Greenhouse gas emission reduction targets were first set in the National Climate Agreement (Klimaatakkoord), and ultimately implemented in the Dutch Climate Plan 2021 – 2030 as a reduction by 55% in 2030 compared to 1990 levels.
At present, more ambitious goals are in place, aimed at achieving full climate neutrality by 2050 and a complete overhaul of the Dutch energy system (energiesysteem) which contributes to limiting the effects of climate change caused by greenhouse gas emissions.
In 2024 the Dutch government will publish an updated and final Dutch Climate Plan 2025 - 2035. It will describe the Netherlands’ climate policy for the next 10 years. Topics include CO2 emission reduction, renewable energy, energy conservation, scientific insights, technological developments, global developments and the social and economic impact of climate policy.
Europe
In recent years the European Union (“EU”) has been sharply focused on (i) increasing electricity generated by renewable energy sources, (ii) a further reduction of greenhouse gas emissions and (iii) climate policy for a greener future in general. The European Green Deal is the EU's long-term growth plan to make Europe climate neutral by 2050. The EU Climate Law enshrines the EU’s new climate targets:
- carbon neutrality (i.e., net zero) by 2050 with the aim of achieving “negative emissions” thereafter; and
- a reduction in greenhouse gas emissions of at least 55% by 2030 compared to 1990 levels.
The 2040 climate target is the EU’s next intermediate step on the path to climate neutrality in 2050. In February 2024, the European Commission (“EC”) recommended reducing the EU’s net greenhouse gas emissions by 90% by 2040 relative to 1990. Following the elections for a new European parliament in June 2024, the new European Commission will draw up the legislative proposal to include the 2040 target in the EU Climate Law.
The ‘Fit for 55’ legislative package demonstrates the clear ambitions from an EU perspective to become a green and sustainable continent in the coming decades and to fully embrace the energy transition currently taking place. The 'Fit for 55' package was tabled in July 2021 to respond to the requirements in the EU Climate Law to reduce Europe's net greenhouse gas emissions by at least 55% by 2030. In a response to Russia's invasion of Ukraine and to boost Europe's energy security, it was updated to reflect the EU’s increased ambitions in the field of renewable energy and energy efficiency as set forth in the REPowerEU plan (May 2022). The adoption of the two (2) final pillars of its ‘Fit for 55' legislative package took place at the end of 2023. Currently, the new legislation includes:
(i) revisions to the EU emissions trading system;
(ii) a new carbon border adjustment mechanism (CBAM);
(iii) revised Renewable Energy Directive;
(iv) revised Energy Efficiency Directive;
(v) a revised CO2 standards regulation which ensures that all new cars and vans registered in Europe will be zero-emission by 2035;
(vi) a new Regulation for the deployment of alternative fuels infrastructure (AFIR);
(vii) ReFuelEU Aviation plan; and
(viii) the FuelEU Maritime Regulation.
Implementation of the 'Fit for 55' package by the EU Member States will take the form of legislation but also as part of the National Energy and Climate Plans (NECPs). Those plans are currently being finalised by the EU Member States and have been submitted to the EC by 30 June 2024. The NECPs purport to demonstrate how the 2030 climate and energy targets will be met at national level. The NECP for the Netherlands (i.e., the Integral National Energy and Climate Plan (Integraal Nationaal Energie- en Klimaatplan) (INEK)) has been finalised on 21 June 2024.
The INEK comprises the NECP for the Netherlands and must be submitted to the European Commission on an annual basis pursuant to the EU Climate Law. The INEK ambitions are structured around five (5) key dimensions that the EU has prioritised for its Member States: decarbonisation (emission reduction and renewable energy), energy efficiency, energy security, internal energy market, and research, innovation, and competitiveness.
In the past years the Netherlands climate policy has been further finetuned as a result of the publication of the Policy Programme Climate (Beleidsprogramma Klimaat) in July 2023 and the additional climate package (i.e., Spring package (Voorjaarsbesluitvorming 2023)) with measures that contribute to achieve a 60% CO2 emission reduction by 2030. The additional climate package aims to close the remaining emission reduction gap. It consists, among others of potential measures to achieve (i) a CO2 neutral electricity sector by 2035, (ii) a climate neutral energy-intensive industry by 2040, (iii) emission- and gas-neutral offices and buildings by 2050, (iv) clean driving without emitting harmful exhaust gases by 2050, (v) sustainable agriculture and land use by 2050 and (vi) adjusting the energy tax so that sustainability pays off and polluters pay more. This will form part of the updated INEK, covering the period 2021 to 2030.
Netherlands
In the National Climate Agreement (Klimaatakkoord), the central theme was to reduce greenhouse gas emissions in the Netherlands by 49% in 2030 compared to 1990 levels. This reduction target is laid down in the Dutch Climate Act (Klimaatwet) along with the goal of arriving at climate neutrality by 2050. In its coalition agreement “Looking out for each other, look ahead to the future” (Omzien naar elkaar, vooruitkijken naar de toekomst), published on 15 December 2021, the Dutch government has set more ambitious targets.
Read more: Dutch coalition agreement - A greener future, Gijs Smith (linklaters.com)
The CO2 emission reduction target in the Dutch Climate Act targets a reduction of at least 55% by 2030. The Netherlands intends to be more ambitious and focuses its climate policy on a 60% CO2 emission reduction by 2030. Simultaneously, in the longer run, reductions of 70% by 2035 and 80% by 2040 are being targeted. The big hairy audacious goal is full climate neutrality by 2050. On 10 July 2023, the Dutch Climate Act was amended reflecting the legally binding obligations of the EU Climate Law, an explicit target of at least 55% reduction (including land use) by 2030 and climate neutrality by 2050.
The Dutch caretaker government currently led by prime minister Rutte will continue and implement current climate and energy policy. Early July 2024 a new Dutch cabinet is installed led by Prime Minister (minister-president) Dick Schoof. In May 2023, the four coalition parties forming such a new cabinet published the headlines of their coalition agreement “Hoop, Lef en Trots”. In this context, the new cabinet will adhere existing agreements and continue most of the climate policy adopted by its predecessor(s). Only if climate targets are not met, alternative policies will be made. However, the ambition is that climate policy must be sustainable, feasible and practical. In the cabinet led by Dick Schoof, Mrs. Sophie Hermans will be responsible for energy and climate policy from July 2024 onwards in her capacity as Minister of Climate and Green Growth (Minister van Klimaat en Groene Groei).
Pursuant to the Dutch Climate Act the following mechanisms apply:
- a climate plan which contains the key points of the government policy to be implemented in the next 10 years . The Minister of Economic Affairs and Climate (Minister van Economische Zaken en Klimaat) is primarily responsible for the implementation of the key elements of the climate plan;
- an annual climate and energy report (Klimaat- en Energieverkenning) (“KEV”) which provides a report of actual and forecasted CO2 emissions in the Netherlands; and
- a climate memorandum which contains an appraisal by the Dutch government regarding the climate related targets, accompanied by any additional policy intentions to achieve those targets.
The KEV is the foremost accountability instrument for Dutch climate and energy policy. It provides an annual insight into the achievements by the Dutch government of the 2030 climate target and developments in renewable energy and energy savings.
The KEV 2023 published by the Netherlands Environmental Assessment Agency (Planbureau voor de Leefomgeving) (“PBL”) demonstrates that the Netherlands is on track with its renewable energy targets and the targeted greenhouse gas emissions by 2030 but falling short on the energy saving targets for 2030. The Climate Council (Wetenschappelijke Klimaatraad) has been appointed on 29 October 2022 by means of the Installation Decree Climate Council (Instellingsbesluit Wetenschappelijke Klimaatraad). This Climate Council is tasked with advising on the “Climate Plan 2024”. The Dutch government intends to give such Climate Council a more permanent task in advising on climate matters in the Climate Act. A legislative proposal on this is pending in Dutch Parliament.
A new “Climate Plan 2024” is in progress containing the headlines of the climate policy in the Netherlands for the next 10 (ten) years (i.e., 2025 – 2035). This “Climate Plan 2024” will be published in the summer of 2024 and input has been gathered from a variety of societal stakeholders and a final draft of the “Climate Plan 2024” will be submitted to Dutch Parliament in autumn of 2024.
The “Climate Plan 2024” will not only contain an outline of the climate policy agenda until 2035 but will include the Netherlands’ strategy towards climate neutrality in 2050 as well. Building blocks for the look through towards 2050 will be based on among others the advice on climate neutrality from the Scientific Climate Council (Wetenschappelijke Klimaatraad (WKR)), insights from the National Energy System Plan (Nationaal Plan Energiesysteem) (NPE)), the National Programme on a Sustainable Industry (Nationaal Programma Verduurzaming Industrie (NPVI)) and the National Circular Economy Programme (Nationaal Programma Circulaire Economie (NPCE)).
The Dutch government considers the road towards a climate neutral society being linked to other transitions occurring simultaneously, such as the energy transition, the raw materials transition and the food transition. Moreover, a climate neutral society cannot succeed without taking into account other significant transformative developments of our time being: (i) adapting to climate change, (ii) restoring biodiversity and (iii) digitalisation. Finally, as part of its international climate strategy the Dutch government is committed to substantially reduce its national greenhouse gas emissions footprint. However, the “Climate Plan 2024” should provide further considerations on reducing chain emissions (i.e., indirect emissions or scope 3 emissions) by Dutch companies and other societal stakeholders outside the Netherlands.
The “Climate Plan 2024” shapes the nation’s environmental policy for the coming ten (10) years, ensuring that the Netherlands not only meets but contributes to the collective EU ambition for 2030.
In July 2023, the Dutch government published the draft National Energy System Plan (Nationaal Plan Energiesysteem) expressing the Dutch Government’s vision for the energy system until 2050. This draft National Energy System Plan examines where to build, save, distribute, and accelerate for a sustainable and equitable energy system, now and in the future.
Urgenda court custom-made agreements with large industrial emitters
Obviously, the Dutch government has been working on achieving its ambitions laid down in the National Climate Agreement. That said, in achieving a further reduction of greenhouse gas emissions in the Netherlands, the so called Urgenda court ruling played a significant role. In the Urgenda court ruling the Dutch State was ordered to reduce greenhouse gas emissions by the end of 2020 by at least 25% compared to 1990.
The Urgenda court ruling led to the closing of coal fired power plants, the Coal Phase Out Act (Wet verbod op kolen bij elektriciteitsproductie) which introduces a production cap for coal-fired power plants and the development of CO2 reduction projects in joint consultation with the industrial players (maatwerkafspraken).
The Dutch government was forced to make significant policy shifts regarding coal fired electricity production in response to the energy crisis spurred by the Russian invasion of Ukraine. With effect from 1 January 2022 an 35% average annual production cap on coal-fired power plants was imposed by the Dutch legislator. Effectively, the Dutch government was limiting production of coal fired power plants in the Netherlands. The energy crisis demanded the Dutch government for reasons of security of electricity supply, to lift this production limitation. Operators of the coal fired power plants have claimed damages from the Dutch government as a result of the production limitations imposed on them between 1 January 2022 and 21 June 2022. Consequently, Uniper has been granted EUR 165 million, RWE has been granted EUR 330 million and Onyx is expected to be granted hundreds of millions of EUR as well from the Dutch government to compensate for any damages suffered. The legislation which stipulates the retroactive withdrawal of the 35% production restriction has been approved in Dutch Parliament in March 2024.
CO2 reduction in the industrial sector is intended to be achieved by agreeing custom-made agreements with the twenty (20) largest industrial emitters in the Netherlands. The Minister of Economic Affairs and Climate is currently working on this. These custom-made agreements will make the (heavy) industry more sustainable and will enable a further reduction of CO2 emissions. At the same time, the agreements should buy in industrial emitters to also contribute to a healthy and safe living environment surrounding their industrial plants. As at Q1 2024, the Minister of Economic Affairs and Climate has signed 11 Expressions of Principles (EoPs) (LyondellBasell (LYB), BP Raffinaderij Rotterdam (BP), Air Liquide, AnQore, Shell, Yara Sluiskil, Zeeland Refinery, Tata Steel, Nobian, Dow Benelux and OCI N.V.) and one Joint Letter of Intent (JLoI) (Nobian). At the end of April 2024, the Dutch government made public that it would kick off discussions with Tata Steel to accelerate the CO2 reduction measures and other sustainable solutions for this steel plant. The acceleration will focus on an earlier closure of the Cooking Gas Plant 2 and earlier realisation of canopies on scrap and raw material warehouses in order to curb the effects of raw material blowing and reduce noise pollution.
The customised approach (maatwerkafspraken) could also be of interest to certain companies outside the largest industrial emitters. In this context, the Dutch Minister of Economic Affairs and Climate foresees that discussions will be held with Alco, Frieslandcampina and Cosun to arrive at Expressions of Principles in the course of 2024.
Furthermore, another part of the extensive laws and regulations the industry must comply with regard to its sector is the Approach to Peak Load Emitters in the Industry (Aanpak Piekbelasters Industrie (API)). The API’s aim is to contribute to the Dutch government-wide commitment to reduce nitrogen deposition on sensitive protected nature areas (Natura 2000 areas).
Read more: Climate Litigation: An overview of the Urgenda decision
Read more: See here for an unofficial translation of the Urgenda ruling: Dutch Supreme court | Urgenda v Netherlands
Lastly, two Dutch levies related to CO2 emissions have been introduced into Dutch law. With effect from 1 January 2021, the Dutch government introduced a CO2 levy on emissions from industrial installations pursuant to the Act on a carbon levy for the industrial sector (Wet CO2-heffing industrie). The amount of the CO2 levy per tonne of CO2 depends on the European Emissions Trading Scheme (“EU ETS”) price, as it is calculated as the difference between the rate set out in the Environmental Taxes Act (Wet belastingen op milieugrondslag) and the EU ETS price. This CO2 levy has been updated by the Act on a minimum CO2 price industry (Wet minimum CO2-prijs industrie) which came into effect on 1 January 2023. This Act recalibrates and tightens the CO2 levy by introducing a minimum price over the part of emissions which is exempted by the CO2 levy. To this end, a minimum price will apply to emissions for which a company has dispensation rights for the CO2 levy industry.
In addition, a levy connected to a minimum carbon price to produce electricity came into effect on 5 April 2022 pursuant to the Act on a minimum carbon price for electricity production (Wet minimum CO2-prijs elektriciteitsopwekking). It applies to greenhouse gas emissions caused by companies under the EU ETS, active in the electricity generation business. The minimum carbon price is based on the EU ETS carbon price and a top-up national levy.
Energy savings
The Russian invasion of Ukraine emphasized the importance of reducing our energy consumption. In its REPower EU plan, the European Commission stated that saving energy is the cheapest, safest, and cleanest way to reduce our reliance on fossil fuel imports from Russia. In addition, the EU Council Regulation on Coordinated Demand Reduction Measures for Gas, which entered into force on 9 August 2022, requires EU Member States to use their best efforts to reduce their national gas consumption between 1 August 2022 and 31 March 2023 by at least 15% compared to their average consumption during that period in the last five years. Finally, the Proposal for an emergency intervention to address high energy prices adopted by the Council of the European Union on 6 October 2022 includes an obligation for Member States to reduce (i) electricity consumption by 5% during selected peak hours and (ii) overall electricity demand by 10% until 31 March 2023. It also introduces a cap on market revenues for inframarginal generation of electricity.
Read more: Netherlands: status of implementation of market revenue cap for electricity generators, Gijs Smit, Joris Knoll (linklaters.com)
Read more: REPowerEU: reinventing Europe's energy architecture, Lothar Van Driessche (linklaters.com)
Read more: Regulation on reducing gas demand in the EU by 15% comes into force, Lothar Van Driessche, Julia Voskoboinikova (linklaters.com)
In the Netherlands an energy savings obligation (energiebesparingsplicht) applies to companies and organisations consuming more than 50,000 kWh of electricity or 25,000 m3 of natural gas equivalent. Qualifying companies must implement all possible energy-saving measures with a payback period of five years or less. Since 2023, the energy savings obligation requires large energy users, including companies that participate in the EU ETS, to implement all energy sustainability measures with a payback period of five years or less. Additionally, large energy users must conduct a mandatory four-yearly study on their sustainable energy use. Other technical details are being considered for updating and strengthening the energy saving obligation.
In July 2023, the Council of the EU adopted the Energy Efficiency Directive providing rules to reduce final energy consumption at EU level by 11.7% in 2030. The National Energy Saving Program (Nationaal Programma Energiebesparing) describes the Dutch energy saving targets and measures per sector. The aim of the National Energy Saving Program is to reduce energy consumption and increase energy efficiency in demand sectors.
Read more: EU/Netherlands: measures to reduce energy consumption, Gijs Smit (linklaters.com)