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3 Use of policy instruments
We noted in chapter 2 that the national energy saving targets applicable until the end of 2010 had not been achieved. We investigated whether the
cause lay in the policy conducted. We commenced by looking at the latest policy programmes, the Climate Policy Implementation Memorandum
VROM, 1999, the Energy Saving Action Plan based on it EZ, 1999 and the Clean and Efficient working programme VROM, 2007. We
determined whether it was known when the policy programmes were prepared whether the instruments would be adequate to achieve the
goals ex ante evaluations, whether the proposed instruments were actually applied and what information was available on the impact of the
policy executed ex post evaluations. Our audit found that successive governments had known in advance that
their ambitions were not backed up by appropriate policy instruments. Time and again, studies carried out for the responsible ministers found
that the policy would not achieve the goals. These signals were not used to adapt policy or reconsider the goals. A number of key policy
instruments, moreover, were applied much later than foreseen or in a much diluted form, if at all. We consider these findings in the following
sections.
3.1 Policy instruments
A wide and diverse palette of policy instruments was applied to achieve the energy saving goal. The Dutch government has opted for a specific
combination of instruments tailored to the individual characteristics of each sector. They are summarised below with a brief description of th eir
assumed effect. Statutory obligations and binding standards
Energy savings can be imposed by means of statutory obligations and minimum energy efficiency requirements on, for example, electrical
appliances and houses. Adequate enforcement is a key condition.
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Market forces An important and unique policy instrument is the CO
2
emissions trading system. The system is designed principally to reduce CO
2
emissions. Emissions trade is based on market forces. Through the creation of supply
and demand, it is thought that companies that are obliged to participate in the system will take measures to meet their obligations at the lowest
cost. At present, the cheapest way for a company to reduce its CO
2
emissions is to increase its energy efficiency. Voluntary agreements
Every sector has entered into voluntary energy saving agreements with the government. The underlying idea is that agreements reached through
mutual consent will be more effective than agreements that are imposed unilaterally. The effectiveness of voluntary agreements sometimes lies in
the threat of a big stick: if the agreements are not kept, the government may introduce other instruments that are more expensive to the parties
in the sector Dijkgraaf et al., 2009. Financial arrangements energy tax, tax schemes, grants
Taxing the use of energy increases the price of energy. A higher energy bill, it is assumed, is a financial incentive to use less energy. Tax schemes
and grants can also be used to lower investment costs and thus cut the payback time of energy saving measures. Under certain conditions,
companies can deduct the cost of specific energy saving investments from their taxable profits or write off the investments against tax. Companies
and consumers can apply for grants or subsidies to buy low-energy products or invest in energy savings.
Communication and information Information on the energy consumed by, for example, electrical
appliances and houses helps consumers choose energy efficient products. Specific advice on energy efficient alternatives is more likely to be
followed up than general advice. In the built environment sector, for example, grants encourage house owners to seek specific advice on how
to make their homes more energy efficient. In the manufacturing sector, participants in the Multiyear Energy Efficiency Agreement receive advice
on energy saving options for their companies.
3.2 Reasons for selecting specific instruments
In 1999 the government drew up the Energy Saving Action Programme. It made a distinction between sectors that competed on international
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markets and sectors that faced little if any international competition EZ, 1999, p. 12. For the former, the government opted for self-
regulation and for the latter for government policy in the form of energy tax, standard setting and regulation.
In 2004 the government decided that energy saving would no longer be compulsory for companies participating in the CO
2
emissions trade. In effect, this meant that the Netherlands decided not to impose energy
efficiency standards for the greater part of manufacturing energy consumption. We return to this in section 3.4.1.
The Clean and Efficient working programme was introduced in 2007. In it, the government declared that the European CO
2
emissions trading system was the cornerstone of its mix of instruments VROM, 2007, p. 49.
In addition, where feasible and relevant, the government supports the introduction of energy efficiency and CO
2
emission standards. It would prefer worldwide and European standards to national standards in order
not to distort the international market.
3.3 Policy impact known in advance
In both 1999 and 2007, studies carried out for the Ministries of VROM and EZ found that the intended policy measures would probably not achieve
the set goals. ECN and the National Institute for Public Health and the Environment
RIVM Beeldman et al., 1999 extrapolated the effects expected from the instruments introduced in the Climate Policy Implementation
