Peter-Vincent Schuld

We recently wrote that Belgium is trying to reduce CO2 emissions by private households through fiscal measures by reducing the taxes on electricity and increasing those on gas and heating oil. But the taxation of energy consumption is also a hot topic in the Netherlands.

In 1996, the energy tax was introduced in the Netherlands. The aim of this measure, which was introduced under the purple cabinets led by Wim Kok, was to make the tax system greener. The measure was intended to be and remain budget-neutral. In other words, income tax decreased as energy tax increased. In 2017 and with the upcoming plans of the new cabinet on the horizon, nothing seems to be left of this budget neutrality.

Tenants and homeowners are faced with significant increases in this tax, which is collected by the energy suppliers and in turn paid to the tax authorities. Did you know that today, almost 30% of your energy bill is made up of energy taxes?

The taxes on energy consumption consist of two parts. On the one hand, the Sustainable Energy Storage (ODE), and on the other hand, the energy tax.

It is undeniable that these levies will increase substantially next year and in the years thereafter. The figures published by the Ministry of Finance gave a distorted picture. The estimated figures also included households that already use solar panels and take energy-saving measures themselves, so the communicated figures cause distorted figures. The majority of households do not work their own energy and do not make heavy investments to save energy, so these households will also pay considerably more. In the calculations of the levies, it is assumed that a decrease in energy consumption by consumers is to be expected. Whether this is de facto a hard fact is also doubtful. It seems as if the government is trying to sell the substantial increase in the tax burden on citizens with distorted figures that do not tell the whole story. For an average Dutch household, this is a significant drain on their purchasing power.

It seems utopian to think that consumers will use less energy. We all like to sit comfortably when it’s colder. With the advent of the digital age, we have, on balance, more energy-consuming devices in our homes. At the moment your reporter is writing this piece, his computer, his phone and his shaver are charging and a light is on because your reporter would like to look through some papers while he is preparing the words to be delivered to your eyes.

Agreed, the old incandescent bulbs have been replaced by energy-saving bulbs, newly purchased electrical equipment should in principle be more economical. The old dishwasher has been replaced by a new one, the washing machine the same and the refrigerator also seems to have had its day. So more sparse goods that consume electricity, but the number of appliances that consume electricity we do increase. It seems that, on balance, energy consumption is not decreasing.

If your kid used to sit quietly playing with blocks, nowadays it’s the Nintento or the Ipad and if you have several offspring of a certain age, then I’m willing to bet that they already have a mobile phone or even a smartphone. Even the calculator of the past that worked on solar cells is no longer sufficient today, no we use the multifunctional “phone” for that.

But is everyone able to afford that higher standard of living with linked energy consumption? Will you be able to replace your old refrigerator tomorrow if it breaks down and put a new, more energy-efficient one in its place? That remains to be seen. The trade in older and second-hand white goods is rampant on sales sites such as Marktplaats. For example, we see that recycling does not necessarily have to lead to a more energy-efficient and sustainable household. The lifespan of electronics is also more limited than it was a few decades ago. These are all factors that sometimes cause energy consumption and sustainability to cause some question marks and comments.

Another interesting fact is that the business community has to deal with a degressive energy tax. In other words, a kind of quantity discount on large-scale consumption. A linked reality is that a significant increase in energy taxes for the business community does not improve the business climate in the Netherlands.

It is therefore not possible to say with certainty how much an average Dutch household will spend extra on the increased energy taxes. There are estimates of an average of 70 euros in the coming year and there are calculations that it will be considerably more. What is a fact is that the amount that an average household spent in 2013 was about 450.00 euros and the hard fact is that an average household spent about 640.00 euros in 2018, an increase of no less than 190.00 euros in just 5 years. Another calculation, that of the Homeowners’ Association, estimates the average costs at about 570 euros this year against an expected figure for an average household of about 835 euros per year in 2021.

What is also a hard fact is that the increases that Dutch citizens will have to pay have caused less fuss than, for example, the retirement age or the annual costs for health insurance. This is in fact due to the total lack of transparency with which the measures are being implemented.

Moreover, it is not known whether the government will take more fiscal measures in this government period that has just begun to meet its climate targets. Moreover, it remains to be seen whether fiscal measures are the way to achieve more sustainable energy needs. The contradictory thing about it all is that based on the anticipated decrease in energy consumption, the tax will increase disproportionately on balance. After all, the ODE levy also comes on top of the energy tax based on actual consumption. That amount goes up every year. The energy agreement agreed by the government parties provides for an annual investment of 1 billion euros in sustainable energy. This has to be financed from the ODE levy.

Of course, the government is committed to selling the measures as well as possible in the light of its climate objectives and the agreements that have been made in an international context. Not much counterweight is really to be expected from the left-wing parties, after all, they have always taken the lead on proposals for the strict taxation of energy consumption and things that in their view would burden the environment.

But this is not the only thing that stands out in the world of energy. Rechargeable electric cars are rapidly disappearing from the streets.
Why? Simply because the addition of the value of the car to the income increases sharply after the tax incentive to go electric has disappeared. For the private individual who drives a company car, it has simply become far too expensive. There is even a noticeable trend that, for example, entrepreneurs prefer to drive an older second-hand car in order to keep the tax addition as low as possible.
No, the Netherlands is saying goodbye to the rechargeable hybrid barrels that can also be driven on old-fashioned fuel in case the charged battery is empty. Motorists in the Netherlands can no longer lose their cars on the paving stones if they want to get rid of them.

Poland and Norway, among others, have a subsidy scheme for “unplug & drive” vehicles. Even Russia.
So where until a few years ago you saw countless half-baked wrecks being transported to Poland, Ukraine and Russia, nowadays it is modern plug-in cars that leave for abroad. As a result, the “investment” that the Netherlands made in cleaner driving, estimated at about 5 billion, is evaporating nicely and the vapor is moving to other countries where the “vaporized” is converted back into environmental liquidity.

The question is beginning to arise as to whether tax measures that may vary from year to year have been abolished or introduced are always accompanied by some long-term vision. At the very least, it now seems that if the country’s treasury threatens to become emptier, its environmental ambitions will also cease. If we compare this with the tax measures that are currently aimed at greening, then the question arises again as to what the real purpose is of the tax increases for citizens and businesses. What are the real facts? Does the reduction of CO2 emissions really take precedence or are there other objectives? All in all, a realistic question that deserves an honest answer.

In the meantime, the Dutch construction group Ballast Nedam announced this week that it will be involved in building projects that are part of the generation of sustainable energy, including the construction of offshore wind farms and solar energy systems.
This is remarkable, because two years ago Ballast Nedam sold a substantial part of its offshore activities. Ballast Nedam also sees the construction of onshore wind farms as a growth market. Over the past 25 years, Ballast Nedam has built around 500 offshore wind turbine foundations and therefore has the necessary expertise in-house. Under the promising brand name Ballast Nedam Renewables, it is busy winning contracts for the construction of wind farms and solar projects.

While the government discourages the private use of natural gas, the production of electricity will run on natural gas to a considerable extent in the near future.
We already reported 1.5 weeks ago that Belgium, among others, is planning to build a considerable number of gas-fired power plants.

The problem in the production of natural gas is the release of methane. Methane is a potent greenhouse gas.
That is why a group of major oil companies including Shell, Repsol, ExxonMobil, Eni, BP and Total have signed a joint statement agreeing to further reduce methane emissions.

Every aspect of energy supply and energy policy has its downsides. Time will tell which downsides we consider “acceptable”.