Past Time for Action: Subsidies and Public Finance for Fossil Fuels in the Netherlands
Amidst a climate crisis and global pandemic, it’s essential that countries develop public finance packages that phase out fossil fuel production and invest in a just, green transition toward renewable energy that benefits communities and industry workers. While the Netherlands has committed to redirect financial flows from fossil fuels to climate action, this report reveals that the Dutch Government continues to provide billions — at least €8.3 billion per year — in taxpayer backed support for the production and use of fossil fuels.
Oil Change International & Friends of the Earth Netherlands.
July 2020
Amidst a climate crisis and global pandemic, it’s essential that countries develop public finance packages that phase out fossil fuel production and invest in a just, green transition toward renewable energy that benefits communities and industry workers. While the Netherlands has committed to redirect financial flows from fossil fuels to climate action, this report reveals that the Dutch Government continues to provide billions — at least €8.3 billion per year — in taxpayer backed support for the production and use of fossil fuels.
Until recently, the Dutch government claimed that no fossil fuel subsidies exist in the Netherlands. We reveal that based on internationally agreed subsidy definitions, the Dutch government provides fossil fuel subsidies worth at least €4.9 billion per year, with the largest single subsidy being energy tax exemptions for fuels used in aviation and shipping. Additionally, the Dutch government provides €2.9 billion per year in public finance for infrastructure supporting the production and use of fossil fuels abroad, and its state-owned enterprises invest €513 million per year in fossil fuel production. We show that by ending fossil fuel subsidies, the Netherlands could reduce greenhouse gas emissions by 7.7% by 2025, whilst freeing up additional resources to invest in a just COVID-19 recovery plan.
Now, for the first time, the Dutch Government has embarked on an effort to map the countries’ fossil fuel subsidies. This presents an important opportunity to turn longstanding commitments to end public support to fossil fuels into concrete action. We argue that the whole range of fossil fuels-supporting instruments should be included in the government’s efforts to align financial flows with climate goals, and we recommend the government to, at the national level:
Build on and expand the overview of fossil fuel subsidies presented in this study (that builds on the internationally agreed UNEP methodology for mapping fossil fuel subsidies) in planning to end subsidies and public finance and investments in fossil fuels;
End all public financial support for fossil fuels. The Netherlands is failing to keep its European commitment made in 2013 to end all environmentally harmful subsidies by 2020. The Dutch government should therefore immediately start taking the actions needed to ensure a rapid phase out of all public financial support for fossil fuels;
Broaden the decision to make Dutch international funding mechanisms fossil free to encompass all fossil fuel activities and infrastructure and all types of financial support, including export credit support, instead of limiting it to fossil fuel exploration and extraction alone;
Ensure that stimulus packages and other support measures introduced in response to the COVID-19 crisis do not lead to an increase in support for fossil fuels or industries that are large users of fossil fuels, including aviation. If support is provided to the fossil fuel sector, it must go to workers rather than corporate executives and shareholders and should be made conditional on plans for a managed decline of fossil fuel production and use in line with climate goals and appropriate taxation of the industry.
At the international level, the Netherlands should:
Take leadership in fossil fuel subsidy phase-out processes, including, at the EU level, through the National Energy and Climate Plans, the 2021 revision of the EU Energy Taxation Directive, the review of EU financial instruments and ensuring that a commitment to end public financial support for fossil fuels is included in the EU’s reviewed Nationally Determined Contribution;
Take leadership in ensuring that ending public support for fossil fuels is part of the implementation of Article 2.1.c. of the Paris Agreement and the SDGs, and that Multilateral Development Banks (MDBs) and Export Credit Agencies (ECAs) exclude fossil fuels from their financing and export credit support.