In order to achieve a low-carbon and circular economy where there are enough employment opportunities, it is necessary for the NE Dutch industry to innovate and join the world top when it comes to energy transition. This is stated by the Social and Economic Council (SER) in its draft opinion 'National climate approach for regional industrial frontrunners'.
In this report, the SER recommends a good mix of measures through which the realisation of the climate goals can be combined with favourable employment effects. In doing so, the costs of the transition must be shared fairly.
"It is very important that the industry starts using its international leading position to make the energy transition a success. In this way, industry can continue to make a major contribution to employment and prosperity in our country while meeting the sustainability goals," said Mariëtte Hamer, chair of the SER.
Four pillars
The SER sees that the discussion on reducing greenhouse gases in industry has recently focused mainly on possible instruments. According to the SER, this discussion is too limited and takes away from the broad goals of the climate agreement. The SER therefore presents a broader advice, consisting of four pillars: strengthening the regional approach; strengthening labour market and training policy; promoting innovation and investment in new technologies; and pricing avoidable CO2 emissions to accelerate innovation.
Working from five clusters
The coherent policy takes shape mainly in the five regional energy-intensive industrial clusters our country has, namely: Rotterdam/Moerdijk, Zeeland (Terneuzen and surroundings), North Sea Canal area, North Netherlands and Geleen region (Chemelot). These clusters house the 12 large energy-intensive companies, which together account for three quarters of the Netherlands' industrial CO2 emissions. These 'big twelve' have a pivotal role in the entire regional chain of companies. They must give momentum to the transition. The other companies in the cluster can then join in and thus reinforce this development. Through the chain relationships, realisation of frontrunner positions works through in the industrial environment but also far beyond, such as supplying residual heat for buildings, CO2 to greenhouses and more green hydrogen for electricity.
The SER proposes that the 'big 12' in these regional clusters make additional efforts and take the lead in creating multi-year industrial frontrunner programmes with ambitious CO2 reduction targets. The SER also proposes that the (implementation of the) frontrunner programmes be assessed and tested by a panel of international experts to ensure that the frontrunner programmes indeed push the boundaries of what is realistically possible in terms of innovation and synergy utilisation.
Labour market
For a successful industrial transformation, it is important that the labour market benefits from industrial developments. Training needs to match new developments in regional industrial clusters. Regional cooperation is needed to ensure that people who lose their jobs due to the transition can go where new jobs are created. Earlier, agreements were made on absorbing job losses due to the closure of coal-fired power plants. The SER indicates in the draft opinion that the experiences in the coal chain will be used in the approach in other sectors affected by the consequences of the energy transition.
To encourage industry to realise the CO2 targets as ambitiously as possible, the SER recommends a sensible implementation of a national CO2 levy. In terms of systematics, this levy could be as close as possible to the European Emissions Trading Scheme (ETS) in which, in principle, only the best performing ten per cent of industrial companies do not pay a levy. According to the SER, this national levy will have to go the avoidable part of CO2 emissions and lead to the reduction target for industry, at least 14.3 Mton by 2030. The regional front-runner programmes will increase avoidable CO2 emissions below the benchmark level.
For the SER, the design of the levy must at all times meet sustainability targets. But leakage of production, loss of employment and decline in willingness to invest must also be avoided, for instance by taking away unnecessary investment space. The long lead times of investments in industry should be taken into account to avoid levying on still unavoidable emissions. Levying on the avoidable part will incentivise companies to innovate and make new investments to reduce avoidable consumption.
With this proposed design, the SER sought to remove the objections and risks that emerged with levies on unavoidable emissions and the proposed bonus/malus system.
Innovation and subsidy
Real breakthroughs require investments in technologies that are currently in their infancy. This will require subsidies, both from national programmes and EU funds. Each regional cluster innovates in the way that matches its strengths. This is closely linked to the regional structure of the economy. Unprofitable tops in investment plans can be reduced through operating subsidies such as the SDE++ scheme.
The SER endorses the government's view that households and SMEs should not have to bear the costs of the transition in industry. In addition, for the sake of support and effectiveness of climate policy, it is desirable that citizens and SMEs are given a concrete action perspective. Therefore, it is necessary to relieve citizens and companies both financially and practically, for instance in the field of energy saving (homes) or energy-efficient measures (SMEs). Provisions must be made to ensure that sustainability does not come up against a lack of financial capacity.
Source: SER.
