Simple tax adjustment could reduce CO2 emissions for Dutch households – new report says

A newly released report by Milieudefensie, conducted by Kalavasta, has revealed what seems to be a game-changing opportunity for the Netherlands. The findings indicate that with a relatively simple tweak to the current energy tax, the incoming Dutch government could achieve significant reductions in carbon dioxide (CO2) emissions while also cutting energy costs for nine out of ten households. 

This discovery underscores the potential for profound environmental and economic benefits through innovative yet straightforward policy measures.

The report evaluates the effects of various climate and energy policies on different income groups in the Netherlands. It considers a selection of areas of consumption such as housing, mobility or food.

The report’s analysis compared two scenarios: the current base policy scenario, reflecting existing regulations and taxes, and the proposed policy scenario, which includes changes such as abolishing the boiler efficiency standard, reducing energy taxes on natural gas, and introducing an aviation tax.

The comparison between the two policy models provides the following observations:

• Base scenario does not incentivise improvements on energy efficiency and expenditure
• Proposed scenario lowers energy costs for the majority of Dutch families
• Proposed scenario increases direct household energy expenditure however introduction of aviation tax partially aids the curbing of such emissions.

The most compelling recommendation from the report is the implementation of a progressive energy tax. By reconsidering the abolition of the efficiency standard for boilers and the reduction of gas taxes, the incoming government can introduce a tax structure that rewards sustainable practices and reduces energy consumption. The proposed progressive tax could:

• Reduce CO2 emissions: Households would be incentivised to adopt energy-saving measures, favouring electricity instead of gas and leading to a significant drop in overall emissions.

• Lower energy costs: Nine out of ten households would benefit, particularly those with lower energy consumption.

Overall, this tax adjustment would see those who consume more energy and produce more emissions paying a higher rate, while those who use less energy benefit from lower costs. Such a progressive energy taxation could lead to significant emission reductions and cost savings for many households while keeping overall government revenue stable.

Whether the new Dutch government will adopt these policy recommendations remains to be seen. Nonetheless, the report’s publication is timely as the Netherlands transitions to a new administration. By addressing both environmental challenges and economic disparities, this report offers a strategic pathway for the Netherlands to advance its European environmental commitments and achieve its 2030 climate goals.