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benefits of renewable energy Innovation Platform, 2010; Council for the Rural Area et al., 2010; VROM Council General Energy Council, 2004.
2. Coherent energy and climate policy The governments vision should clarify:
the relationship between energy policy and climate policy; the necessary instruments and their principal goals;
the route to achieve the goals.
When setting the goals and priorities, it should be borne in mind that a substantial and cost-effective reduction in CO
2
emissions can be achieved chiefly by means of energy savings.
Estimate of policy impact and inconsistent policy goals The policy instruments must be selected so that their expected and
reasonably estimated effects can achieve the policy goals. If it is known in advance that they will not, the ambitions must be lowered. If policy
implementation or effects do not match the ambitions, additional measures will have to be taken.
11
Given the inconsistent and sometimes contradictory energy and climate goals, the government must make clear to the House of Representatives
the principal goal of each policy instrument and its potential consequences for other energy and climate policy goals. A coal-fired
power station, for instance, will strengthen energy security but will not reduce CO
2
emissions
.
Inconsistent policy goals can lead to contradictory policy. Dutch energy and climate policy should be checked for
inconsistencies and revised where necessary. In this respect, we would remind the government that the Netherlands signed the G20 Pittsburgh
declaration of intent in 2007 to phase out fossil fuel subsidies in the medium term because they deter investments in clean and sustainable
energy. Relationship with CO
2
emissions trade Available instruments and resources should be used as efficiently as
possible. We pointed out to the government in the past that the introduction of CO
2
emissions trade reduced the effectiveness of all other policy instruments. We also recommended that an assessment be made of
the costs and benefits of all CO
2
emission reduction instruments Netherlands Court of Audit, 2007. The government has not yet followed
up this recommendation. We therefore repeat our recommendation that
11
We refer to policy implementation because it usually fails to meet the ambitions before it is realised that the effects are below expectations.
19
all energy and climate policy instruments be aligned to reinforce each other wherever possible. Alternatively, if the government and parliament
decide to retain instruments that, on account of international emissions trade, are less cost effective, they should clearly explain the reasons and
consequences. We have identified three ways in which energy and climate policy
instruments can strengthen rather than weaken each other. The three options described below are not mutually exclusive.
1. A first option is to focus energy saving policy on consumption that is
not subject to the CO
2
emissions trading system: a gas consumption by manufacturing companies not participating in the CO
2
emissions trading system, b gas consumption in the domestic, trade, services
and public sectors, and c energy consumption in the transport sector.
2. For the sectors participating in the CO
2
emissions trading system, a second option is to target policy instruments at the development of
innovations that are profitable in the long term, for example innovations in the biobased economy or alternatives to fossil fuels.
At present, emissions trade encourages measures that are profitable in the short term.
3. A third option is to strengthen the operation of the CO
2
emissions trading system by pricing emission allowances at such a high level
that companies invest in significant improvements in energy efficiency and in renewable, clean energy. This can be done by reducing the
emissions ceiling before the next trading period after 2012 or by significantly lowering the emission ceiling after 2020. This will require
a decision at European level. As a member state, the Netherlands can support this option. If a decision is not taken in Europe, the
government could buy up CO
2
emission allowances to take them temporarily out of the market. This is an expensive option and
would require concerted action by several European countries. The operation of the CO
2
emissions trading system could also be strengthened by critically reviewing the implementation of foreign clean
technology investment projects for which Dutch companies are allocated emission allowances.
2.3.2 Revision of energy saving policy in the manufacturing sector
The policy conducted to date has not forced energy intensive companies to invest in energy savings. To bring about substantial savings, policy in
the manufacturing sector will have to be reviewed. Our audit identified a number of options to strengthen the policy. All the options relate to policy
20
instruments for manufacturing companies that are not participating in the European CO
2
emissions trading system. Improved application and greater enforcement of environmental permits
Pursuant to the Environmental Management Act, provinces and municipalities are responsible for ensuring that companies that consume
a certain volume of energy take compulsory energy saving measures, on condition that the companys financial situation is adequate and the costs
are recovered within five years. Studies have found that the Act is not implemented in full and its effects are very limited De Buck et al., 2007;
Haskoning, 2009; Majoor De Buck, 2010. It is curious, we think, that the Act makes local authorities responsible for assessing a companys
financial situation. We recommend that the Minister of Infrastructure and the Environment review the Acts cost effectiveness and inform the House
of Representatives of its findings. Modification of energy tax brackets
With a view to cost effectiveness, energy tax could be spread more evenly over the various consumption brackets. This would reduce overall
costs because the most profitable measures would be taken before more expensive measures were considered. Relatively low tax rates for the
largest consumers give them a competitive advantage over foreign companies. The fiscal options to encourage energy intensive companies to
save energy should be studied.
12
Tax incentives will have little effect, however, if the government continues to exempt wholesale electricity
consumers from the top bracket if they are party to an energy efficiency agreement.
The importance of knowledge Our audit revealed the importance of knowledge about ways to save
energy. Companies must also have an insight into their own energy consumption. Large companies are more than capable of collecting and
using such knowledge but medium-sized companies need support. The multiyear energy saving agreements between the government and
the various consumption sectors provide the best opportunities to share knowledge about ways to save energy see below.
Stricter multiyear energy saving agreements The multiyear energy efficiency agreements the government has
concluded with various sectors have not exerted a great deal of social
12
Such a study could also consider compensation for negative income effects, for example in the horticulture sector.
21
pressure.
13
There would be more pressure if individual companies were aware of each others performance. Studies of the agreements operation
reveal that this is an important incentive, provided it does not discourage energy savings Lokhorst, 2009, pp. 80-81. A big stick the government
taking more stringent measures if the agreements are not kept would also increase an agreements effect Dijkgraaf et al., 2009.
14
Multiyear agreements would also be more effective if the associated activities were
directed principally at medium-sized companies and at increasing their knowledge of energy savings.
Public procurement of sustainable products Companies are more inclined to take energy saving measures that
increase their market share. There is therefore more than one benefit from the government stimulating the market by procuring energy efficient
and low-CO
2
goods and services. We recommend that the Minister of Infrastructure and the Environment continue to execute a sustainable
procurement policy.
2.3.3 Stricter EU policy
National binding targets for energy saving The EU energy saving targets are not currently binding on the member
states. The European Commission has announced, however, that it will consider setting binding national savings targets if it is thought in 2013
that the EU energy saving goal will probably not be met by means of the member states energy efficiency measures. We recommend that the
government clarify the energy saving goals it has set. It should also call in Brussels for binding national goals for all member states. Binding
national goals would level the playing field between the member states as they would prevent some countries doing little and benefiting from the
steps taken by the others. Active implementation of EU directives
New and stricter directives on energy efficiency in the various energy sectors will be negotiated in the EU in the coming years.
15
The
13
The effect of the second generation of multiyear agreements is also due to their influence on two other key factors: the expected consequences of energy saving and the perceived feasibility.
14
Such a threat must be credible and the instrument must be effective. An international comparative study by Dijkgraaf et al. shows that energy taxes are the most effective instrumen t,
especially in combination with a mechanism to return the tax income back to industry so as not to distort competition.
15
The new European energy efficiency plan was issued in 2011. It includes new directives and a tightening up of existing directives in the years ahead. A white paper was issued for the transport
sector in March 2011. It, too, provides for new directives.
