Renewable energy and Climate policy incentives in the Netherlands

directoraat-generaal voor energie

Renewable energy and Climate policy incentives in the

Netherlands

Koomen05

Michel Verhagen

Willem van der Heul

Energy production directorate

Ministry of Economic Affairs


Topics

•incentives for renewable energyInvestment schemes EIA and EPR energy tax (REB) new MEP scheme

•incentives for climate policy


Investment schemes

• Stimulate investments in energy saving and renewable energy

• EIA: energy investment deduction scheme for enterprises (55% of investment is deductible from profit tax);

• EPR: investment scheme for households. RE investments 50% subsidy


Energy tax (REB)

• on gas and electricity consumption

• ceiling of 1 mln m3 and 10 mln kWh

• total revenue in 2002 over € 3 bln

• All REB is returned to target groups, i.e households and SME’s.

• For example: REB exemption for green electricity


REB on electricity (€ct/kWh)

kWh ‘98 ‘99 ‘00 ‘01 ‘02 ‘030-800 0 0 0 5.84 6,01 6,39

800-10000 1.35 2.25 3.72 5.84 6,01 6,39

10000-50000 1.35 1.47 1.61 1.94 2,00 2,07

50000-10 mln 0 0.1 0.22 0.60 0,61 0,63

> 10 mln 0 0 0 0 0 0


MEP scheme (environmental quality of electricity production)

• subsidise national production of green, CHP and “Clean fossil” electricity

• Reason for introduction: present demand oriented scheme ran out of hand (massive green electr. Imports) poor development of RE in NLharmonise with RE schemes in other EU-member states


RE Schemes in EU in 2003

supply

demand

Feed-in tariff / green prices

price quantity

Price supportof the demandNetherlands

Obligation (%) forconsumers or suppliersUK, Austria (small hydro)

Belgium

TenderIreland

Obligation for producersItaly

France (wind)Germany, Austria, Spain,Portugal, Greece, Finland,France, NetherlandsSweden, Denmark


MEP scheme (2)

•inspired on German EEG scheme

•budget € 258 m (2003) tot € 316 m (2006)

•RES € 141mln, CHP 94 mln, CF 23 mln

•10 year contract with fixed kWh subsidy

•Every NL electricity connection pays 34 €

•100% compensated in REB energy tax

•Start MEP foreseen in July 2003


MEP scheme (3) kWh subsidies:

•Wind on land 4,9 €ct/kWh (max. 18000 hr)•Wind offshore 6,8 €ct/kWh•Biomass co-firing 4,8 €ct/kWh•MSW + mixed biomass streams 2,9 €ct/kWh (only biomass comp.)•Hydro + solar-pv 6,8 €ct/kWh•CHP 0,57 €ct/kWh•Clean fossil electricity 6,8 €ct/kWh


Eligibility of RE imports

•Imports are eligible under REB 36i (fiscal demand subsidy). Restrictions:Hydro electricity and MSW are exemptedNo foreign subsidyBiomass co-firing must meet NTA 8003Electricity must be imported physicallyPM: reciprocity?


Guarantees of origin

•Present green certificate system is transferred into GOO system

•We will comply with planning in EC directive (Oct. 26, 2003)

•We are presently investigating consequences for import green electricity (refuse certificates from non-complying countries?)


Grid system issues (art 7 RED)

•No priority for RE electricity (for now)•The MEP law requires Tennet to subsidise RE electricity at a fixed tariff;•In practice at this time not many problems because NL has a dense electricity network•Problems may arise with implementation of wind off shore (6000 MW?)


Progress RE Targets

•10% in 2020, 5% in 2010 (primary energy)

•9% of RE electricity in 2010 (RED)

•Results in 2001: 1,2% primary energy, 2,8% electricity (almost 10% when imports were included)

•Prospects 2010-2020: 10% of primary energy can be done, but with 1-2% imports

•priority on wind (off shore) and biomass


Dutch Climate Policy

•reduction target 2008-2012: -6% from 1990 levels

•40 Mton a year

•50% flexible mechanisms: JI and CDM

•Extra: EU emission trading directive


Dutch JI Programme

•Budget: € 34 mln per year

•government purchases ERU’s

Four tracks

1. ERUPT

2. multilateral financial institutions

3. private banks

4. bilateral agreements


1. ERUPT

•public procurement for private companies

status

•ERUPT-I and -II: max 9 Mton

•price: € 5-9/ton

•ERUPT-III: selection phase


2. Multilateral Financial Institutions

•Participation in Prototype Carbon Fund

•Negotiations to sign contracts with EBRD and Worldbank to deliver emission reductions (expected: summer ‘03)


3. Private banks

•Contract private banks to sell emission reductions from projects in their portfolio

•Banks will be selected through public procurement (expected: summer ‘03)


4. Bilateral agreements

•Interesting option, but may be superseded by ET directive

•Credits have to be project-related (no “hot air”)


EU Emissions Trade Directive

•Start in 2005 (-2007 and 2008-2012)•Direct CO2-emissions only•Participating sectors: electricity prod.+ CHP installations > 20MW , steel industry, chemistry, paper 50% of Dutch CO2-emissions•‘Grandfathering’ of allowances by National allocation plans


ET scheme and electricity

•Electricity production sector major player in emissions allowance market

•Electricity sector charges customer for extra marginal costs allowances

•Grandfathering implies a subsidy to electricity producers

•With allowances of 5 euro, electricity price increases 7%

•Change in merit order electricity production


ET scheme and renewable energy

•Renewable electricity shifts in merit order

• Position renewables improved by scheme

•Estimated allowance prices (5 - 20 euro) not high enough to make renewables profitable

•No need anymore to support renewables from perspective of climate change policy

•Other policy goals may ask for extra instruments to support renewables


More info

www.emissionstrading.ez.nl

www.ji.ez.nl

www.cdminfo.nl

Thank you

Documents

Renewable energy and Climate policy incentives in the Netherlands