Letter to the Minister of Economic Affairs

16-12-2016

A column by Hans van Cleef, senior economist for the energy sector

Dear Minister Kamp,

Earlier this week, you published the government's energy agenda. An agenda which should form the basis of the Dutch energy policy for the coming decades. The publication elicited some quite harsh reactions and a lot of criticism. Completely unjustified, in my opinion. It's not easy. The energy market is uncertain, because the future is difficult to predict. That has always been the case, but even more so in a period of global transition. This transition goes a lot further than just simply closing a couple of coal-fired power plants. It is a transition that will affect everyone, and by that I really mean everyone. A reduction in CO2 emissions does not only require a change in the supply of energy, consumers will also have to make changes in order to prevent the temperature from rising too much. And this costs money, quite a lot of money, which, ultimately, households have to pay. To keep the transition affordable and get people behind the idea, it is important to create a robust foundation, in a timely manner.

You have been responsible for our energy policy for just four years. And for four years, the complaint has been that things aren't going fast enough, that plans aren't ambitious enough and that the Netherlands are at the bottom of the lists. That is true. The Netherlands do indeed not score very well on some lists. But is that caused by recent policy decisions? How can anyone say that things are not going fast enough if: the share of renewable energy will be almost quadrupled in ten years’ time, the Netherlands are building enormous wind parks at a very low price, gas production will have halved within just a few years, and half of all coal-fired power plants have been closed? This forms a foundation your successors can build on.

What is even more surprising, is that everyone who is anyone wants to give their opinion about the energy agenda. An agenda which was actually drawn up based on the input that those same people could have given as part of the energy dialogue earlier this year. And while this agenda does not contain many surprises - simple because the vast majority of subjects have already been elaborated during this dialogue - those people who gave their input, are now supposedly deeply disappointed.

Of course, it is also not easy for NGOs, politicians and energy experts to admit that such a major transition requires compromises, that technological developments often can't seem to keep up with the objectives we think up, and that long distances - these targets are to be achieved within a period of 35 years - can only be covered step by step. Ambition is great, but when you start running blind, the chances of success are zero. That is why a good foundation is of crucial importance. History has taught us that if technological developments, cost reduction and social support allow, the acceleration will automatically follow. There is a reason why the International Energy Agency raises its expectations for sustainable energy every year. And just as well. In doing so, they create the foundation for the energy transition and, hopefully, for the acceleration of the process as a whole.

And that is exactly why this energy agenda is so important. It helps us determine our minimum pace. Of course we can – and should – accelerate when possible. Accelerating does require that we do not take irresponsible risks with regard to the security of our energy supply, but take the time to continue to develop technology, improve social support, reduce costs and increase efficiency. I now hope that the rest of Europe will follow your example. Dear Minister Kamp, if this so-called unambitious fake agenda will be just as successful as the transition of the past four years, the rest of Europe will soon join us, to not end up at the bottom of those same lists. The Netherlands should be proud of such a firm foundation.

Sincerely,
Hans van Cleef


 


Hans van Cleef is senior economist for the energy sector at ABN AMRO Bank. He is active on Twitter as @hansvancleef. He writes his columns in a personal capacity.