Country series: The Netherlands needs a strong commitment to renewable energy

Trade, industry and agriculture form the cornerstones of the Dutch economy. Industry is largely based on the import of raw materials which are processed and then exported. Much of the trade in and out of other EU countries also goes via the Netherlands, not least because of the country's important ports.

However, its dependence on international trade makes the Netherlands vulnerable to fluctuations in the world economy. The country was hit hard by the financial crisis in 2008, which also put climate policy on hold.

Climate on hold

Although no country has been able to ignore the climate crisis in recent decades, many have, for various reasons, delayed dealing with the problems and deferred taking necessary action. The Netherlands is one of them.

According to Eurostat, the Netherlands had a renewable share of 8.8 per cent in 2019 – far from the target of 14 per cent to be met by the end of 2020. And according to the Netherland's climate research institute PBL Netherlands Environmental Assessment Agency, the country is also unlikely to reach its targets for 2030.

Niels van der Linden, head of wind and solar power in Statkraft in the Netherlands, thinks he knows why.

"The economy has determined energy policy in the Netherlands for many years. Our large gas reserves and other affordable energy sources, such as coal, have been important for both business and private households. Renewable energy has been too expensive," he says.

­­"As a consequence, the transition to renewable energy sources is well behind schedule. If we're to reach our climate goals, there is no way around it. We will need significantly more solar and wind production in the years to come. Fortunately, it seems that both the government and the Dutch people have now realised the seriousness of the situation."

Cheap gas – and coal

The fact that the Netherlands has substantial natural gas reserves has undoubtedly helped to slow down the green shift. According to The Oxford Institute for Energy Studies, gas covers about 40 per cent of Dutch energy needs, compared to 23 per cent in the EU as a whole. Gas is used to heat 95 per cent of private households.

The Netherlands is now facing a gradual phasing out of gas power. The huge Groningen gas field, which is the largest of its kind in Europe, is being shut down after operating since 1959. One of the reasons is the number of earthquakes in the region, which has troubled both the population and the geologists. Consequently, the Netherlands must either become less dependent on gas or increase its gas imports.

"We also have coal power, but that will be phased out by 2030. This means that in the future we must either buy gas from other countries or achieve a green shift to renewable energy and electrification of households, industry and transport," says Valerie van Hagen, a solar and wind power analyst for Statkraft in the Amsterdam office.

"The biggest challenge for the Netherlands is to achieve a fast enough transition from gas to renewable energy sources. Turning industry green will be a challenge. Industry has, until now, largely solved its climate challenges by purchasing emission allowances from other countries, but now there is increasing pressure to cut its own emissions. Another challenge is to convert households to electric or other heating sources. The entire infrastructure is gas-based, so this shift entails a huge cost to Dutch society."

Won climate lawsuit

Although the Netherlands has long lagged behind in its climate measures, politicians were put under new pressure when the activist group Urgenda filed a lawsuit in 2015 to get the state to implement climate measures in accordance with international conventions and its own legislation. In court, the Dutch state was ordered to reduce the country's greenhouse gas emissions by at least 25 per cent from 1990 levels.

The state accepted the decision, but appealed the verdict on principle. The case came up again in 2018 and the Dutch state lost again. According to the court, the climate crisis is such a serious threat to people's lives and health that the state has a duty to ensure that Dutch emissions be reduced as quickly as possible. Activists in many countries have tried similar lawsuits, but it is only in the Netherlands that the state has been ordered to implement climate action.

Climate agreement

To achieve a more proactive climate policy, the government in 2019 implemented a national climate agreement with proposals for measures to reduce greenhouse gas emissions by 49 per cent from 1990 levels by 2030 and make the Netherlands climate neutral by 2050.

The measures include improvements to energy efficiency in 1.5 million existing homes, fossil-free heating in all new homes, zero emission requirements for all new cars by 2030 and an additional carbon tax for industry on top of the EU emission trading system. The government will also subsidise the development of renewable energy until 2025, with a target of a 70-per-cent renewable share by 2030.

Requires local support

The climate agreement has been signed between the Dutch government and a large number of stakeholders in society and business. Niels van der Linden believes this is crucial to the country's success.

"In the Netherlands, it's important to get all stakeholders involved in implementing these types of measures. Not least, it's important to get local communities involved, so the government is delegating responsibility to the regions and asking them to come back with suggestions on how climate targets can be achieved through local measures."

As in many other countries, the green shift does not happen by itself. When coal and gas are to be replaced by wind turbines and solar parks, this creates resistance, even in the Netherlands. People may be fans of renewable energy, but they do not want the wind turbines in their own backyard.

"We're a small and densely populated country and only have limited available land space. Our agricultural sector is among the largest in the world, and the Netherlands is the world's second-largest exporter of agricultural products. Because it's usually agricultural land that is leased to the power plants, a conflict arises between agricultural interests and the need for renewable energy," says Valerie van Hagen.

 "In the past, the government decided to develop wind power without people's consent, which created a lot of local conflict and resistance, even threats against wind power developers. Therefore the climate agreement includes a commitment that development will take place with local participation and co-ownership. At Statkraft, we always want local communities involved in the development of new projects. If people are to understand the value of locally produced renewable energy, they need to be heard. Good dialogue and support from local stakeholders is crucial to the feasibility of a project."

Niels van der Linden believes that there are good opportunities for Statkraft to become a bigger player in the Netherlands in the future than it is today.

"The market today is dominated by a few major developers of solar and wind power, and Statkraft isn't among the top ten. We're not necessarily going to be among the biggest, but we have ambitions to grow. The country must increase its focus on renewable energy, and this opens up opportunities for several players – including Statkraft."

Statkraft has so far built one solar park in the Netherlands, Lange Runde in 2017. It was the largest that was built that year, and the company has several others under development. In line with its strategy, Statkraft operates primarily as a developer in the Netherlands and does not wish to own or operate the power plants.