Greener than the greenest ever?

On the 10th of October 2017, the previous government (Rutte III) announced that it would be “the greenest ever”. The newly formed government (Rutte IV) is built from the same parties as the previous one, with the addition of a few new ministers. How does the new government think about climate change? Do Rutte and his new colleagues want to be greener than the greenest cabinet ever? Here’s an attempt to find these answers by taking a look at the coalition agreement presented in December 2021. 

Is combatting climate change important to Rutte IV?
Statements from the coalition agreement strongly suggest that Rutte IV aims to spearhead Europe’s transition towards a green economy, by strengthening climate policy and fulfilling existing international climate commitments.

To become this so-called forerunner, the emission goals for the future are sharpened. The government targets to reduce CO2 emissions by a minimum of 55%, and ideally by 60%, as soon as 2030. Rutte IV plans on continuing this trend by reducing emissions by 70% by 2035 and 80% by 2040. These plans for CO2 emission reductions are even more ambitious than those set by the previous government, who themselves increased targets in an effort to appear determined. While realizing goals set by previous governments was challenging for Rutte III, hopefully Rutte IV has an easier time. 

Rutte IV even appears to put a stronger focus on  climate change than Rutte III. The new coalition agreement dedicates a whole chapter to climate and energy, whereas the previous government merely had one section. Furthermore, a new minister for climate and energy has also been introduced, although given limited importance and power.

“A goal without a plan is just a wish”
Antoine de Saint-Exupéry, author of ‘Le Petit Prince’, once said that “a goal without a plan is just a wish”. Becoming a forerunner is easier said than done. Let us take a look at some concrete plans underlined by Rutte IV. 

Firstly, a plan most economists would like: the imposition of tax in addition to the Emissions Trading System, with the minimum price increasing over time. The resulting increase in profits will be transformed into a fund for making companies sustainable. Collaborating with neighboring countries is prefered when implementing this, so that there will be no companies trying to evade this tax by moving abroad. It remains unclear however how feasible this idea of cooperation will be…
Additionally, the largest 10-20 polluters are also expected to make tailored agreements on decreasing emissions.

Another hobby-horse of economists aligns with Rutte IV’s climate action plans - ‘rekeningrijden’. This is a system of road user charges that incentivises people to drive less by charging car owners for every kilometer driven. ‘Rekeningrijden’ will be implemented in 2030, thereby replacing the current system of charging a fixed tax for car ownership. The pitiable news is that the opportunity to decrease traffic jams, was not grabbed… By differentiating this price per kilometre for different times and places, highway traffic could be spread out better over the day, and the amount of traffic jams could decrease. The coalition agreement states that this will not be implemented.

Something else that might give mixed feelings is the ‘climate fund’ worth €35 billion. In the next 10 years, this amount will be used to develop the energy infrastructure and make the industry more sustainable. While the fund is a step in the right direction, potential misallocation and misuse could lead to bad investments.

There are quite a number of other plans to reduce CO2 emissions. Preparations for the construction of 2 new nuclear power plants will start and at the same time the existing one in Borssele will remain open for a longer period. The use of renewable energy will be stimulated, though exact plans remain a bit vague. There are several proposed measures on the aviation industry such as the introduction of cleaner fuels, taxation on tickets, and a ban on ordinary paraffin. 

To view the exhaustive list of government measures, please follow the additional reading sources provided at the end. 

Problems: Sunshine without rain becomes a desert
Could there be any practical objections between the dreams and the anticipated deeds of the new government?

First of all, issues with income can arise. Is everyone able to afford products that become more expensive due to an increase in taxes? Can people afford hybrid heat pumps? The ministers explain that this should not be one of our concerns, and state that they will make sure that everyone can participate and that nobody is left behind. First evidence that they intend to keep their promise was seen last year, when taxes on gas were lowered after the large increase in gas prices. On the other hand, before all these cost increasing plans there were already 900 000 people living in poverty in the Netherlands in 2020.
Another problem is that there might not be enough employees who can do all the work that needs to be done in the transition, for example, people who install solar panels or hybrid heat pumps. The coalition agreement says that it wants to discuss with partners and schools so that enough people are trained and hopes that that will suffice.

Moreover, there are problems with the electricity supply infrastructure. In some regions, no new houses, industry areas or solar panels can be developed, because the current infrastructure has insufficient capacity. Rutte IV wants to invest in this infrastructure, and additionally in technological innovations to support the energy transition, and wants to connect it to circularity.

A last problem is financing all these plans. An opposition member asked prime minister Rutte whether he is worried about passing on a burden of huge government debts to new generations. Rutte replied that even Germany has a deficit of almost 80%, and others are doing even worse. The Netherlands meanders around a deficit of 60%. It is indeed true that the Dutch government debt is relatively low, though in the worst case scenario, Dutch government debt increases to circa 90% in 2060. It is far away, but also quite high.

Concluding remarks
It can be deduced from the coalition agreement that Rutte IV places importance on combating climate change and developed quite an exhaustive action plan. Therefore, calling them “the greenest ever” isn’t unreasonable, as long as the comparison is restricted to domestic governments. Why Rutte wants to prevent climate change, remained so far an unanswered question. When he was asked why he thinks climate policy is important, he answered that he hopes that one day, there will be an article in The Economist about the Netherlands, because of all the special things happening there. In his eyes, it would be magnificent to achieve that. Let’s hope that the ambition shown by Rutte IV will indeed lead to such exceptional achievements.

Sources
Full coalition agreement (see below)
For remark of Rutte why he thinks climate policy is important and/or a debate on all plans from the coalition agreement, see ‘Kamerdebat 19-01 vanaf 10:15’ retrieved from minute 2:01:35, available via: https://www.npostart.nl/nos-kamerdebat/19-01-2022/POW_05299606

Further reading/watching
Nice conversation between Rutte and Van der Staaij about financing all the plans (NL): https://www.youtube.com/watch?v=kYv_x3TL-q8
Opinion of the prime minister and his party on climate change (NL): https://www.trouw.nl/nieuws/vvd-van-groenrechts-naar-klimaatsceptisch~bc38b1df/
Full coalition agreement (NL): https://www.rijksoverheid.nl/regering/documenten/publicaties/2022/01/10/coalitieakkoord-omzien-naar-elkaar-vooruitkijken-naar-de-toekomst
Summary coalition agreement (NL): https://nos.nl/collectie/13884/artikel/2409601-klimaat-kinderopvang-hoger-minimumloon-de-plannen-uit-coalitieakkoord
Euronews coverage of the coalition agreement (EN): https://www.euronews.com/2021/12/14/fourth-term-for-mark-rutte-as-dutch-parties-agree-coalition-deal-to-end-record-nine-month-
Summary coalition agreement by KVK for entrepreneurs (EN): https://www.kvk.nl/english/rules-and-laws/coalition-agreement-regeerakkoord-what-entrepreneurs-can-expect/
Review of the PBL of the coalition agreement (NL): https://www.pbl.nl/sites/default/files/downloads/pbl-2021-reflectie-leefomgevingsthemas-coalitieakkoord-4884-2.pdf
Summary of the review of the PBL of the coalition agreement (NL): https://nos.nl/artikel/2410626-nieuw-kabinet-moet-doorpakken-om-klimaatambities-waar-te-maken