipt by VoltH2 of an SDE++ subsidy grant of approximately EUR 85 million for its hydrogen projects in Terneuzen en Vlissingen. These projects relate to two plants for the production of green hydrogen through electrolysis with a capacity of around 25 MW each (and upside potential to scale up to 100 MW in the coming years).

Other noteworthy incentive schemes that are relevant or could be applied to hydrogen projects in the (near) future are (i) Hydrogen in Mobility (Waterstof in Mobiliteit), a new subsidy scheme focusing on logistics and heavy road transport and (ii) Renewable Energy transition+ (Hernieuwbare Energietransitie (HER+)), for purposes of certain innovation projects for renewables, including hydrogen.

In addition, funds are being made available for selected Important Projects of Common European Interest (IPCEI). Through the European IPCEI state aid framework, projects can be subsidised to boost the development of European hydrogen chains. The Netherlands takes part in all 4 waves within IPCEI Hydrogen announced so far with a total budget of over EUR 1.6 billion. The 4 waves are: (I) Hy2Tech (i.e., technological development with a total budget of EUR 35 million), (II) Hy2Use (i.e., large scale hydrogen production by electrolysis with a total budget of EUR 783.5 million), (III) Hy2Infra (i.e., infrastructure and storage with a total budget of EUR 600 million) and (IV) Hy2Move (i.e., mobility and transport with a total budget of EUR 199 million).

Over the summer of 2022 the Hy2Tech wave of projects was approved by the European authorities. One Dutch project, Nedstack received a subsidy which will contribute to the realisation of a semi-automated production system for fuel cell stacks with an annual name plate production capacity of one GW of stack power. Under the Hy2Use wave, concerning large electrolysis projects, seven (7) projects developed by inter alia Ørsted, Shell, ENGIE, Air Liquide and HyCC received subsidies for approximately EUR 800 million. Once realised, such projects will add up to a nominal installed capacity of 1,150 MW of electrolysis projects to produce (renewable) hydrogen. The process of awarding subsidies for Hy2Infra (3^rd wave) and Hy2Move (4^th wave) is ongoing. For both waves, 3 (three) Dutch projects have been notified to the European Commission for pre-notification. Final outcomes are foreseen in after the summer of 2024.

On the basis of the Climate Fund (Klimaatfonds) an aggregate amount of EUR 15 billion is allocated to upscaling renewable hydrogen (carriers)). The new Dutch government will keep the Climate Fund intact but announced budget decreases that could add up to EUR 1.5 billion.

The Dutch government is developing a subsidy scheme to convert large-scale gas power plants to hydrogen, aiming for a climate neutral electricity sector by 2035. The subsidy scheme will initially be available for large-scale gas-fired power plants with a production capacity of more than 100 MW. EUR 1 billion has been set aside in the Climate Fund for this subsidy scheme.

Moreover, to stimulate hydrogen demand, the Dutch government is considering an obligation for industrial parties to use renewable hydrogen (on the basis of binding RFNBO off-take targets set by Europe) as from 1 January 2026 which binding target will gradually increase towards 2030 and demand subsidies (vraagsubsidiëring) by means of either SDE++, contracts for difference or one- or double-sided tenders. The preferred mechanics will be further explored. Obviously, details will depend on the outcome of the discussions taking place in Europe on the amendments to RED II.

The EU Innovation Fund supports projects that contribute to the goals set out in the European Green Deal. Four Dutch hydrogen focused projects will receive grants from the Innovation Fund.

Hydrogen transport network

The Dutch government envisages re-using the existing gas infrastructure for its hydrogen transport network. The rollout plan for the hydrogen transport network will include details where (and where not) hydrogen transport infrastructure will be developed. The rollout of the hydrogen transport network will taken place by means of a flexible, adaptive and phased approach. Given the current uncertainties on the development of a hydrogen market as well as the interdependency of production, demand and infrastructure of hydrogen such a phased approach for the development of the hydrogen transport network is considered necessary.

The hydrogen market will be regulated as of 2033 following the regulations established in the EU Hydrogen and Decarbonised Gas Markets Package. In due course, HNS will become the designated regulated hydrogen network operator for onshore transport. Until that time, HNS must develop the hydrogen transport network at the right place and at the right time. For now, HNS will take the lead in the development and management of the Netherlands’ hydrogen transport network. Therefore, HNS will develop the hydrogen network as a provider of a general service of economic interest (Dienst van Algemeen Economisch Belang). Consequently, it must ensure reasonable tariffs, non-discriminatory access and a reduction in the maturity risk (vollooprisico) for any governmental investments.

HNS is working on standard hydrogen connection and transportation agreements, and it has received indications from the market on the expected use of the transport network. A first contract set ‘the General Conditions of Transmission and Connections version 1.0’ (Algemene voorwaarden transport en aansluitingen versie 1.0) was published in February 2024. This contract set sets forth the rights and obligations for both the operator and the users of the hydrogen network. Pricing provisions and hydrogen quality have not been included whilst the Ministry of Economic Affairs and Climate deals with these subject matters and it was not involved (yet) in the discussions on this first draft of the contract set.

Secondly, other than the demand and supply side, there are other system elements that will impact the development of a hydrogen transport network. In this context, a hydrogen transport network is a prerequisite for transporting hydrogen (produced at and/or near the sea) to inland customers and (underground) storage locations. Both system elements are subject to ongoing further studies on behalf of the Dutch government. Finally, the Netherlands intends to function as a pivot in the developing hydrogen chain. The latter requires close collaboration and co-ordination with Belgium and Germany.

The construction of the hydrogen transport network qualifies as a project of national importance under the project procedure for national energy projects. This will enable a more time efficient and centrally co-ordinated spatial permitting process. Between 2025 and 2030 the Minister for Climate and Energy and the Dutch Authority for Consumers and Market (Autoriteit Consument & Markt) will work towards a system of regulated third party access with regard to the hydrogen transport network.

On 21 May 2024, the Council of the EU adopted the Hydrogen and Decarbonized Gas Market Package. This legislation envisages the decarbonization of the gas market by fostering the ramp-up and network integration of renewable and low-carbon gas, such as hydrogen. Renewable and low-carbon gas are set to replace conventional, fossil-based natural gas as the backbone of the gas system. The Hydrogen and Decarbonized Gas Market Package is harmonized with the requirements laid out in the Renewable Energy Directive II/III-legislation of the EU (RED II/III) and supplements it. Noteworthy is that it provides a definition of low-carbon hydrogen. In this context, a delegated act (DA) with more details on when renewable fuels of non-biological origin (RFNBOs), which include hydrogen and its derivates, can be considered “green” under RED II has been adopted. The Dutch government supports the newly introduced binding national minimum targets for the industry of 42% in 2030 and 60% in 2035 for green hydrogen and RFNBOs proposed in RED III. The Netherlands is closely monitoring these EU developments regarding RED II/III and any hydrogen associated delegated acts.

Read more: EU: Commission publishes delegated act on green hydrogen, Ruth Losch (linklaters.com)

The overall investment costs of a hydrogen transport network are currently estimated at EUR 1.5 billion. The Dutch government intends to employ a subsidy of EUR 750 million to deal with low transport volumes and not being able to fully compensate market costs during the rollout phase. The Netherlands foresees phased rollout of the hydrogen transport network consisting of three (3) parts:

• First, large industrial clusters near the Dutch coast (including Belgium and Germany) and connections with storage locations in the northern part of the Netherlands (Groningen and Drenthe) will be established (2025-2026). An alternative route could be necessary whilst an important gas pipe is not expected to be ready for re-use by 2026. Gasunie currently explores alternative routes through Noord-Brabant and the Betuwe.

• Secondly, further expansion of the hydrogen network (primarily north-south connections) (2027/2028).
• Thirdly, the final rollout of the hydrogen network, in particular connecting the province of Zeeland with the Chemelot chemical cluster in Limburg will be realised (by 2030). Following the summer of 2023, the first construction works for the hydrogen transport network will commence. A 30km pipeline will be built between the Tweede Maasvlakte and Pernis, near Rotterdam.

Specialists have advised the Dutch government to apply a minimum quality of hydrogen equal to 98 mol%. This minimum quality requirement will be evaluated three years following the commercial operations date of the hydrogen network.

Production of renewable hydrogen by means of offshore electrolysis

With regard to the production of renewable hydrogen by means of offshore electrolysis, which is expected to kick off after 2030, the Dutch government has tagged two (2) demonstration projects. In a letter sent to Dutch parliament on 28 June 2023, the Dutch Minister of Climate and Energy announced wind farm zones Hollandse Kust and Ten Noorden van de Waddeneilanden as being preferable locations for two demonstration projects for offshore electrolysis. The first demonstration project involves an electrolysis plant at one of the existing offshore wind farms in the Hollandse Kust region. The second demonstration concerns the offshore wind location Ten Noorden van de Waddeneilanden which will be tendered with associated electrolysis capacity. The latter is expected to be realised around 2033.

The Minister of Economic Affairs and Climate prefers that Gasunie will - in due course - be appointed as the offshore hydrogen network operator. Also, Energie Beheer Nederland will be involved in the development of the hydrogen transport infrastructure offshore as it currently participates in all (offshore) gas infrastructure in the Netherlands. Its expertise could play an important role in re-designing and re-using existing gas infrastructure assets for renewable hydrogen transport.

Hydrogen storage and import

Next to production and transport, storage of hydrogen will become an important part of the Dutch hydrogen infrastructure. In this respect, a hydrogen transport network road map Energy Storage (routekaart Energieopslag) was published in June 2023. This road map will also discuss the role of hydrogen storage. Hydrogen storage can take place by way of (i) short-cyclical storage to deal with temporary surpluses in supply and demand, (ii) seasonal storage to take into account seasonal fluctuations in supply and demand and (iii) long-cyclical storage to guarantee sufficient supply in case of calamities. The general hydrogen road map, published in November 2022, states that three to four salt caverns with a total storage capacity of 750 to 1000 GWh will be required by 2030. According to the current plans, EUR 125 million has already been reserved to cover the financial risks of large-scale hydrogen storage, which amount can be doubled for additional caverns, if needed.

The Dutch government will create viable conditions for the import of hydrogen. On this basis market participants can work on business plans to develop (vertical) hydrogen supply chains. Further research is being undertaken regarding the expected import volumes for hydrogen and LOHC products. The sustainability criteria for renewable hydrogen will take the lead with regard to importing hydrogen.

Currently, the Netherlands has (various forms of) co-operation agreements with Portugal, Chile, Uruguay, Namibia, Canada, Spain and the United Arab Emirates on the import and export of (renewable) hydrogen. Noteworthy in this respect is that the Minister for Climate and Energy confirmed to the Dutch parliament that it will perform a corporate social responsibility risk analysis (Maatschappelijk Verantwoord Ondernemen risico-analyse) regarding hydrogen imports.

Current expectations are that ammonia (NH3) will become the dominant carrier for hydrogen, as it is a generally accepted carrier in practice. Ammonia is a globally traded commodity with known properties and a logistics infrastructure that is in place. In light thereof, there are various plans in the Netherlands to expand existing ammonia import facilities and introduce new ammonia import terminals.

Businesses will have a broader scope to enter into agreements, particularly to achieve climate objectives such as a reduction in carbon emissions.

The Netherlands is considering the introduction of a legal framework for social enterprises (besloten vennootschap met maatschappelijk doel (BVm)). Social enterprises will have a specific social purpose as set out in their articles of association (statuten). The managing directors of such enterprises will need to consider and act in accordance with such social purpose. A social purpose is likely to include one or more ESG elements. Social enterprises must report their social purpose in their management reports. Being transparent and disclosing the impact of business activities on people, the environment and society are key to a sustainable future. A legislative proposal for social enterprises is being worked on. Certain parts of this legislative proposal, such as provisions on profits and capital regarding social enterprises require further discussions with experts prior to the legislative proposal being published.

Currently, no national or international framework on sustainable standards exists. The Dutch government supports a global harmonisation of sustainability standards. That said, a number of initiatives were rolled out over the past years. The EU progresses on its Taxonomy rules. On 21 November 2023, delegated acts on the technical screening criteria for the remaining four environmental objectives (circular economy, water and marine resources, pollution prevention and control, and biodiversity and ecosystems) were published together with amendments to the climate technical screening criteria.

Read more: European Commission publishes Taxonomy Delegated Acts with criteria for remaining four environmental objectives and additional criteria for climate, Sara Feijao (linklaters.com)

Read more: EU Taxomomy Delegated Acts with TSC for remaining four environmental objectives and amending climate TSC published in Official Journal, Sara Feijao (linklaters)

In November 2021 the International Financial Reporting Standards (IFRS) Foundation announced the formation of a new International Sustainability Standards Board (“ISSB”), which will develop international sustainability disclosure standards. The ISSB received feedback on its two proposed sustainability-related disclosure standards. This comprises IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. The ISSB published the final version of the first two standards on 26 June 2023. Importantly, the European Union pledged to incorporate ISSB Standards in its Corporate Sustainability Reporting Directive to the greatest extent possible. Early May 2024 the IFRS Foundation and EFRAG have published guidance material to illustrate the high level of alignment achieved between ISSB's IFRS Sustainability Disclosure Standards and the European Sustainability Reporting Standards (ESRS) and how a company can apply both sets of standards. The ISSB confirmed in a press release on 28 May 2024 that more than twenty (20) jurisdictions representing more than half of the global economy representing nearly 55% of global GDP, more than 40% of global market capitalisation, and over half of global greenhouse gas emissions, have announced steps to use or align with the ISSB disclosure standards.

Read more: ISSB sustainability disclosure standards: latest developments, Sara Feijao, Julia Voskoboinikova, Gilly Hutchinson (linklaters.com)

Read more: IFRS and EFRAG publish Interoperability Guidance on ISSB Standards and ESRS, Julia Voskoboinikova, Iyes Igiehon (linklaters.com)

Read more: More than 20 jurisdictions in the process of adopting ISSB standards, Sara Feijao (linklaters.com)

Reporting on sustainability matters requires a major overhaul of the current reporting processes of companies affected pursuant to the EU Corporate Sustainability Reporting Directive (“CSRD”). The CSRD entered into force on 5 January 2023 (i.e., 20 days following its publication in the Official Journal of the European Union (OJEU) on 16 December 2022). EU Member States now have 18 months to implement the new rules into national law. The CSRD will become effective in four stages. Large public interest entities already subject to the EU Non-Financial Reporting Directive shall apply the CSRD with effect from 1 January 2024 (i.e., include in their reporting published in 2025). Finally, on 1 January 2028 certain non-EU companies must report in accordance with the CSRD standards.

The CSRD will completely replace and significantly expand the scope of the current EU Non-Financial Reporting Directive. Large companies and all companies listed on EU regulated markets, including certain non-European entities, must include information on environment, workforce, social matters, human rights and governance in their annual reports. A less rigid regime will apply to small- and medium-sized enterprises. Upon its implementation, the CSRD will not only extend the number of companies which will need to report on ESG matters but it will also significantly widen the scope of the reporting obligation itself.

The CSRD requires companies within its scope to report in compliance with the European Sustainability Reporting Standards (“ESRS”) which are adopted by the European Commission as delegated acts. The first set of draft ESRS developed by the European Financial Reporting Advisory Group (“EFRAG”), the technical advisor to the European Commission, were released to on 23 November 2022. On 31 July 2023, the European Commission published the final versions of the ESRS. Published documents include a Delegated Act (DA), Annex 1 which contains 12 sector-agnostic reporting standards, Annex 2 which contains acronyms and a glossary of terms used in the ESRS, and a Q&A. The ESRS sets out the sustainability transparency rules in-scope companies must adhere to. These rules relate to general requirements for disclosure in sustainability reporting, as well as more specific topics relating to environment (including climate change, pollution and biodiversity), social (including companies’ own workforces) and governance (business conduct). The European Commission adopted f the final standards as delegated acts on 31 July 2023.These reporting requirements will be phased in over time for different companies.

On 29 April 2024, the Council of the EU adopted legislation to delay the adoption of both (i) sector-specific ESRS, which will set out the information specific to the sectors in which a company operates and (ii) ESRS to be used by certain non-EU companies with business in the EU meeting certain thresholds, by two years, i.e., to 30 June 2026. This delay is explained as allowing companies to focus on the implementation of the first set of (sector agnostic) ESRS, as well as allow more resources to be dedicated to the development of effective and proportionate sector-specific ESRS and limit the reporting requirements to the minimum necessary.

Read more: EU CSRD: Commission given power to delay sector-specific ESRS and ESRS for non-EU companies by two years until 2026, Sara Feijao (linklaters.com)

Read more: EU CSRD: EFRAG publishes new set of explanations of the ESRS, Julia Voskoboinikova (linklaters.com)

Read more: CSRD: First set of ESRS published in the Official Journal of the EU, Julia Voskoboinikova (linklaters.com)

Read more: EU: CSRD published in the Official Journal, Sara Feijao (linklaters.com)

ACM and sustainable economy

The Netherlands Authority for Consumers and Markets (“ACM”) wants to increase the opportunities for competing businesses to collaborate in the pursuit of sustainability objectives. Following the adoption of the EC Horizontal Guidelines, the ACM replaced its draft Guidelines on Sustainability Agreements with the policy rule “ACM’s oversight of sustainability agreements - Competition and sustainability”. On the basis of these guidelines, the ACM provides insight into the application of competition rules on sustainability agreements. In practice, the ACM for example has allowed Shell and TotalEnergies, being competitors, to co-operate on CO2 storage given its importance from a sustainability point of view and to serve the energy transition.

Read more: Policy rule ACM’s oversight on sustainability agreements | ACM.nl

The ‘sustainable economy’ and in particular (i) educating consumers and businesses on sustainability claims, (ii) taking action against companies using misleading sustainability claims and (iii) investigating companies that abuse their economic dominance or collude and thereby impede sustainability, are important spearheads for the ACM in 2024. In the past years we have seen investigations been conducted into the practices of several companies in the clothing, energy and dairy sectors. As from 2024, the ACM has been actively pursuing and requiring businesses to remove and/or take offline misleading sustainability claims (including Plus supermarket chain, online shop Zalando, Booking.com, Albert Heijn supermarket chain and Eneco).

The ACM has also published guidelines on making reliable sustainability claims. These guidelines assist companies in phrasing their sustainability claims. Also, from a European perspective enforcement of misleading sustainability claims has been taken to a further level as part of the ‘European Green Deal’. The EU Directive on Empowering Consumers for the Green Transition includes processes on encountering misleading information on products, the business activities of companies and sustainability labels. Furthermore, the Directive on the Substantiation and Communication of Environmental Claims, commonly known as the Green Claims Directive, complements the directive mentioned above. This directive aims to combat greenwashing by establishing minimum criteria that companies must meet when making claims to EU consumers about the environmental benefits and performance of their products or services.

Read more: Guidelines regarding Sustainability claims | ACM.nl The new EU Directive on Empowering Consumers for the Green Transition | Linklaters

Read more: EU Parliament adopts first reading position on the Green Claims Directive, Iyes Igiehon, Kerry Liebenberg, Julia Voskoboinikova (linklaters.com)

Read more: EU: Council adopts negotiating position on the Green Claims Directive, Kathrin Bauwens, Mirjam Erb, Iyes Igiehon, Alexia Kaztaridou (linklaters.com)

Listed companies must include in their annual reports information on environment, workforce, social matters, human rights and anti-corruption and bribery policies.

In the Netherlands a debate is ongoing on the introduction in Dutch law of a duty of care on management board members and supervisory board members to participate responsibly in social and economic life. This would involve, among other matters, climate change, tax ethics, pay ratios within the business and diversity. Alternatively, scholars have proposed an explicit elaboration of the corporate purpose in the articles of association of Dutch companies. The Dutch government will further analyse how these proposals could be enshrined in Dutch law.

In addition, certain Dutch members of parliament submitted an updated version of a proposal for the Act for Responsible and Sustainable International Business Conduct (Wet verantwoord en duurzaam internationaal ondernemen) to the House of Representatives in November 2022. The Netherlands have signalled an intention to enact a national law on human rights and environmental due diligence, regardless of the Corporate Sustainability Due Diligence Directive (“CSDDD” or “CSD3”). In September 2023 certain revisions have been proposed regarding the Act for Responsible and Sustainable International Business Conduct.

If the Act for Responsible and Sustainable International Business Conduct is adopted, a general duty of care on all undertakings and due diligence obligations on large undertakings in respect of responsible and sustainable international business conduct becomes effective. Effectively, undertakings in the European Union and foreign undertakings (to the extent they engage in activities in the Netherlands which know or should reasonably suspect that their activities may have a negative impact on human rights, labour rights or the environment in countries outside the Netherlands, must take all reasonable measures to prevent, mitigate or reverse such impacts and, where necessary, enable remediation thereof. Also, such undertakings must exercise due diligence in their value chains.

The ACM is envisaged to be entrusted with enforcing compliance with the proposed regulation. Administrative fines could equal 10% of the net turnover of the undertaking concerned and criminal sanctions may be imposed as well.

The Act for Responsible and Sustainable International Business Conduct has been the subject of much criticism. Members of the House of Representatives feared that this act would be too strict in comparison with the national laws of surrounding countries. The Council for the Judiciary was also not in favour of certain vague wording.

The main consensus within the legal community and we expect that Dutch Parliament will consider the same, is that a standalone Dutch Act for Responsible and Sustainable International Business Conduct besides the CSDDD or CSD3 is not necessary. Under the CSDDD, certain (large) companies are required to identify and address the negative impacts on the environment and human rights in their value chains. These companies must, among other things, formulate a due diligence policy and monitor the effectiveness of such policy. Finally, the CSDDD or CSD3 introduces an obligation for in-scope companies to adopt and implement climate transition plans.

Read more:EU: The Council formally adopts the CSDDD, Julia Voskoboinikova (linklaters.com)

Read more: EU: Parliament gives final approval for CSDDD, Sara Feijao (linklaters.com)

Read more: EU: New CSDDD compromise finally accepted by Member States, Julia Grothaus, Mirjam Erb (linklaters.com)

With regard to board diversity, since 1 January 2022, Dutch-listed companies have been required to meet a quota of at least one-third women and one-third men on their supervisory board or one-tier board. Appointments that are not in accordance with this quota are null and void (nietig), without affecting the validity of passed (supervisory) board resolutions. In addition, all “large” public and limited liability companies must formulate a plan including appropriate and ambitious diversity target figures for their supervisory boards, management boards and their junior management. This plan must be reported to the Social and Economic Council (Sociaal Economische Raad) (“SER”) and the management report (bestuursverslag) shall include a description thereof. The SER will publish reports on the progress of these companies’ achievements of the targets set. These obligations are envisaged to apply for a period of eight years and will be evaluated after a period of five years.

Read more: Legislation on male-female ratio on boards and in management of Dutch companies, Gijs Smit, Jill Reijnen Husagic (linklaters.com)

The updated Dutch Corporate Governance Code was published on 22 December 2022 (the “GC Code”). The GC Code will replace the corporate governance code published in 2016 and relevant companies must adhere to its principles and best practices as from the financial year commencing on or after 1 January 2023 (i.e., compliance with the revised code must be accounted for in 2024 over the financial year 2023). The GC Code puts a focus on three principal themes: (i) sustainable long-term value creation, (ii) the role of shareholders and (iii) diversity and inclusion. As such, the GC Code sharpens the focus on sustainability aspects of companies. The GC Code does not include a specific definition on sustainable long-term value creation, but it does specify that the companies’ management shall take account of the balance between social, environmental and economic aspects of a company’s business. Initial commentary reflects that the updated version could have been more ambitious regarding ESG, especially in light of the increased importance of ESG for various stakeholders in the Netherlands, which stakeholders include groups and/or individuals who are (in)directly influenced by realising the company’s objectives.

A significant shift has also been taking place in the stance of investors, trade unions and other stakeholders in the Netherlands on companies’ responsibilities in relation to ESG. One of those stakeholders, the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten) (“AFM”) It conducted studies on the current reporting by listed companies on ESG matters in order to anticipate on CSRD reporting as from the financial year 2024. The results urged the AFM to stress towards companies to invest in sufficient expertise and capacity in sustainability reporting and assurance and to start collecting available and reliable sustainability information on time. In addition, companies are substantiating their net-zero targets up to 2030 in an orderly manner, however, the road towards net zero in 2050 and how to get there is still vague. During 2024, the AFM will further investigate how companies include double materiality in their reporting.

In addition, Eumedion, a representative body of institutional investors in Dutch-listed companies, issues its focus pointseach year in light of the upcoming season of annual general meetings of listed companies. Not surprisingly, it is well aware that listed companies require devoting substantial time in 2024 to sustainability reporting under the CSRD. In the past, it has focussed on companies’ plans to accomplish the net zero transition, diversity and inclusion and human rights due diligence as well as biodiversity. This is seen by Eumedion as complementary to the climate policy plans that are being adopted by listed companies and their wider net zero plans. Overall, it deems that further work and efforts must be undertaken regarding climate related disclosures and the establishment of net zero plans to meet the targets set by the Paris Agreement. For 2024, it will examine the extent to which companies follow its recommendation that a substantial portion of the variable remuneration elements shall be based on stretching environmental, social and/or governance goals that are material to the company. These goals should be sufficiently challenging, measurable and auditable. The rationale of this particular item is that it expects that remuneration policy for the executive and supervisory directors needs to be renewed in 2024 (as part of the four (4) year cycle to put remuneration policy to a binding vote by the general meeting in accordance with the revised EU Shareholder Rights Directive.

Other large institutional investors are not only seeking dialogue with listed companies on ESG matters but are even divesting certain investments that they deem contrary to their ESG policies and/or commitments. Among others, ABP, PFZW and PME, which are part of the five (5) largest pension funds in the Netherlands, have announced that they will stop investing in certain producers of fossil fuels. By the end of 2022 ABP publicly announced to overthrow its current investment strategy and, by means of contributing to a more sustainable world, could be existing of sustainable investments for more from than 50% of its current investments. It also expressed to invest over EUR 30 billion in the energy transition by 2030, including significant investments in offshore wind and other renewables. Also, certain Dutch pension funds have sold their investments in (Brazilian) meat companies as well.