Dutch gov't spends €37.5 billion per year on fossil fuel subsidies

The Dutch government misses out on 37.5 billion euros in income every year due to schemes that favor using fossil fuels. Researchers from SOMO, Oil Change International, and Milieudefensie arrived at this amount in a study into how the government “subsidizes” the fossil fuel industry.

Researcher Boris Schellekens of the Foundation for Research on Multinational Enterprises (SOMO) called the estimate conservative. He and his colleagues ignored all costs of environmental damage. “We purely looked at missed state revenues.” The researchers are convinced that their overview is the most complete to date.

The report published on Monday describes 31 regulations that, in one way or another, make the use of fossil fuels more economical. That usually does not concern money that the government transfers to companies’ accounts but mainly tax discounts and exemptions. For example, major natural gas consumers do not have to pay energy tax on most of their consumption, and aviation and shipping are exempt from excise duty on kerosene and fuel oil. Oil refineries, coal-fired power stations, and the steel industry also enjoy such tax benefits.

The biggest hit, 13.5 billion euros per year, is in the energy tax, which is degressive in the Netherlands. That means that companies that use more energy have to pay relatively less tax on their consumption. The researchers call this “a perverse incentive.”

Large-scale consumers from heavy industry contribute only 11 percent to the energy tax that the government collects from companies. While they consume almost three-quarters of “business” natural gas. Small and medium-sized businesses bear the majority of the costs.

The organizations behind the research advocate for quickly phasing out the fossil benefits. The tax money this generates can then be spent on, for example, combating energy poverty by insulating homes.

Some of the money will not end up in the tax pot because companies will “replace or reduce their fossil consumption.” And that is exactly the intention, the researcher said, because it reduces CO2 emissions. According to the report, if these subsidies are completely abolished, this will cut between 13 and almost 20 percent of CO2 emissions, depending on how quickly it happens. Schellekens: “This means you can achieve the climate goals for 2030 in one fell swoop.”