Dutch pension funds offer to push billions into energy transition

The five largest pension funds in the Netherlands are willing to invest “billions of euros” in the energy transition, they said in a letter sent to Elbert Dijkgraaf and Richard van Zwol - the two men leading the current round of Cabinet formation talks between the PVV, VVD, NSC, and BBB. The Financieele Dagblad has the letter in its possession.

“We would like to do more, we want and can invest more in the Dutch energy transition,” the pension funds ABP, PFZW, PMT, BpfBouw, and PME wrote. They specifically mention expanding the heating and electricity networks. The letter doesn’t mention amounts, but sources told FD it amounts to “billions.” The pension funds together manage approximately 900 billion euros.

According to the newspaper, this is the first time the pension funds have taken the initiative. Until now, it was always the government urging the sector to make investments in certain areas. For example, outgoing Minister Micky Adriaansens of Economic Affairs and Climate asked pension funds to invest in key technologies early this year.

The Netherlands needs to make massive investments in the energy transition. The country’s electricity grid is already under pressure. It will need to take much more as households and businesses move away from the gas network and to electricity generated by wind turbines and solar parks. The pension funds want to help, but they have requirements.

The pension funds want a long-term partnership with the future Cabinet. That should prevent the next government from ending projects that already started. They also suggest jointly providing loans that limit the credit risk for pension funds - they want the government to guarantee projects and take any initial losses if a project fails or turns out less lucrative than expected.

The pension funds also want a “full-fledged national investment institution” to bridge the gap between the pension funds and the government and take the lead where needed. The funds suggest Invest-NL, a public-private fund founded by the government in 2018 to fund sustainability and innovative projects. According to the funds, there are currently around 40 projects in which the government wants them to invest. There needs to be a consistent policy for this.

Invest-NL CEO Rinke Zonneveld told FD that the fund is certainly prepared to take on that role. But the government must give it a clear order to do so and expand its capacity.