Policies for a Carbon-Neutral Industry in the Netherlands

image of Policies for a Carbon-Neutral Industry in the Netherlands

This report presents a comprehensive assessment of the policy instruments adopted by the Netherlands to reach carbon neutrality in its manufacturing sector by 2050. The analysis illustrates the strength of combining a strong commitment to raising carbon prices with ambitious technology support, uncovers the pervasiveness of competitiveness provisions, and highlights the trade-off between short-term emissions cuts and longer-term technology shift. The Netherlands’ carbon levy sets an ambitious price trajectory to 2030, but is tempered by extensive preferential treatment to energy-intensive users, yielding a highly unequal carbon price across firms and sectors. The country’s technology support focuses on the cost-effective deployment of low-carbon options, which ensures least-cost decarbonisation in the short run but favours relatively mature technologies. The report offers recommendations for policy adjustments to reach the country’s carbon neutrality objective, including the gradual removal of exemptions, enhanced support for emerging technologies and greater visibility over future infrastructure plans.


Competitiveness and sectoral change in Dutch industry’s low-carbon transition

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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