Our government pumps €39.7-€46.4 billion into the fossil industry every year
The world is burning. For each bucket of water our government throws on the fire, they throw six buckets of oil after it. The latest IPCC report is clear: the destructive effects of global warming are greater than we thought. We must bring emissions of greenhouse gases to net zero and stop burning fossil fuels right now. However, our government - completely ignoring the science - spends six times as much tax money on stimulating fossil fuel use as the entire budget for fighting climate change.
Large-scale users pay 100× less tax on their electricity than small companies. Power stations and refineries pay no excise duty on the coal and oil they use. If you fly, you are paying no VAT or excise duty on the kerosine for the plane. Large-scale polluters receive free CO2 allowances. In total 31 fossil subsidies have been identified so far.
These destructive, reckless and inefficient policies are unacceptable. We demand that the government stops all fossil subsidies - immediately.
Where does this €39.7-€46.4 billion come from?
A fossil subsidy is a financial arrangement whereby the government makes the use of oil, coal and gas cheaper. In 2020, (ex-)minister Wiebes first admitted in a letter to the house that our government supports the fossil industry with various “financial incentives”.
Ex-MEP Alman Metten was able to calculate all these incentives using publicly available statistics, deriving a figure of €17.3 billion in 2019. After more statistics were published, Metten found the original total to be an underestimate, and that subsidies actually amounted to €30 billion a year.
Early September, new research by SOMO, Oil Change International and Milieudefensie showed that there are 31 schemes in the Netherlands in which the government misses out on an average of €37.5 billion per year.
In leaked Budget Day documents from climate minister Rob Jetten the amount turned out to be even higher, between €39.7 and €46.4 billion.
According to the WTO’s definition of subsidies used by the cabinet, these subsidies are lost public revenue - mainly tax breaks. It’s usually not the case that these multinationals receive money - instead they get a discount on what they should actually be paying. This makes these arrangements invisible: they don’t appear in the state budget, while the missing revenue for the public coffers (9% of the total budget!) has to be coughed up by us citizens.
How is this €39.7-€46.4 billion broken down? So far more than 30 subsidies have been identified:
100× less energy tax for large-scale users
In the Netherlands you pay less energy tax the more you use. Large-scale polluters like Tata Steel, Shell or Dow, who make billions in profits each year, pay literally 100× less tax per kWh of electricity than SMEs like the bakery on your street corner (for gas, tax is 12,5× less). The few hundreds of these users in the highest electricity usage bracket use 40% of the total electricity, but pay less than 1% of the total electricity tax.
No excise duty on oil, gas or coal for electricity generation
We should be doing everything to make our electricity generation climate-neutral as fast as possible. Despite this, the Netherlands choses to exempt oil, gas, or coal from excise duty if it is used to generate electricity. This exemption is a counterproductive incentive that makes fossil-generated energy cheaper compared to renewable electricity generation
No excise duty and 0% VAT for air travel
Air travel is fully exempt from VAT and excise duty on kerosine (aircraft fuel). Strange - given that VAT is charged for (international) train travel, and energy tax is paid. This way, train travel cannot compete with flying. The modest flight tax of €26 that took effect this year is too low to make a difference to frequent flyers, the small group of 8% of travellers accounting for 40% of all flights.
No excise duties for refineries
Making petrol or diesel from crude oil takes a lot of energy. Companies such as Shell, which make billions in profits, derive this energy from oil, gas or coal on which they don’t have to pay excise duty. This is a direct subsidy towards the fossil industry. On top of this, it removes the incentive for similar companies to invest in sustainable alternatives.
Free CO2 allowances for industry
Large-scale polluters such as Yara, the biggest fertiliser producer in North-West Europe, need to buy CO2 allowances from the EU to compensate their emissions. They, and others, receive free CO2 allowances from our government, all while Yara - just like other multinationals - makes multiple billions in profits yearly.
…and billions more in further subsidies
Besides the subsidies described above, Economics and Climate Minister Rob Jetten referenced around 20 additional fossil subsidies that the cabinet grants, or plans to grant, in a budget statement and a letter to the House. For example, an excise duty exemption for shipping, energy tax breaks for greenhouse agriculture, and investment in gas drilling in the North Sea.
Why are they still here?
In 2009, the cabinet expressed the ambition to get rid of all fossil subsidies before 2020, when signing the Leaders’ Statement at the G20 in Pittsburg. Obama called it a “Historic effort to phase-out over 300 billion dollars of yearly subsidies”.
Unfortunately, the opposite happened. Under pressure from a strong industry lobby, Rutte’s cabinet more than doubled the stimulus for the fossil industry. Completely at odds with scientific warnings about the climate, this forces public health and nature to pay the price. The Climate Agreement (2019) mainly protects industry, letting citizen and small companies foot the bill. It shields fossil companies from having to pay the full cost of pollution and global warming. The industry lobby has The Hague wrapped around its little finger.
What do we want?
Extinction Rebellion demands that the government stops all fossil subsidies immediately:
Tell the truth about the extent of fossil subsidies.
Act now, abolish subsidies and direct this extra income towards a just climate policy.
Let citizens decide by allowing a national Citizens’ Assembly on Climate and Environment to decide how the Netherlands can become climate neutral by 2025.
The fossil era is over, but our government is still addicted to oil. This cannot go on. It’s not just the view of Extinction Rebellion: this is a demand supported by climate science, hundreds of economists, and millions of concerned citizens.