Parliament wants to scrap CO2 levy on Dutch industry

The Tweede Kamer, the lower house of the Dutch parliament, wants to spare Dutch industrial companies from paying a CO2 levy on the emissions they cause. A parliamentary majority - including the coalition party VVD - plans to vote in favor of a CDA motion to scrap the levy on Thursday, NOS reports.

The VVD’s promised vote to scrap the levy is remarkable, because the CO2 tax is an important part of caretaker VVD Minister Sophie Herman’s plans for the Nehterlands to achieve its climate goals. The intention was to invest the proceeds from this levy, which would be added to the European emissions levy, in sustainability and greening.

So far, companies have been compensated for the CO2 levy, which has been formally imposed since 2021, but they would soon have to start paying it. For the coming years, it concerns relatively small amounts, but if the industrial companies don’t lower their emissions, it could amount to hundreds of millions of euros.

And that is CDA leader Henri Bontenbal’s main reason for proposing to scrap the levy. According to him, greening and sustainability are not happening as quickly as hoped, and often for reasons beyond companies’ control. High energy prices and the overextended power grid mean that companies still have to fall back on fossil energy sources. The additional CO2 tax on top of these challenges could create unfair competition for Dutch companies compared to other European companies, he fears.

Now that the VVD has decided to vote against its Minister’s plans, the CDA proposal will have majority support. “The VVD wants to abolish the CO2 levy as soon as possible. Dutch industry is known worldwide for its innovative strength, and we want to continue to reap the benefits of this in the future,” the party said in a statement.

What the next Cabinet will do with this parliamentary decision remains to be seen. The Netherlands must still meet its climate targets.