Greenhouses provide potential risk of carbon leakage

In contrast to companies under the European Union (EU) Emissions Trading System (ETS), non-ETS companies do not face an explicit carbon price in the Netherlands. For these non-ETS companies, there is limited information available on what the potential consequences are if they were to face carbon pricing. Particularly, little is known on their potential risk of carbon leakage, which varies significantly for each sector.

A recently conducted study, ordered by the Dutch government, sought to identify to what extent Dutch non-ETS sectors are exposed to carbon leakage risks and explore to what extent EU policies could mitigate these risks. It aims to support the Dutch Ministry of Economic Affairs and Climate Policy (EZK) in the context of European and national decision-making on new climate policy.

According to the study, 61% of Dutch non-ETS emissions at potential risk of carbon leakage relate to the Dutch nonETS greenhouse horticulture sector, which is by far the largest non-ETS sector affected by a non-ETS climate policy on fuel use. Even though the sector was found to be at risk of carbon leakage, a distinction needs to be made between carbon leakage towards countries with heated (greenhouse) and countries with unheated production.

While carbon leakage from heated Dutch greenhouses to unheated production in warmer climates negatively affects production levels in the Dutch sector, it may lead to lower global CO2 emissions due to lower carbon footprints per unit of product. This is not the case for leakage towards (Northern) countries using heated greenhouses, like the Netherlands.

Furthermore, in the manufacturing of polymers and greenhouse horticulture sectors, many producers use CHPs, which are at lower risk of carbon leakage. This is because the use of CHPs in the Netherlands has an effective carbon price of €0/ 2 due to various exemptions, unlike in some other countries like Germany and France where they do face a higher effective carbon price. However, this is set to change in the coming years, as the Dutch Coalition Agreement announced to abolish tax exemptions on CHPs.

Read the complete report here.

Publication date:

Receive the daily newsletter in your email for free | Click here

Other news in this sector:

Sign up for our daily Newsletter and stay up to date with all the latest news!

Subscribe I am already a subscriber