Netherlands Court of Audits afterword

27 Main conclusions, recommendations and undertakings Place in part I Conclusions Recommendations Undertakings 2.1 Fewer and weaker policy instruments have been applied than thought necessary in advance to achieve the energy saving goal. Policy instruments must be selected so that reasonably estimated effects will achieve the policy goals. If the policy or its impact is inadequate it must be revised. Since there is no energy saving goal, the minister of ELI does not think this is relevant. 2.2 Policy instruments had little effect in the manufacturing sector in 1995-2008. The reasons include: energy saving agreements in energy intensive industries have become increasingly less strict and the CO 2 emissions trading system has had little effect so far. Policy for energy intensive industries must be revised:  study options to improve the cost benefit ratio by spreading energy tax more evenly among user groups;  strengthen the CO 2 emissions trading system by supporting calls to lower the ceiling in 2020. The Minister of ELI will support the increase in European minimum rates of energy tax. The government will work at European level to improve the operation of emissions trading. MEE will encourage energy intensive industries to invest in energy savings. 2.3 Policy instruments for the manufacturing sector are more effective if they agree with the reasons why companies take energy saving measures. Many policy instruments only partially recognise these reasons. Policy for the manufacturing sector must be strengthened through better agreement with the companies reasons to save energy:  higher priority for knowledge;  stricter multiyear agreements;  increased market for energy efficient and low carbon goods and services through public procurement of sustainable goods and services. The costs and benefits of environmental permits should be studied further. The Green Deal will improve the agreement. Disclosing each others performance will be discussed with the participants. Sustainable procurement will be continued. A plan will be drawn up to strengthen compliance with and enforcement of the Environmental Management Act. Studies show that the Act is a cost effective option; additional study is not necessary. 2.4 Part of the energy saving is negated by the interaction between CO 2 emissions trade and other energy saving instruments. Three options not mutually exclusive to overcome the negative interaction with CO 2 emissions trade: 1. focus energy saving policy on sectors not participating in emissions trade; 2. target policy for ETS sectors on long- term benefits; 3. strengthen the operation of emissions trade by lowering emissions ceiling as from 2020 or by having the Dutch government buy up emission allowances. The Minister of ELI says that, despite the emissions trading system, targeted policy efforts are still required to promote profitable savings options for energy intensive industries. Innovations that produce alternatives to fossil fuels will be promoted. Buying up emission allowances is inappropriate. The government prefers an extension of emissions trading to other sectors. The government will support the better operation of the trading system at European level. 2.5 Continued implementation of the Balkenende IV energy saving policy will not bring about the stronger approach as promised by RutteVerhagen. The binding EU CO 2 emission reduction target will probably also not be achieved. A new vision of energy and climate policy is required that clarifies the relationship, priorities and route to the goals, with particular attention for the relationship between national energy saving policy and CO 2 emissions trade. According to the Minister of ELI the vision is set out in the coalition agreement. Existing instruments complemented with such plans as the Green Deal, Local Climate Agenda and Sustainability Agenda will be adequate to achieve the European CO 2 reduction targets by 2020. 28 Part II Audit findings 29 1 Introduction

1.1 Organisation of part II

We presented our audit conclusions in part I of this report. In part II we provide background information and further reasoning for the conclusions presented in part I. We begin by providing background information in chapter 2 on energy saving policy and the results achieved. Chapter 3 contains an evaluation of the policy. We explain the expected results of the proposed policy and consider the extent to which that policy was actually implemented. In chapter 4 we look at the interaction with the CO 2 emissions trading system and describe the options available to refine policy. The findings of our in-depth audit of the manufacturing sector are presented in chapter 5. We discuss the main motives and obstacles revealed by a survey we held among companies in the manufacturing sector. We also look at the costs and benefits of the policy instruments the government has introduced to save energy in the manufacturing sector in recent years. In chapter 6, we describe the relationship between the individual goals of Dutch climate policy and the impact that failure to achieve energy savings would have on the other goals of national and European climate and energy policy.

1.2 Terminology

Terms are frequently used in part II to refer to energy and CO 2 emissions. Joule is the unit of energy. As one joule is a very small quantity of energy, national figures are expressed in petajoules PJ. One petajoule is equal to 1,000,000,000,000,000 joules. The Netherlands used 3,349 PJ of energy in 2008 Daniëls et al., 2010, p. 30. The energy consumed as stated on domestic energy bills is expressed in cubic metres of gas m 3 and kilowatt hours of electricity kWh. One PJ is equal to 278 million kWh or 31.6 million m 3 . By way of comparison, an average household consumes 3,500 kWh and 1,600 m 3 per annum Milieu Centraal, 2010. CO 2 emissions are measured in megatonnes. One megatonne is equal to one million tonnes. 30 Feedstocks are energy carriers that are not used to produce energy but serve as a raw material to make products, such as oil for plastic and gas for fertiliser. 31 2 Results of energy saving policy Monitoring data released by the Ministry of Economic Affairs EZ in recent years show that energy savings in the Netherlands have been systematically lower than the governments ambitions. The ambitions have been raised and lowered on several occasions since 1995 but the targeted energy saving has not been achieved in any single year. Feasibility studies of the energy saving targets indicate that they can be achieved but only at very high national cost and with the broad support of the public and enterprises. Ex ante studies indicate that the goal for 2020 is not feasible. This chapter outlines the development of the policy goals in the period 1999 –2007 and the actual energy saving achieved each year.

2.1 Energy saving targets

2.1.1 European targets

The European Commission adopted a new energy policy at the end of 2006 European Commission, 2007, p. 46. The European Commission is seeking an economy that runs on sustainable, competitive and secure energy and low energy consumption. Energy saving The EU member states have committed themselves to reducing energy consumption of 20 by 2020, compared to the level reached in a situation of unaltered growth from 2005. At first sight, this target seems straightforward but it is open to several interpretations because a fixed measurement method has not been agreed. Furthermore, the European energy saving target is not binding. The two other European climate targets are binding. They relate to a reduction in CO 2 emissions and an increase in the share of renewable energy see below. The European Parliament and the Council require the EU member states to prepare a National Energy Efficiency Action Plan NEEAP Directive 200632EC, 2006. In its NEEAP, each member state must set an energy saving target of 9 by 2016 relative to average consumption in