As of 1 January 2020 the government wants to introduce a minimum price for CO2 emitted in the Netherlands during the production of electricity. State Secretary for Finance Menno Snel and Minister of Economic Affairs and Climate Policy Eric Wiebes submitted a bill on this matter to parliament on Wednesday. A minimum carbon price will encourage businesses to make their operations more sustainable.
The measure will give electricity producers long-term certainty about their minimum costs, stimulating them to consider the effects of carbon emissions for people and the environment in their investments.
The measure is linked to the EU Emissions Trading System (ETS), which was set up to regulate the trade in emission allowances. One allowance gives the holder the right to emit one tonne of CO2. The price on the market is determined by supply and demand. But because this price fluctuates greatly the Dutch government has decided to introduce a minimum carbon price of €12.30 in 2020, increasing to €31.90 in 2030. Should the EU ETS price fall below this minimum price, the difference will be levied in the form of a national-level carbon tax. The EU ETS price is not expected to fall below the minimum price in the next few years.
The minimum carbon price will apply to all businesses that generate electricity and fall under the EU ETS. This includes power plants, as well as for example chemical plants, food producers and paper factories. Around 135 companies will be affected whose main or subsidiary activity is the production of electricity. The measure will be implemented by the Dutch Emissions Authority.
By introducing a minimum carbon price the Netherlands hopes to encourage other EU member states to do the same. To promote this, an international conference on carbon pricing and an EU aviation tax will be held in The Hague in June.
In addition to introducing the minimum carbon price for electricity generation, the government is working towards a reasonable carbon tax for industry.