The big green wall

by: Hans van Cleef

On 10 October it was the Dutch ‘National Sustainability Day’. But, based on recent news headlines, it could be National Sustainability Day every day. Only recently, we saw a number of key developments. The courts ruled against an appeal of the Dutch state regarding the Urgenda climate case as unjustified. As a result, the Dutch government must do more to cut carbon emission to reach the minimum target of 25% reduction in 2020 versus 1990. Elsewhere, the Dutch central bank – De Nederlandsche Bank (DNB) – warned that the financial risk of climate change for the financial sector was being underestimated. DNB indicated that the government should no longer postpone climate measures. On top of that, the climate panel of the United Nations – IPCC – released a new report. This report indicated that much more measures are needed to prevent the world from warming more than 1.5 degrees Celsius. Remarkably, the IPCC also mentioned Carbon Capture and Storage (CCS) and nuclear energy as necessary measures in almost all its scenarios.

You might think that this is perfect timing. After all, at this very moment many people are working on a Dutch Climate Agreement, and with that the Netherlands should be able to speed up its measures against global warming. Recently the Netherlands Environmental Assessment Agency (PBL) and the Bureau for Economic Policy Analysis (CPB) released their calculations regarding the initial draft Climate Agreement. To summarise the outcome: it was too little and too vague to calculate the exact costs. The parts which were specific enough to be calculated would lead to an additional investment of 80-90 billion euros for the period 2019-2030. These are in addition to the measures to be taken in the Energy Agreement (2023-2030). This is only a small step on our way towards the 2050 goals. Besides the fact that this concerns a huge amount of money, it is hard to say whether these investments will bear significant fruit. For instance, the calculation does not take into account how much costs are avoided by doing such an investment. On top of that, this is just an indication of the costs, without knowing all the specific measures needed.

The technology already exists. The shift towards more clean energy can be scaled up. However, the challenge ahead is enormous. More innovation is needed to keep costs in control and also to lead to more short term benefits for the consumer. Many more engineers are needed to make the energy transition possible and to scale up. However, there is already a chronic shortage of skilled people, and this will become even worse in the years to come, before newly-qualified engineers enter the labour market. This makes it more difficult to innovate quickly.

To reach the climate goals, bold decisions need to be made. At the same time, the call for more public support also rises. Creating more support takes time. And without this support there is a good chance that the current public grumbling will increase even further: more wind and solar parks in people’s backyards (NIMBY-ism), whole neighbourhoods which need to be connected to district heating networks, or other challenges associated with reduced reliance on natural gas. Meanwhile, the car must be replaced as the older diesel is no longer allowed in the city centre, and a weekend break to Barcelona can no longer be justified due to its carbon footprint, et cetera. On top of that, the subsidy schemes for the early adopters of renewable energy will be halted after 2025 according to the current government plans. This creates a massive problem for the government. The greater the need to accelerate the energy transitions increases, the bigger the chance that we run into a big green wall.

Already we see several measures which come with negative side effects. In Belgium for instance, six out of the seven nuclear power plants are currently out of service. As a result, Belgium needs to import more electricity. Luckily, the Netherlands is – amongst others – able to export some electricity, generated by gas fired power plants. However, by exporting electricity, we also import carbon emissions. If the Dutch government decides to close its coal fired power plants even earlier than 2030, the Netherlands would also occasionally need electricity imports, at least until the planned offshore wind parks are operational. However that means also a shift in carbon emissions to our neighbouring countries. These are the so called ‘waterbed’ effects, and this underscores the need for more European cooperation regarding energy policy is increasing.

Minister of Economic and Climate Affairs Wiebes pushed the task to come to a climate agreement back to the five negotiation groups. This is where specific and detailed solutions should result in a widely supported agreement, preferably even this year. The fact that most civilians are not represented during these climate talks is something we overlook. It would be fantastic if everybody leaves the negotiations as winners. The main question has always, and will continue to be whether the representatives active in these climate groups will be able to come with sufficient strong measures to come to a far-reaching climate agreement in the short period of time left. Or would it be wiser for the minister to take back control of making such an agreement himself?

 

This column was published earlier in Dutch on Energiepodium.nl