Industry must brace for new climate measures

In its recently published Climate and Energy Outlook (KEV) 2024, the Netherlands Environmental Assessment Agency (PBL) states that the country is unlikely to meet its 2030 climate targets. This grim forecast was somewhat expected, especially as the new cabinet has been reversing previous measures and suspending investments in green hydrogen and battery technology. However, Minister Hermans (Climate and Green Growth) has announced new measures slated for spring 2025 to try to meet these climate targets.

This won’t be an easy task: recent political compromises on issues like asylum policy and divided perspectives within the coalition regarding climate action make the proposed measures a potential new stumbling block for this cabinet. Nonetheless, the industry should prepare for new measures, as the legal climate targets remain in place, and this cabinet has also committed to them in its governing program. Despite significant progress over the past years and many concrete projects underway, the industrial sector faces a substantial sustainability challenge, for which a solid foundation is essential.

Preconditions and stable policy are crucial

This means the government must prioritize setting preconditions while introducing effective incentives—a balanced mix of “carrot and stick”—within a consistent and predictable policy framework. Without this, it’s like a construction project without a foundation—the plans exist, but progress is impossible without the groundwork. Policy stability is critical for the industry; the sometimes erratic policy of recent years has impacted competitiveness and, more importantly, diminished the willingness of foreign companies to invest in their Dutch operations.

Currently, many companies are holding off on investment decisions related to sustainability due to the lack of essential preconditions such as access to energy infrastructure, permitting processes, and physical and environmental space. Delays in crucial infrastructure projects, like the Delta Rhine Corridor (a project for the construction of underground pipelines and direct-current cables between Rotterdam and the German border, connecting to industrial areas in Moerdijk and Geleen), and bottlenecks in electricity supply heighten this reluctance. Furthermore, the recent Draghi report sends a clear message: Europe (and therefore the Netherlands) must invest now in a future-proof industry, with these preconditions as the starting point for investment.

Political discussion: necessity and opportunity for public affairs professionals

For companies and their public affairs professionals, this is a crucial and necessary moment to be part of the discussion, which also offers many opportunities. The expected new measures will likely lead to intense political debate, as the coalition must navigate between various interests within the cabinet, while the opposition calls for stronger measures. Moreover, the extraparliamentary nature of this cabinet gives the House of Representatives additional leeway to influence policy, challenging public affairs professionals to engage with both policymakers and political parties.

Opportunities also lie within the government apparatus: various government programs and policy plans, such as the Climate Plan 2025-2035 (currently under consultation), national programs for industrial sustainability and the circular economy, and cabinet visions on hydrogen and other energy carriers, set the policy course for the coming decades. This course is for the first time also comprehensively summarized in the Energy Note 2024* (Energienota 2024), providing insight into upcoming policy initiatives from the government, which are expected to expand with new measures.

The new measures are expected to focus not only on incentives but also on regulatory standards. According to the Climate Plan 2025-2035 (Klimaatnota 2025-2035), the Netherlands relies relatively little on regulatory policies, especially compared to subsidies. Although regulatory measures can stimulate the market, it is essential that they are implemented as much as possible at the European level to ensure a level playing field with neighboring countries. For businesses, therefore, it is crucial to engage in discussions on workable standards and their practical impact. Additionally, pricing as a policy measure is always a potential approach, although this coalition currently seems less inclined in this direction, as shown earlier this year when it reversed the increase in CO2 levies for the industry.

Broader impact of KEV 2024 findings

The impact of the KEV findings extends beyond the industry; sectors like construction, mobility, and finance will also feel the consequences, affecting the overall Dutch investment and business climate. Companies should prepare for increasing political pressure on the cabinet to act and should anticipate this in their planning. Sustainability brings not only challenges but also opportunities. The energy transition, alongside a better living environment, offers new green business models for companies that act in time. Government and industry will need to continue collaborating to reap these benefits, presenting a unique opportunity for public affairs specialists to help shape workable and effective policy.

*The accompanying policy agenda offers valuable guidance for companies navigating the maze of energy policy.