The fossil sector will receive between 39.7 and 46.4 billion euros in subsidies, even more than expected

ANPThe factories of Tata Steel, seen from Wijk aan Zee

NOS Nieuws•vandaag, 19:52

The Netherlands gives many more tax breaks to companies for the use of oil, gas and coal than expected. These so-called fossil subsidies amount to an annual amount of between 39.7 and 46.4 billion euros, according to leaked Budget Day documents from climate minister Rob Jetten.

The ministry previously assumed an amount of 4.5 billion euros, while environmental organizations’ own calculations came to 37.5 billion euros.

There has been a heated discussion recently about these fossil subsidies, which are financial arrangements that favor the use of fossil fuels. With greater use of oil, gas or coal, relatively less tax often needs to be paid.

Kerosene

This concerns large steel companies, inland shipping, greenhouse horticulture, coal-fired power stations and oil refineries. Airline companies, for example, do not pay taxes on kerosene in the Netherlands, which earns them more than 2 billion euros annually, according to the leaked documents.

Environmental organizations, such as action group Extinction Rebellion, have recently been taking action, including the occupation of the A12 in The Hague.

A majority in the House of Representatives and outgoing Minister Jetten of Economic Affairs and Climate believe that fossil subsidies should be phased out, but there is discussion about the pace and how this should be done. Jetten also first wanted to map out which financial incentives were involved and he had the Central Planning Bureau (CPB) and the Netherlands Environmental Assessment Agency (PBL) make an inventory. All kinds of arrangements are included.

Political reporter Michiel Breedveld:

“These figures are startling. In 2020, the government assumed an amount of 4.5 billion euros and now it appears to be even more than the environmental organizations had already calculated. It will be a major task for Jetten and the next cabinet to to phase out these fossil subsidies.

Other countries also give such financial benefits to companies and the unilateral approach to fossil subsidies in the Netherlands has economic consequences. For example, companies can leave the Netherlands or increase their prices.

But the government also sees that phasing out is necessary and fair. It is also necessary to achieve climate goals and combat global warming. These fossil subsidies ensure that the use of clean energy remains relatively more expensive.”

The piece is mainly descriptive and Jetten does not yet present a plan of action. It is clear that a start has been made on phasing out disguised subsidies, amounting to 6.2 billion euros. Greenhouse horticulture will receive less tax benefits and an exemption from motor vehicle tax for vintage cars will be reduced from 2028.

Subsidy?

The term ‘fossil subsidy’ is somewhat confusing. Typically, a subsidy is an amount of money that you receive from the government to encourage something, such as the use of solar panels. ‘Fossil subsidies’ are a collective term for financial benefits for companies.

These are mainly tax benefits, price supports and government investments. This definition is used by international organizations and also by the Dutch government.

How do fossil subsidies work? In the video below, NOS op 3 explains it to you:

Pollute more, pay less… how!?

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