Documents presented this week by Dutch Climate Minister Rob Jetten revealed that the Netherlands is offering far greater tax incentives than previously thought to companies operating in the oil, gas and coal sectors .
According to the government’s assessment, these “fossil subsidies” amount to an annual amount of between 39.7 and 46.4 billion euros, a stark contrast to previous figures.
Just two weeks ago, three environmental organizations – Somo, Oil Change International and Milieudefensie – estimated the total subsidies at €37.5 billion.
A 2020 assessment by the previous Dutch administration in response to a previous Somo report had pegged fossil subsidies at just €4.5 billion, but was widely criticized for omitting tax benefits.
The report presented this week could signal a new commitment from the Dutch government to resolve the issue of fossil subsidies.
“Fossil fuel subsidies have no place in a clean Netherlands, so they must simply stop,” Jetten said at a climate protest organized by climate group Extinction Rebellion on Saturday.
But he also warned that this “can’t happen overnight.”
“We need to formulate a clear plan for gradual reduction in the coming period,” he said.
The debate has been going on for years and the latest revelations have raised important questions about the government’s commitment to reducing fossil fuel support programs.
Critics pointed out that Jetten reneged on earlier promises to draft a phase-out plan.
“It is good that the government is now being transparent, but I am deeply concerned that there is still no phasing out plan,” said Boris Schellekens, one of the authors of the Somo report, to the Dutch press agency NOS.
“There was a commitment to phase out by 2025, but we are far behind. In 2009, the government already said that subsidies should stop,” he said.
Reluctance has also come from academia, from 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 blocked the A12 motorway. Climate group Extinction Rebellion, organizers of the protest, pledged to maintain the blockade until the government stops subsidizing fossil fuels.
Dutch police arrested 2,400 activists on the first day. Since then, hundreds more have been arrested, although most were released soon after.
Jetten, in response, said the government had already started working to phase out fossil fuel benefits.
According to budget notes, a total of €6.2 billion in cuts have been committed, including an electricity rebate for energy-intensive industries worth €5 billion canceled at the start of this year.
The term “fossil subsidies” encompasses a range of financial benefits for businesses, including tax breaks, price support and direct government investment.
This is consistent with the definition maintained by international organizations, such as the International Monetary Fund and the Organization for Economic Co-operation and Development.
The government document shows that Dutch tax cuts and exemptions mainly benefit large fossil fuel users, but not all tax benefits can be easily abolished, Jetten said, because many of them are registered and protected by international treaties.
Exemptions for kerosene used by airlines (2.2 billion euros) and similar provisions for heavy fuels used in shipping (429 million euros) are based on European tax agreements.
A 14 billion euro 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 tax reforms of the EU require the unanimous approval of all members.
Further signaling the complexity of the undertaking, Jetten also indicated that an exemption for “red diesel” used for inland navigation – based on a treaty signed in 1868 – is currently under consideration for cancellation.
Jetten denied that the highway blockade in any way influenced his commitment to phasing out fossil fuels.
But years of work by Somo and other environmental organizations, as well as the recent “marathon blockade” of the highway, have undeniably put fossil fuel subsidies at the center of the Dutch election campaign, forcing climate skeptics and supporters of more ambitious climate policies to adopt a position.
Pieter Omtzigt, a longtime member of the Dutch center-right Christian Democratic Appeal (CDA) who recently created a new party, said “there was no point in cutting subsidies” because businesses would simply leave .
Meanwhile, former EU Green Deal chief Frans Timmermans, seen as a frontrunner for the prime minister’s post, publicly backed the campaigners, saying “European climate policy was only made possible thanks to the demonstrators.”