Dutch households face dozens of euros in extra monthly costs from new EU CO2 tax

Suppliers of gasoline, diesel, and natural gas for building heating will have to buy CO₂ emission allowances from 2028 under a new European Union system, with the costs passed on to consumers and potentially adding tens of euros per month to Dutch household bills, the Netherlands Environmental Assessment Agency warned.

The so-called ETS2 system will apply to those fuels. The total number of available CO₂ allowances will decline each year, forcing reductions in emissions, NU.nl reports. A similar system already exists for gas- and coal-fired power plants and heavy industry, where emitters currently pay around 75 euros per ton of CO2.

The eventual CO2 price for consumers remains uncertain because it is determined by the market. In the first years, EU measures will keep the price below 57 euros per ton of CO2. That would equal roughly 10 euro cents per cubic meter of natural gas and 14 euro cents per liter of gasoline. Those measures have a limited duration, however, and prices could rise sharply from 2030.

The agency estimates that by 2030 a resident of a row house could see a 20-euro monthly increase in their natural gas bill. Someone who drives a gasoline car 13,000 kilometers a year would face about 20 euros in extra monthly costs.

Rapid decarbonization of the European vehicle fleet and buildings could keep allowances plentiful and prices low. Slower progress would make allowances scarce and drive prices higher. In that case, politicians could intervene to lower the levy.

The ETS2 system is part of the Green Deal promoted by former European Commissioner Frans Timmermans. Its introduction was already postponed by one year during last year’s negotiations over the EU’s 2040 climate target. The measure is now politically sensitive in European capitals, where discussions focus on lowering energy costs after prices rose quickly because of the war in Iran. The ETS2 will do the opposite.

PBL researcher Roel van der Veen told NU.nl that pricing CO₂ emissions “is an important part of effective climate policy. But we also know that pricing alone is not sufficient, especially for households.”

Households often react more slowly to price signals and sometimes cannot reduce their fossil-fuel consumption. Renters, for example, depend on landlords or municipalities to switch from a gas boiler to a heat pump or district heating.

The levy could create extra problems for the hundreds of thousands of Dutch households already dealing with energy or transport poverty. “If you want to prevent that, it is wise to take measures in time,” Van der Veen said.

Revenues from the ETS2 will flow largely into government coffers, with part going to a Social Climate Fund that EU member states can use for support measures for vulnerable households. The Dutch cabinet plans to use money from the fund to pay for “fix teams” that help people make their homes more sustainable.

The Netherlands already has relatively high energy taxes and excise duties on gasoline and diesel compared with other EU countries. “That could be reason to look at the level of the levies,” Van der Veen said.

The agency suggested one way to ease the burden is to return ETS2 revenues directly to households as an annual climate bonus, similar to systems already in place in Germany, Austria, and Switzerland. Everyone would receive the same flat payment. Such a bonus would reportedly still make it worthwhile to cut back on natural gas and gasoline while increasing public support for the levy.

Compensation measures would require budget room. The Dutch government currently assumes the ETS2 revenues will simply be stacked on top of existing excise duties. The one-year postponement of the system has already created a gap of more than 4 billion euros in the 2027 budget.

To give households more certainty about future costs, the PBL recommended agreeing on a “price corridor” with minimum and maximum prices within which the CO₂ price could move freely. That would prevent sharp spikes if decarbonization lags or sudden drops if politicians step in.