Climate debate heating up in the Netherlands

The Dutch centre-right Cabinet Rutte III, which came to power in October 2017, is profiling itself as the greenest Dutch Cabinet ever. So far however, the Netherlands’ actual contribution to the implementation of key EU climate policy targets is mediocre. Climate change policy in the low lands has become a divisive issue.

Integrated climate and energy policy is one of the four key issues in the 2017-2021 Policy Agenda (‘Regeerakkoord’). The Cabinet set the ambition to achieve an emission reduction of 49% by 2030, to be realised in a national, multi stakeholder Climate and Energy Agreement. The Regeerakkoord also indicated that the country wanted to be a European climate frontrunner, by seeking support to enhance the overall EU ambition to -55% in 2030. When that would appear not to be achievable, the Netherlands would still try to find agreement on an additional effort with like-minded countries. This ambitious agenda was set up in the context of angry citizens protesting against domestic natural gas mining leading to earthquakes in the north of the country (Groningen), triggering a Cabinet decision to substantially scaling down and finally ending the mining, and of a court ruling, urging the government to step up short-term climate action in line with climate science.

Steps towards a consensus-based Climate and Energy Agreement
In February 2018, the government began the ‘polder’-process of fleshing out with stakeholders the aspired Climate and Energy Agreement. Representatives of over 100 stakeholder organisations started negotiations at five ‘tables’ led by independent chairs with a strong reputation on the subject. The tables would develop policies for five key sectors: industry, mobility/transportation, built environment (houses, offices and other buildings), electricity production, agriculture and land use. The overall process coordination is conducted by a so-called Climate Council, made up of the chairs of the five tables and independent experts. The Council itself is chaired by former Minister of the Environment Ed Nijpels, who formerly was a minister of the liberal-conservative party VVD, home to Prime Minister Rutte and currently the largest party in Parliament, holding 21% of the seats. The 2017 Regeerakkoord aims to reduce greenhouse gas emissions by at least 49% in 2030.

First negotiation results
First negotiation results were presented on 1 July 2018.. The table proposals were broadly criticised by commentators for lacking specificity. The government asked the Netherlands Bureau for Economic Policy Analysis (CPB) and the Netherlands Environment Assessment Agency (PBL) to assess the proposals. The agencies’ conclusion (28 September 2018) was that the policy proposals seemed to ‘offer sufficient potential to realise a 49% reduction in 2030’. The agencies added that ‘they could not assess, as of yet, the actual emission reduction of the proposed packages’, and advised government to continue the table negotiations on (more) concrete policy instruments and measures, such as standard setting, levies, subsidies, new regulations, binding agreements.

The Netherlands aspires to become an EU climate frontrunner

The government followed this advice, and it asked the tables to clarify ‘their individual commitment and concrete contribution to achieving the necessary emission reductions’. Additionally, the government itself offered clarity on its own commitment and role, by defining a framework for the aspired Agreement: in addition to realising cost-effective emission reductions on national territory, it would enhance an Agreement that would offer clear insight on its affordability, i.e. on its effects on cost sharing (‘who would have to pay for what’).

Draft Climate Agreement, and beyond
On 21 December 2018, Ed Nijpels presented the Draft Climate Agreement, containing more than 500 negotiated proposals for policies and measures.  One day earlier, the green NGOs, the Labour Union FNV and the association of green industry CSR Netherlands walked away from the negotiations. Their view on the Draft Agreement was that ‘without equal burden sharing it will be an agreement without power’. They added that the Draft Agreement ‘does not contain the structural changes needed to tackle climate change appropriately; and on paying the costs, the big polluters can wave their hats’.

At the presentation of the agreement to the press, Ed Nijpels and the Minister of Economic Affairs and Climate, Eric Wiebes stated they regretted the walking away, adding that ‘the job is not finished, yet’. ‘The green NGOs are welcome to re-join the negotiations later, anytime’, they said. The chair of the powerful employers association VNO-NCW had his regrets, too. But he added that ‘we can also reach an agreement without the green NGOs’, and that they ‘play no major role in implementing it’.

Government advisory agencies PBL and CPB were once again asked to assess the emission reductions, the budgetary and income effects of the negotiated proposals. In addition, the Cabinet asked both agencies to assess extra policy options for industry, housing, transportation and agriculture. The government said that the assessments might trigger adjustments of the package, ‘to safeguard the desired minimum emission reduction of 49% in 2030’ and, if necessary, to correct for disputable income-distribution effects.

Towards a national Climate Law
Simultaneously, a parliamentary initiative for a national Climate Law proceeded. On 21 December 2018, just moments before the Draft Climate Agreement was presented, a vast majority (117 out of 150 seats) in the Second Chamber of Parliament adopted a version of the Bill. Already in September 2016, the parliament itself tabled a first version of the Bill. The on 21 December adopted version sits on support of nine out of thirteen political parties. To generate this vast support, the ambitions of the initial version had to be lowered somewhat. The new version of the Bill establishes a framework for negotiations on policy development towards greenhouse gas emission reduction up to 95% in 2050. It sets a policy intention to achieve 49% emission reduction in 2030, instead of setting legally enforceable targets. Another amended intention is ‘100% CO2-neutral electricity production in 2050, leaving open the option of using biomass to achieve this target’, instead of increasing the share of renewable energy up to 100% in 2050.

Final steps in the process to turn the Bill into Law are a second debate in the Senate, and a countersignature by His Majesty the King. Best guess is that this process will end in the first months of 2019, well before the regional elections of 20 March 2019 when (indirectly) a new seat allocation in the Senate will be assigned.

How the Dutch aspirations compare to the EU's 2030 ambitions
As highlighted above, the Netherlands aspires to become an EU climate frontrunner. In line with this ambition, the Netherlands is very active, not only in communicating it in general, but also trying to integrate it into ongoing European policy development for key sectors. In December 2018, at the UN Climate Summit in Katowice, Prime Minister Rutte repeated the Netherlands’ preference to increase the EU target for 2030 to -55%. He also indicated his expectation that ambitious Dutch national climate policies would be agreed upon soon.

So far, the Netherlands’ actual contribution to the implementation of key EU climate policy targets – e.g. for emission reductions in sectors not covered by the EU emissions trading scheme, targets for energy efficiency and the use of renewable energy – is mediocre. The Netherlands is not alone here, but other EU Member States who would be envisaged to join the Netherlands in an EU frontrunner group, have a better track record. It is remarkable that the recently published Dutch reporting to the European Commission (the so-called INEC report) is very quiet on the Netherlands intention to sharpen its policies regarding the EU 2030 renewables and energy efficiency targets. The Dutch INEC seems rather weak on this point, indicating only that the energy efficiency and renewables shares are likely to increase as a side-effect of policies focusing on cost-effective emission reductions.

Climate negotiations reaching their end game, while societal debate is heating up
What are next steps on the way towards a final Climate Agreement in the first half of 2019?

In the formal process, policy negotiations seem to have entered their decisive stage. Firstly, the still ongoing assessment of the Draft Agreement (by PBL and CPB) will have to answer two major questions: do the proposed policies and measures deliver the aspired emission reductions, and will the burden sharing of the economic costs be in line with the principle that the polluter pays? If necessary, when the answers to both questions above are insufficient, the Cabinet said it will restart the table negotiations.

Recently, the timing of the assessments has become an issue of political rivalry. On 22 January, PBL and CPB announced the publication of the assessments for 13 March. The opposition will try to enhance a parliamentarian debate on the assessment results before the election day on March 20, but decision-making on a final Climate Agreement seems not likely before that date.

Parallel to the proceeding of the official process, a quite intense societal debate has ignited. After the publication of the proposals just before Christmas, an overload of comments, op-eds, and columns on every aspect of the dossier entered the public domain. The opposition to the climate proposals by populist newspaper De Telegraaf was particularly strong, along the line that ‘at the end, ordinary citizens will have to pick up the climate bill’. Overall, the vast exchange of views mirrors a polarisation of the debate, if not a multi-polarisation. In particular, three ‘poles’ compete for their right of way: i) The Netherlands will economically (and morally) gain by its front running role and ambition, ii) The Netherlands is too small to play an individual leading role; it has to act in coordination with European allies, iii) The ambitions are those of the elite, the commons are not included and will have to pay the bill.

Can a well-designed polder process anno 2019 deliver an outcome with broad public support, or is it too elitist and short-term oriented to be legitimate?

Defining a compromise in this complex landscape seems quite a challenge. Despite their initial support for the 2017 Regeerakkoord, the enthusiasm of coalition partners VVD (conservative) and CDA (Christian Democrats) now appears lukewarm at best, especially as their competitors on the political right, notably Geert Wilders and Thierry Baudet, are fuelling fears about the costs of climate policies for ordinary citizens. Third coalition partner D66 (liberal-democrats) is keen to underline its green credentials, which to a somewhat lesser degree is also the case for the fourth coalition party CU (Social-Christian profile). The latter two parties fear electoral losses from the Greens (Groen Links), the Social Democrats (Partij van de Arbeid), and the Party for the Animals.

With regional elections coming up on 20 March 2019, the scenery of the debate is clear. The election outcome will determine a new seat allocation in the Senate which is crucial for continuity in general parliamentary support for the Rutte III coalition, and for its climate ambitions in particular. Recent polls show that the coalition could lose its current majority (of only one vote) in the Senate.

As indicated above, the PBL and CPB assessments will be available before the election day but decision-making on a final Climate Agreement seems likely only after March 20. This scenario will put the climate dossier in the top of the agenda of the recently started election campaign.  

Pressure is mounting on the polder-tradition and political survival of Rutte-III
In the public debate, even the Dutch ‘polder’-process itself is under pressure. Its initial ambition is that bottom-up negotiating with industry and civil society would ensure legitimacy and cross-partisan support for the energy and climate transition. But now industry and the more conservative political parties are backtracking, in particular by pointing at the importance of guaranteeing a European-level playing field. On the other side, green political parties and NGOs indicate they will not sign up to an Agreement which includes high reliance on carbon capture and storage, and without a national CO2 levy for industry. And they are critical on any arrangement that leaves households paying the transition costs rather than industry.

The debate has opened up between those who advocate sticking to the ‘polder’, even if a negotiated societal compromise does not deliver in full, and those who advocate empowering the government to overrule the maximum outcome of the negotiations by means of additional regulation. Can a well-designed polder process anno 2019 deliver an outcome with broad public support, or is it too elitist and short-term oriented to be legitimate?

Hence, societal support for the outcomes of the five tables appears to deteriorate quickly. The issues are complex, the stakes high. Even though there is majority support for taking urgent action now, it is becoming clear that proposed policies will affect key elements of economic life and social welfare. Moreover, international developments are feeding and complicating the national debate. The French (and Belgian) ‘gilets jaunes’ protests (so far relatively small in the Netherlands) illustrate the risk of popular unrest when household expenditures on for instance energy and mobility are rising, and expose public anger about growing inequalities between elites and ordinary citizens. And what might happen when climate activists join the forces?

Climate change policy in the low lands has become a divisive issue

Moreover, the Urgenda rulings add complexity. And even more so, when PBL will publish data (as indicated above) that show the government has to take short-term action indeed. Although this case focuses on short-term policies (up to 2020), its societal impact may extend further if and when downgrading the ambitions for longer term (2030–2050) would enter the discussion.

The process to scale down - and finally end - natural gas mining in Northern Groningen, is yet another complication. The decision is a fait accompli for the negotiating parties at the climate tables, whereas many - especially in Groningen - still have little confidence in the government sticking to it. Central government lost considerable credibility by initially downplaying the relationship between the earthquakes and gas exploration. The challenge is to re-establish trust and confidence, by showing that social inclusion and safety are important elements of the final policy packages. And to add complexity, the ending of gas mining is closely linked to a key chapter of the climate proposals, i.e. the ending of gas use for houses and buildings. In the public debate, this chapter contains a quite controversial aspect on the rising of costs for individual households.

A last, but by no means least complicating issue is the Climate Bill, which is nearly agreed upon and already codifies the climate ambitions of the 2017 Regeerakkoord. But the target setting in the Bill has changed from mandatory to intentional, and the policies to achieve them are not yet agreed upon. With a Senate debate still coming up, the final outcome may be a Bill that will only facilitate the polder process, rather than guiding it.

Finally, in short and to conclude: climate change policy in the low lands has become a divisive issue. Political backing for the compromises reached by around 100 stakeholder organisations is under immense pressure. However, a complete failure of the process would make the decision to stop gas exploration unrealistic. Moreover, it would also increase the scope for continued legal action against the state. And it would damage Prime Minister Rutte’s reputation as European leader in the field of climate change.