Proposals for the climate economy. Calculations for Friends of the Earth-Netherlands

Friends of the Earth-Netherlands (Milieudefensie), seeking to make the energy transition more equitable, has identified measures in three areas that could help achieve climate ambitions while sharing burdens more evenly. FoE-NL asked CE Delft to estimate the impact of these measures.

On the expenditures side, FoE-NL has defined three funds:

1. A heat fund, for home insulation:

  • loans for home insulation, with benefits guaranteed higher than costs
  • no ceiling on loan sum
  • loan remission after 30 years for lowest-income brackets.

2. An accessibility package, for sustainable mobility and accessibility:

  • a shift in investments from roads to public transport and cycling
  • a time- and location-indexed kilometre charge
  • abolition of the untaxed commuting allowance
  • a flexible tax provision for private use of company cars
  • a progressive tax on air tickets.

3. An agricultural transition fund, for switching to regional, circular agriculture and reducing livestock numbers:

  • more sustainable and extensive agriculture
  • a higher VAT rate for fruit, vegetables, nuts and pulses.

Through to 2030, the aggregate costs and benefits vary between € 14 and 16 billion.

Taken together, the three funds have positive employment effects, despite the major losses in traditional livestock farming (60% + reduced herds). These losses cannot be offset by extensive, circular agriculture, which would grow substantially under the plan, but it would balance out in other sectors, where there would be 1,700-7,700 FTE net employment growth over the whole period.

The overall package is estimated to lead to an annual reduction of greenhouse gas emissions of 25-27 Mt CO2–eq. in 2030, which is less than the 49% target under the terms of the Netherlands’ Climate Act.

The country’s climate target, which according to the Netherlands Environment Agency (PBL, 2019a) will not be secured under the government’s National Climate Agreement, does become feasible with these three sets of measures in place.

With this package, low-income households see their income rise by 3.7%. For medium-income households, income remains unaffected on balance. High-income households contribute most to this climate transition, both in absolute and relative terms (- € 1800; -2.1%).