Massive gas tax hike planned to get Netherlands off natural gas: report

The climate table led by former PvdA leader Diederik Samsom is planning large shifts in energy tax in order to get individuals, businesses and housing corporations disconnected from the natural gas network. Over the next 12 years the negotiators want energy tax on gas to increase by around 75 percent, while tax on electricity decreases by over 50 percent. This gradual energy tax shift will almost certainly be included in the Climate Agreement, sources around the climate table said to the Volkskrant.

The climate table believes that the tax hike on gas will prompt people to stop using gas faster, while the tax drop on electricity will make the purchase of electric heat pumps more attractive. Owners of a gas heated house will only be willing to purchase an expensive heat pump if they are rewarded with a substantially lower energy bill, is the thought. The price differences between gas and electricity are currently too small for people to easily opt for an environmentally friendly alternative.

Since 1996 individuals and companies have paid a fixed amount of energy tax per consumption quantity. Small consumers like families pay 26 cents per cubic meter of natural gas and 10.5 cents for every kilowatt hour of electricity. Under Samsom's plans, the gas tax will gradually increase by 20 cents over the coming 12 years, and electricity tax will decrease by 6.5 cents for small consumers. For large natural gas consumers, a very low tax rate of between 1 and 6 cents per cubic meter applies. Samsom wants the tax on natural gas to increase by the same percentage as that for small consumers.

A substantial increase on natural gas tax will hit low-income households particularly hard, especially if they live in a poorly insulated house. The climate table under Samsom has a number of proposals on how to help this group of small gas consumers with low incomes. One is by reducing income tax, though that benefits everyone and not just the low-income group. More targeted measures include an increase in rent allowance or other benefits, according to the Volkskrant's sources.

Switching ot a heat pump is quite expensive, because existing homes usually have to undergo considerable renovations for a heat pump to be effective. The climate negotiators expect that these costs will drop quickly once heat pumps are more widely used.

The Ministry of Economic Affairs is currently calculating the effects these tax shifts will have on purchasing power and behavior. The climate table may adjust the percentages based on these calculations. On June 26th the negotiators - consisting of environmental organizations, municipalities, housing corporations, energy companies, construction and installation companies, trade unions, and banks - will meet for the last time and draw up a final proposal. The proposal will be published in the second week of July, according to the newspaper.

The Tweede Kamer, the lower house of Dutch parliament, will ultimately decide what proposals are included in the Climate Agreement, a package of measures that must ensure that the Netherlands reduces its greenhouse gas emissions by 49 percent by 2030 when compared to 1990. It is unlikely that all proposals will be ignored, because a large majority consisting of the coalition parties and the left-wing opposition parties support getting the Netherlands off natural gas.