Thursday

29th Feb 2024

Activists push €40bn fossil subsidies into Dutch-election spotlight

  • Climate activists from Extinction Rebellion have declared a permanent blockade of the A12 highway near The Hague (Photo: Roel Wijnants)
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Documents presented by Dutch climate minister Rob Jetten this week revealed that the Netherlands provides significantly more tax incentives to companies engaged in oil, gas, and coal industries than previously believed.

According to the government's assessment, these "fossil subsidies" amount to an annual sum ranging from €39.7bn to €46.4bn — a stark contrast to earlier figures.

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Just two weeks ago, three environmental organisations — Somo, Oil Change International, and Milieudefensie — calculated total subsidies at €37.5bn.

A 2020 evaluation by the previous Dutch administration as a response to an earlier report by Somo had pegged fossil subsidies at a mere €4.5bn, but was widely criticised for its omission of tax benefits.

The report presented this week could signal a newfound commitment by the Dutch government to address the issue of fossil subsidies.

"Fossil subsidies have no place in a clean Netherlands, so they simply must end," Jetten said at a climate demonstration organised by climate group Extinction Rebellion on Saturday.

But he also cautioned that it "cannot happen overnight."

"We need to formulate a clear phased reduction plan in the coming period," he said.

The debate has been going on for years, and the latest revelations have raised significant questions about the government's commitment to reduce fossil-support schemes.

Critics have pointed out that Jetten has reneged on earlier promises to write a phase-out plan.

"It's good that the government is now providing transparency, but I am deeply concerned that there is still no phase-out plan," Boris Schellekens, one of the authors of the Somo report, told Dutch news agency NOS.

"The commitment was made to phase out by 2025, but we are far behind. In 2009, the government already stated that subsidies should be terminated," he said.

Pushback also came from academia, by 300 economists and other university staff who recently signed a letter calling for a rapid end to fossil-fuel subsidies.

Earlier this month, 10,000 members of the general public blockaded the A12 motorway. Climate group Extinction Rebellion, the protest organisers, has pledged to continue the blockade until the government stops subsidising fossil fuels.

Dutch police detained 2,400 activists on the first day. Since then, hundreds more have been arrested, although most were set free soon after.

Jetten, in response, has said that the government has already begun efforts to phase out fossil benefits.

According to the budgetary notes, a total of €6.2bn in reductions has been initiated, including a power reimbursement for energy-intensive industries worth €5bn cancelled at the start of this year.

Fossil subsidies?

The term "fossil subsidies" encompasses a range of financial advantages for corporations, including tax breaks, price support, and direct government investments.

This is consistent with the definition maintained by international organisations, such as the International Monetary Fund and the Organisation for Economic Co-operation and Development.

The government document shows that Dutch tax reductions and exemptions primarily benefit heavy fossil energy users, but not all fiscal advantages can be abolished easily, Jetten has said, as many are enshrined in and protected by international treaties.

Exemptions for kerosene used by airlines (€2.2bn) and similar arrangements for heavy fuels used in maritime shipping (€429m) are based on European tax agreements.

A €14bn subsidy for hydrocarbons such as naphtha, used in the production of plastics, is also subject to EU rules, making it difficult for the Netherlands to unilaterally revoke, as EU tax reforms require unanimous approval from all members.

Further signalling the complexity of the undertaking, Jetten also indicated that an exemption for 'red diesel' used for inland shipping — based on a treaty signed in 1868 — is currently under review for cancellation.

Elections

Jetten has denied that the blockade of the motorway has in any way influenced his commitment to phase out fossil fuels.

But the years of work by Somo and other environmental organisations, along with the recent "marathon blockade" of the motorway, have undeniably thrust fossil fuel subsidies into the centre of the Dutch election campaign, forcing climate sceptics and proponents of more ambitious climate policies to adopt a position.

Pieter Omtzigt, a longtime member of the Dutch centre-right Christian Democratic Appeal (CDA) who has recently created a new party, said that "its useless to remove the subsidies" because companies would simply leave.

Meanwhile, former EU green deal chief Frans Timmermans, deemed a frontrunner for the prime minister's post, has publicly endorsed the campaigners, saying that "European climate policy was only made possible thanks to protesters."

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