Energy Saving: ambitions and results

Energy saving policy is inadequate

Energy consumption in the Netherlands increased by 11% between 1995 and 2007, not by 4% as the government had planned. As a result, 13 megatonnes more CO2 were emitted than intended. The energy saving policy is not working effectively enough. We fund three causes:

1. In recent years the government has taken fewer and less effective measures than ex ante studies had found necessary.
2. Policy in the energy intensive manufacturing industry became steadily less compulsory in 2000-2007 and had relatively little impact. The energy saving achieved (0.5% on average per annum) was less than the saving that would have been achieved without policy (the autonomous saving: 0.8-1% per annum). Over the entire 1995-2007 period, manufacturing as a whole performed slightly better than the national average (1.5% versus 1.1% on average per annum). The national average, however, was significantly diminished by the performance of the transport sector.
3. The policy executed in the manufacturing sector only partially agrees with the reasons why entrepreneurs invest in energy saving measures. The government has concentrated on reducing the cost of energy saving measures. In practice, however, other factors also play a role in energy efficiency.

CO2 emissions trading system frustrates national policy

Another factor has made energy saving policy less effective since 2008: the EU CO2 emissions trading system. In this system, companies that emit large volumes of CO2 (factories, power stations) must have 'emission allowances'. As the allowances can be bought and sold, the European system weakens the effectiveness of the national energy saving policy. Companies that use a government grant to reduce their CO2 emissions, for example, retain emission allowances that they can use themselves or sell. The CO2 emission that was initially avoided thanks to a Dutch energy saving measure is subsequently made at a later date and probably in another EU member state.

More effective policy required to reduce CO2 emissions

The Rutte/Verhagen government declared in the coalition agreement that it would 'continue and strengthen' the energy saving policy of the fourth Balkenende government. Since the previous government had been unable to achieve its ambitions, energy saving policy will have to be considerably more effective if the ambitions remain unchanged or are increased. The same is true of the policy to reduce CO2 emissions. It is unlikely that continuation of the Balkenende government's policy will achieve the CO2 reduction targets set for the Netherlands for 2020. More effective policy than the one conducted to date will therefore be needed to reduce the emission of CO2.

We recommend that the government develop an integrated vision of energy and climate policy that clarifies: (1) the economic and social benefits of energy saving, renewable energy and a low-CO2 energy supply; (2) the targets of energy and climate policy and the relationship between them. To achieve a substantial energy saving, policy for the energy intensive manufacturing sector must be revised. We recommend that specific policy instruments be directed at manufacturing companies that are not participating in the European CO2 emissions trading system. The government should also press in Brussels for binding national energy saving targets for all EU member states. When new European regulations are introduced in this area, the Netherlands should implement and enforce them quickly and without reservation.

The Minister of Economic Affairs, Agriculture and Innovation wrote that a number of our recommendations were consistent with the new government's policies. He would also consider including a number of our recommendations in his policy. The energy saving measures the previous government had taken would be continued and, if necessary, refined so that they would be more effective. The binding European targets for CO2 reduction and the share of renewable energy were the guiding principles of the energy and climate policy.