Energy Tax: a good idea or not?
The government is in consultations with the Senate about a new Tax Plan. In this context, State Secretary of Finance Wiebes is considering increasing the tax on natural gas by five cents per m3 and to offset this with a reduction in tax on electricity. Is this a good idea? Recently, two articles on this subject were published on www.energiepodium.nl. One by supporters of such a tax, Sible Schöne, director of the HIER Climate Agency, and Frans Rooijers, Director of CE Delft, and an article against the tax, by Martien Visser, Lector Energy Transition & Network Integration, Groningen University of Applied Sciences. Decide for yourself.
Submitted by Sible Schöne, Director of HIER Klimaatbureau, and Frans Rooijers, Director of the CE Delft
In the coming decades, we will be faced with the challenge to make our houses and buildings climate-neutral. This means we will need to stop burning natural gas and need to switch to alternative heating methods, such as electricity, green gas, geothermal energy, heat-cold storage and residual heat from industry. Making the tax system ‘greener’ is the perfect opportunity to bring us a step closer to this goal. One option is to gradually increase the price of natural gas to 1 Euro per cubic meter through energy taxes, in combination with the further reduction of the tax burden on labour and the introduction of a number of accompanying measures. This tax can be seen as an alternative to the current plans to increase VAT on services, such as visits to the hairdresser.
At the request of GasTerra, research agency CE Delft recently calculated that, if we want to heat houses and buildings in a climate-neutral and cost-effective manner, (smaller and larger) district heating systems would be able to supply roughly half of the buildings in the Netherlands, heat pumps one quarter and green gas another quarter. Especially in urban areas, district heating systems offer a solution to quickly achieve climate-neutral heating. In less urban areas, natural gas can best be replaced by green gas (from biomass). Of course, we must also, at the same time, insulate houses and buildings better.
"Implement a gradual tax increase in natural gas to a price of 1 Euro per cubic meter"
The problems gas extraction is causing in Groningen also show us that the Cabinet is finally taking heat supply seriously. The recent Heat Vision by minister Kamp indicates that the Ministry of Economic Affairs has changed the way it is thinking in the past year, and is finally recognizing the importance of heat supply. This new vision is, however, not yet being accompanied by concrete measures, but is mostly still characterized by lots of questions.
Denmark has already taken concrete measures. They already have thirty years of experience with heat supply through intelligent district heating systems, which deploy smart technology and ICT. The main measures that Denmark has taken, are the introduction of energy tax on natural gas, which means that the Danes pay around 1 Euro per cubic meter of gas, and giving municipalities the authority to appoint districts for heating projects. Because of the high gas price and the good quality of the district heating systems, there is no resistance against these heating systems in Denmark. The consumer also pays less for heat coming from the district system than for heat coming from a boiler.
If the Netherlands really want to achieve a climate-neutral built environment, our country also needs to implement a gradual increase in energy tax on natural gas to a price of 1 Euro per cubic meter, as part of the current tax reforms. This would bring the tax on natural gas, in CO2 terms, at the same level as the current tax on electricity.
It is important that this increase is introduced gradually, as it was done in the nineties, and that it is combined with a further reduction in tax on labour, specific measures for those groups that cannot afford higher energy prices and an active energy-saving scheme to stimulate both citizens and businesses to implement energy-saving measures.