Evaluation of cost-effectiveness of Dutch domestic climate policy 1999-2004

This study reports on the cost-effectiveness of Dutch domestic climate policy between 1999 and 2003/2004, analysing the costs and the emissions reductions achieved. Policy costs have been broken down by target group (government, society as a whole and end users) and by sector (transport, urban environment, agriculture, industry/energy, and ‘other greenhouse gases’: OGG). Between 1999 en 2003 domestic climate and energy policy resulted in an overall reduction of 11.4 Mt in greenhouse gas emissions, 1.5 Mt of which through reductions in OGG, 8.1 Mt through energy saving and 1.7 Mt through use of renewable energy. From a national perspective the measures implemented under the various policies from 1999 to 2003/2004 had a cost-effectiveness of € 40-90 per tonne CO2 avoided. During this period, government expenditures on climate policy totalled over € 4.6 billion (in 2004 prices). The bulk of the measures implemented by the various target groups were funded by the Treasury via a number of major subsidy schemes. Partly because of the ample scope for free-riders under these schemes, Dutch climate policy has probably been rather more expensive than originally conceived. There was comparatively little government support for sectors where low-cost abatement options were available (passenger and freight transport, OGG). This is another indication that policy efforts were not as cost-effective as they might have been; a more rigorous approach would have focused on emission reductions in sectors where abatement was cheapest. On the other hand, certain synergies were achieved, with energy saving and use of renewables leading to 1-4% reductions in emissions of VOC, PM10, NOx and SO2. during the same period. If these synergies are factored in, the figure for the cost effectiveness of Dutch domestic climate policy becomes about € 10-15 per tonne lower, bringing it down to about € 30-75 per tonne of CO2 avoided.