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Beyond Nord Stream 2: Lessons from the Netherlands

21 May 2019 - 13:22

Already in 2011, the International Energy Agency (IEA) predicted an international new golden age for gas. Now this age seems to have arrived. According to the latest IEA statistics, natural gas production from OECD countries increased by 7.4% in 2018, compared to 2017, reaching a record total of over 130 billion cubic meters in December. This growth is primarily caused by the rapid rise of Liquid Natural Gas (LNG) from the United States, Australia, Qatar and other countries. Planned new pipeline infrastructure in the future will contribute to further growth of gas supply to the European Union, with the Nord Stream 2 pipeline from Russia to Germany being by far the most controversial project to be realised.

The Netherlands seems to be the odd one out in international gas trends

The Netherlands seems to be the odd one out in international gas trends. Germany with its planned coal and nuclear exit is deemed to use more natural gas in the near future. Likewise, other countries seem inclined to reduce coal supply in favour of gas. The Netherlands, however, recently took decisions that many would have thought impossible in a country that is virtually completely dependent on natural gas for heating since the discovery of its Groningen gas field in the 1960s. In March 2018, the Dutch government decided to strive for a complete end to natural gas use in the built environment by 2050. Furthermore, they announced a premature closure of the large Groningen gas field in the northern part of the country by 2030.

Both decisions were largely due to massive public protests after a series of small earthquakes caused by gas exploitation in Groningen. Although the relatively light Richter scale of 3.6 was not exceeded, the earthquakes caused substantial material damage and a widespread public fear for further and perhaps heavier events to occur in the future. The initially hesitant government therefore finally gave in to public pressure by taking drastic steps towards a new gas policy.

This does not mean that the Netherlands will become fully independent of gas-use in the near future. In particular the energy-intensive Dutch industry will continue to use natural gas in the years to come. While the exploration of the Dutch offshore gas fields is planned to continue until the end of their economic lifetime, these fields are much smaller than the Groningen field. Dutch gas imports therefore are likely to increase rather than decrease in the short term. Nordstream, and perhaps also Nordstream-2 will supply part of this gas. Hence, from once being a large gas exporter, the Netherlands, like other countries, will increasingly turn into an gas importing country, with a rising dependency on gas from Russia in the near future.

Earthquakes and government decisions seem to have marked a tipping point in Dutch public opinion about gas

Still, the earthquakes and government decisions that followed seem to have marked a tipping point in Dutch public opinion about gas. Suddenly, gas policy has become not only a major issue of local governments that have to decide separately for each neighbourhood how the future heat demand will be supplied if gas is no longer allowed. It has also very much entered the public domain, with massive discussions in the media, the celebration of ‘van-gas-los festivals’ (loosely translated as ‘gas-exit festivals’), and a large insecurity of house owners about which investments in their own dwellings will be required in the future.

Along with more public support for gas transition, opposition has also become more pronounced. The 2019 Dutch provincial elections have shown a large win for the populist right. The new party Forum voor Democratie (Forum for Democracy) that arose virtually from zero, is very much opposed to any changes to the current status quo of natural gas in the built environment. If it would enter into government after the next national elections, a swift reversal of current government decisions is to be expected.

Therefore, for a consolidation of the Dutch gas transition, a further reinforcement of public support would be required. Three conditions could in particular contribute to such a fortification. In the first place, insecurity about the alternatives to gas on a neighbourhood level should be ended as soon as possible. Now municipalities only have to take such a decision by 2021, making it very unattractive for local residents to invest in new heating options for their own house until that time.

The Netherlands could take the lead in a ‘diamond’ international age beyond that of natural gas

Secondly, local NIMBY (not-in-my-backyard) resistance to renewable electricity as one possible alternative for heating should be mitigated as much as possible. In particular involving local residents in the profits of new supply options to be built – notably local wind turbines – has shown to be a promising option. Thirdly, it should be made clear to everybody that, despite initial investments and costs involved, in the end everybody is able to profit from a transition through innovation and new employment opportunities generated for all - independent of their education level. The latter is particularly important since the public discussion about transitioning towards sustainability is increasingly waged as marking a fundamental societal fissure between a profiting societal ‘elite’ with higher education and suffering ‘ordinary people’.

If the Netherlands succeeds in further spreading the recently unfolded public support for gas transition amongst the rest of the Dutch population, the built environment might only be a first step towards a Dutch natural gas exit that subsequently could comprise a deep restructuring and degasification of industry as well. In that case, the Netherlands could take the lead in a ‘diamond’ international age beyond that of natural gas. Current heated discussions about Nord Stream 2 and gas dependency on Russia then might show blinded by short-termism from hindsight, and the pipeline could sooner than expected become a stranded asset only.

Authors

Stephan Slingerland
Senior Visiting Fellow at the Clingendael Institute