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The report Policies for a Carbon-Neutral Industry in the Netherlands evaluates the consistency and cost-effectiveness of the set of policy instruments in place in the Netherlands to reach its 2050 decarbonisation objectives in the manufacturing sector and offers recommendations on adjustments of existing policy instruments and further measures. The analysis of the Dutch climate policy package illustrates the strength of combining clear commitment to raising carbon prices with ambitious technology support, uncovers the pervasiveness of provisions aimed at supporting the competitiveness of the industry, and highlights the trade-off between short-term emission cuts and longer-term technology shifts. While the Netherlands does not start from a blank page and can leverage a long experience in carbon pricing and technology support, the challenge ahead is to retrofit this extensive policy package to effectively put industry on the path to carbon neutrality. Importantly, the report offers general lessons for the low-carbon transition beyond the Netherlands, in particular European countries, which feature the same characteristics as Dutch industry.
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Countries representing more than 80% of the world economy have announced targets of carbon neutrality by mid-century. Reaching this objective requires a comprehensive set of policy instruments – a “green industrial strategy” – to trigger the necessary investments in zero-carbon energy sources and production processes across all economic sectors. As countries embark on this journey, they can benefit from learning from each other, exchanging knowledge and experience on their different roads towards carbon neutrality.
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This chapter describes and discusses a zero-emission 2050 scenario for the Dutch industry. It is based on a detailed account of the technologies currently used in the largest firms and emitting sectors in the Netherlands, and on the technologically feasible decarbonisation options for each of them. The robustness of the results is assessed through a comparison with other available decarbonisation scenarios.
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This chapter presents theoretical insights from the literature on the “optimal” decarbonisation policy mix and links these insights to the specificities of the Netherlands. It also reviews existing research to present the current state of knowledge on the design of a decarbonisation policy portfolio. It first describes the range of decarbonisation policy instruments and underlying market failures that justify government intervention. It then presents the main takeaways from an existing state-of-the-art model developed for analysing interacting market failures and complements them with additional elements that are particularly relevant in the Dutch context (international competitiveness and carbon leakage, international knowledge spillovers, innovation path dependency, business dynamics and risk-sharing).
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This chapter provides an in-depth description of the policy instruments most relevant for the decarbonisation of the Dutch industry and discusses the overall policy package with a view to its potential cost-efficiency, its coherence as well as its consistency with the carbon neutrality 2050 objective. The instruments are grouped into electricity and carbon pricing instruments (including energy taxes), support for R&D and demonstration projects (either horizontal or specifically targeted at low carbon innovation), adoption subsidies for low-carbon technologies, voluntary agreements, command and control instruments, infrastructure programmes and green procurement schemes.
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This chapter presents the results of two case studies which illustrate the consequences of the current set of policy instruments for the financial viability of two representative decarbonisation projects identified as critical by the zero-emission scenario for the Dutch industry by 2050 (Chapter 3). The two projects are green hydrogen for ammonia production in the chemicals sector and CCS for hydrogen production by steam-methane reforming in the refinery sector.
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This chapter reviews policy instruments aimed at reducing greenhouse gas emissions in German industry and compares the German and Dutch policy landscapes. The German policy mix focuses strongly on energy efficiency and on recycling. Compared with the Netherlands, the German government is more reluctant to develop biomass and CCS. Germany’s innovation funding policies strongly focus on fundamental research and CAPEX support, while the Netherlands provide greater support to demonstration projects and deployment. As a consequence, high operational costs are still a major barrier for large-scale investments in Germany.
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This chapter discusses policy options to accelerate the development and adoption of five technologies that are critical for the decarbonisation of Dutch industry: carbon capture, storage and utilisation (CCUS), electrification of heating, hydrogen, recycling of plastics and metals, and bio-based materials. It assesses their Technology Readiness Levels (TRL) and analyses the main challenges for their diffusion. A patent analysis provides empirical evidence on the performance of inventors based in the Netherlands with respect to these key technologies.
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This chapter simulates the potential economic and social impacts of input costs increases implied by the low-carbon transition on the competitiveness of the Dutch industry, based on a static model describing the industrial structure of the Netherlands and its interactions with the rest of the world through international trade and value chains. It shows that, while the aggregate economic impact of carbon pricing in the Netherlands is likely to be small, energy-intensive and trade-exposed sectors such as iron and steel can be significantly affected if they do not shift toward low-carbon technologies. Support to technology adoption and co-ordination at the European level can attenuate competitiveness effects.
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This chapter proposes overall policy recommendations for achieving industry decarbonisation based on the analyses presented in Chapters 2 to 9. The recommendations concern the three main areas for policy action: carbon pricing, technology support, and complementary policies and framework conditions.