On Friday, 22 April, the government announced a package of sustainable subsidy options and tax changes that will enable the greenhouse horticulture sector to make the energy transition more quickly. Below is the full message from the Hague.
The greenhouse horticulture sector must accelerate the energy transition in order to become climate neutral by 2040. To this end, the government is presenting a coherent package of both sustainable subsidy options and tax adjustments that will create the right financial incentives to invest in sustainable energy instead of natural gas. With this package, the government supports the acceleration of the agreements made in the coalition agreement and the Budget Memorandum 2021. Therefore, the provisional target for greenhouse horticulture in 2030 will be in the range of 4.3 to 4.8 Mton CO2 equivalents. The Minister of Agriculture, Nature, and Food Quality wrote this week (week beginning April 25) in a letter to the Lower House.
In accordance with the coalition agreement, the Netherlands wants to be a leader in the fight against global warming. In developing policy measures, the government focuses on an emission reduction of 60%. All sectors, including greenhouse horticulture, contribute to reducing emissions.
The government sees great potential in the greenhouse horticulture sector to lead the way in energy-efficient and circular production of high-quality vegetables, flowers, and plants. This requires an acceleration of the energy transition, which is not an easy task for the sector, given the current high gas prices and uncertainties due to geopolitical developments.
This week, the industry organization Glastuinbouw Nederland presented an investment plan to accelerate the reduction of dependence on (Russian) natural gas. This plan shows that the efforts of the sector and LNV are aligned, a good joint starting point for the future.
Financial incentives and fiscal measures
To ensure that climate targets are met in the future, the Minister of Agriculture, Nature, and Food Quality, together with the sector, will replace the current CO2 sector system in 2025 with a new effective, individually secured pricing instrument. The CO2 sector system is the result of a covenant of agreements between the sector and the government to reduce emissions. Unlike the current system, the new system must encourage individual growers to produce energy efficiently. That is why, for example, the level of the levy and thus the price for greenhouse gas emissions must be clear in advance so that growers can take this into account when making investment decisions.
The coalition agreement also includes measures that will have a broader impact on the greenhouse horticulture sector: reducing the ODE tariffs (levy for storage of sustainable energy and climate transition) by 2023, treating large and small-scale consumers more equally, increasing the tariffs for gas and reducing those for electricity. In addition, the Cabinet will abolish the reduced energy tax rate in 2025. These measures will be elaborated on in the Tax Plan 2023 and 2024.
Opportunities for sustainable investments
The Market Introduction for Energy Innovations in Glasshouse Horticulture (MEI) and Energy Efficiency in Glasshouse Horticulture (EG) subsidy schemes specifically aims to stimulate innovation and investment in energy conservation in glasshouses. These schemes will be reopened this year for an amount of EUR 7 million for MEI and EUR 25 million for EG, respectively. The EC subsidy makes it possible, for example, to invest in LED lighting or other energy-saving techniques.
The coalition agreement describes how the Climate Fund helps sectors such as greenhouse horticulture to build the necessary energy infrastructure. Synergy is possible between greenhouse horticulture, industry, and the built environment, for example, by linking residual heat so that greenhouse horticulture can absorb peaks and troughs in the energy system. A subsidy instrument is therefore being developed to make collective heat systems possible. In addition, adjustments are being made to the SDE++ subsidy scheme so that, for example, geothermal energy projects can be considered sooner.
No compensation for current high gas prices
The government cannot compensate for the high gas prices during this transition. However, the government is considering whether to support entrepreneurs who are going through the climate and energy transition but are experiencing immediate liquidity problems, for example, through a guaranteed credit, but mainly by facilitating and accelerating investments, such as in energy saving.
Source: Dutch Ministry of Agriculture, Nature and Food Quality