Our audit: audit background, questions and

8 2 Conclusions and recommendations

2.1 Main conclusion

The Netherlands is not achieving the governments energy saving targets. Between 1995 and 2007, national energy consumption rose by 11, versus a targeted increase of just 4. As a result, CO 2 emissions were 13 megatonnes higher than intended. Our audit found three causes for the underachievement of the policy targets: 1. In recent years, fewer and weaker policy instruments have been used than ex ante evaluations had found necessary. 2. The policy conducted in the energy-intensive manufacturing sector in the period 2000-2007 increasingly became less compulsory. The policy had few results. The energy saving achieved 0.5 per annum on average was less than the saving that would have occurred without policy the autonomous development of 0.8-1 per annum. In the period 1995-2007, the manufacturing sector as a whole performed slightly better 1.5 per annum on average than the national average 1.1 per annum. The national average, however, was significantly reduced by the transport sector. 3. Policy in the manufacturing sector only partially matches companies reasons for investing in energy savings. Policy instruments in the manufacturing sector are targeted chiefly at lowering the direct cost of investing in energy efficient measures. In practice, however, other reasons also influence energy efficient behaviour. Since 2008, a fourth cause has grown in importance: part of the energy saving achieved through the national energy saving policy is negated by the European CO 2 emissions trading system. The trading system was introduced in 2005 but had little if any effect in its first three years. Companies that cut their CO 2 emissions thanks to the national energy saving policy for example by means of a grant or tax scheme need to take fewer measures to remain within their emission allowances and can 9 use or sell their excess emission allowances. This means there is less incentive to use energy as efficiently as possible, i.e. to save energy. 5 The energy saving policy of the fourth Balkenende government was inadequate to achieve the policy goals and bring the 2020 energy saving targets within reach. The RutteVerhagen government said in the coalition agreement that it would continue and strengthen the approach to energy saving. Since the government has set the same or even higher ambitions for energy saving, even more effective policy will probably be needed to achieve them. The RutteVerhagen government has not set a national goal for CO 2 reduction but the European target still applies. It is unlikely that continuation of the Balkenende IV governments policy will achieve the Netherlands CO 2 reduction target. More effective policy will therefore be necessary to reduce CO 2 emissions. We consider this main conclusion in more detail in the sections below and make a number of recommendations to the ministers concerned at the end of this chapter.

2.2 Notes to the main conclusion

2.2.1 Use of policy instruments

In recent years, fewer and weaker policy instruments have been used than ex ante evaluations had found necessary. The governments ambitions to improve energy efficiency varied from a 1.5 to a 2 energy saving per annum between 1995 and 2010. The actual average energy saving between 2000 and 2007 was 1.1 per annum, including the autonomous saving that would have been achieved without policy, for example on account of global oil prices and technological advances. 6 The Balkenende IV governments goal of a 2 per annum energy saving was technically and financially feasible only at very high national cost. In 2006, the ex ante calculation of the policy indicated that 2 would be barely feasible, if at all, if account was also taken of the impact of related policy Daniëls et al., 2006, p. 40. A subsequent study concluded that a saving of 1.8 per annum could be achieved at relatively reasonable cost 5 There are several ways to overcome this negative interaction, see section 2.3.1. 6 It can be concluded from the literature that the autonomous sav ing lies between 0.8 and 1 for a summary, see Davidson et al., 2011.