A comparison of energy intensity with industry
At the request of the Dutch Horticultural Product Board and the Ministry of Agriculture, Nature and Food Quality, CE Delft and the Agricultural Economics Research Institute (LEI) have compared the energy costs and Energy Tax burden of the greenhouse horticulture sector with those of industrial sectors. The aim of the study was twofold:
A comparison with industry shows that greenhouse horticulture is one of the most energy-intensive sectors of the Dutch economy, paying markedly more Energy Tax per unit turnover than industry. This holds whether the agricultural tariff or the general tariff is paid. Because of the small-scale nature of greenhouse horticulture, the Energy Tax paid on natural gas (with limited consumption in the cheaper tax bands) makes up a relatively high proportion of operating costs. As a result, a higher Energy Tax rate may have a greater impact on the competitiveness of greenhouse horticulture compared with industry. This confirms that the rationale behind initial introduction of the agricultural tariff is still valid.
Although various feedback mechanisms are theoretically conceivable to compensate for the increased outlay if the agricultural tariff is abolished, implementation will not be straightforward. With some of the options (feedback via income tax and corporation tax) the potential for adequate compensation of the increased tax burden for greenhouse horticulture is problematical. Serious consideration should be given to feedback options based on energy efficiency subsidies and a CO2 benchmark. Further study on these issues is required.