Report

Mineral extraction and the energy transition

This report was commissioned by NL-EITI to provide an overview of the current energy system and its impact on public financial flows, the climate and the environment.

The Dutch energy system
An energy system consists of an integrated system where energy is routed from source to application. It forms the backbone of a society, enabling businesses and individuals to operate. The system is thereby more than just its technical components. The system can be described as adequate if it can provide energy that is reliable, affordable and sustainable. In 2021 about 10% of the total energy consumption was renewable, including raw materials and for air and sea transport. Petroleum and natural gas currently remain the main energy carriers. Renewable energy is currently more expensive per unit of energy than fossil energy. The phasing out of fossil extraction in the Netherlands has resulted in almost 80% of the Netherlands’ energy having to be imported, which could present a risk to the security of supply.

Impact on public finances
Mineral extraction has always played an important role in the energy system, especially due to the Groningen field which is the largest natural gas field in Europe. The phase-out of fossil extraction and construction of a sustainable energy system will also have an impact on public finances: most visibly, natural gas revenues have fallen sharply in recent years and are set to fall even further. The closure of the Groningen field in particular has caused natural gas revenues to fall sharply in recent years. These revenues amounted to around €17 billion ten years ago. They are now less than €3 billion.

Impact on climate and environment
As a result, the energy system still operates mainly on the basis of fossil energy. Fossil sources, however, have a harmful impact on the climate and the environment. The climate impact of energy consumption is mainly (81-88%) determined by CO2 emissions released from fossil fuel combustion and to a limited extent by greenhouse gas emissions from extraction and transport.

Conclusion
Switching the energy system to renewable energy sources will take some time due to the historical development of the system. This will involve costs due to the provisionally higher cost of renewable energy carriers and the costs associated with constructing a new system. This development coincides with the removal of benefits from natural gas extraction. The switch, however, will bring climate and environmental benefits.