Climate policy synthesis study on Reconstructing policy theory and understanding the effectiveness and efficiency of current climate policy

This synthesis study reconstructs the theory of Dutch climate policy and analyses the effectiveness and efficiency of climate policy between 2019 and 2024. This study can be used to develop the new 2024 Climate Plan, together with the lessons learned evaluation of current climate policy conducted by the Netherlands Environmental Assessment Agency (Planbureau voor de Leefomgeving) and strategic advice from the Netherlands Scientific Climate Council (Wetenschappelijke Klimaatraad).

The results are based on evaluation research (26 studies) and a review of insights from scientific literature on climate transitions, complemented by a decomposition analysis of climate emission trends over the period 2015-2022. The main findings are:

• There is no central policy theory, though the carrot and stick approach is widely applied. We note important differences between sectors. Since each sector has its own characteristics, common practices and is at a slightly different point in the transition, the mix of instruments deployed differs. It is also notable that the agriculture sector has a fundamentally different approach. Climate policy for this sector is an integral part of an integrated approach that includes (closed-loop) agriculture, nitrogen and biodiversity.
• Remarkably, a strong growth in the number of sector-specific instruments is visible and the use of generic instruments, such as energy tax (energiebelasting), the Sustainable Energy Production and Climate Transition Incentive Scheme (Stimulering Duurzame Energieproductie en Klimaattransitie, SDE++) and the European Emissions Trading System (EU ETS), has remained relatively limited. Climate subsidies have increased sharply since 2019. Far more subsidies are deployed than pricing instruments.
• It is plausible that Dutch climate policy in general has contributed to greenhouse gas emission reductions, but we have not been able to quantitatively determine the exact degree of effectiveness.
• Effectiveness was assessed based on a limited number of evaluations. Based on these insights, we cannot make any statements on the effectiveness of the entire policy mix. We note that instruments aimed at energy saving, such as energy-saving investment credit (energie-investeringsaftrek), are relatively inexpensive. Other schemes aimed at renewable energy are somewhat more expensive or have a broader scope of effectiveness. The effectiveness of subsidies is limited by ‘free riders’.

Climate policy challenges increasingly transcend the level of classic market failures (the CO2 price is not paid in full) and are currently at the level of system and transition failures. Towards 2030, it is therefore recommended that instruments that create framework conditions from a broad systems perspective be used and that this be given a place in policy theory. Regarding climate policy, it is further recommended to ensure a balanced policy mix in which normative instruments also play an important role. Finally, the study recommends ways to better evaluate policies.