From zinc and glass to brick: can energy-intensive industry do without ‘fossil subsidy’? 16:51 in Economy Factories must close or leave if energy subsidies disappear, the industry warns.

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Climate Minister Rob Jetten wants to reduce the so-called fossil subsidy to zero. But the industry says that it cannot survive in the Netherlands without a tax benefit; the consequences for the economy and society would be major. Scientists and activists, in turn, emphasize that CO2 emissions are maintained by this fiscal government support.

The Ministry of Economic Affairs and Climate has calculated that between 39.7 and 46.4 billion euros are spent on fossil subsidies every year. This is evident from leaked Budget Day documents. That amount is much higher than the previously calculated 4.5 billion euros, and it is also much more than the 37.5 billion euros that was released last week.

The Netherlands offers tax benefits for companies that use a lot of oil, gas and coal. A company pays proportionately less tax if more energy is consumed. This concerns, for example, the steel industry, fertilizer producers and oil refineries, but also greenhouse horticulture and brick factories.

Zinc

Another company that needs a lot of energy is Nyrstar, which processes metal and produces zinc in a factory in Budel, Brabant. According to Jasper van Zon, head of external relations at Nyrstar, the necessary steps are already being taken to limit energy consumption. “We are trying to make this as energy neutral as possible through our own solar park. In addition, we are increasingly adapting our production depending on whether we generate more or less sustainable electricity.”

The zinc manufacturer emphasizes the social importance of zinc production. It is used, among other things, to make steel structures stainless, for cars, medicines and nutritional supplements. Nyrstar is also experimenting with production of critical raw materials. This concerns, for example, germanium, necessary for the production of chips. Due to the tense relationship with China, germanium is in danger of becoming scarce in Europe.

Industry on the drip

Boris Schellekens of the Foundation for Research on Multinational Enterprises (Somo) previously investigated the amount of so-called fossil subsidies: “It is nice that the government is now providing transparency, but I am very concerned about the fact that there is still no phasing-out plan. promised to phase out before 2025, but we are far behind. In 2009, the cabinet already said that the subsidies must be ended.”

Schellekens thinks that ending tax benefits for large energy consumers is necessary to get the industry to stop using fossil fuels. “Our economy is being kept on a drip with low rates. This is not future-proof.”

Somo thinks that the Netherlands will not be worse off if certain industries disappear. For example, they point to the bankruptcy of Aldel, the former aluminum manufacturer in Delfzijl, which had to close in 2022 due to the high gas price. Giga Storage, a company that stores sustainable energy, is now located at that location. This stored energy creates space on the busy electricity network to connect new companies.

‘Subsidy incorrect term’

The industry stumbles over the term ‘fossil subsidy’. Hans Grünfeld of the Association for Energy, Environment and Water (VEMW) represents the interests of Dutch industry that consumes a lot of energy. “Subsidy is an incorrect term. It is of course not intended to promote the use of fossil energy or CO2 emissions, but to ensure that climate measures or energy taxes do not lead to economic damage.”

If outgoing Minister Jetten does indeed cancel the tax benefit for large energy consumers, many manufacturers will get into trouble, Grünfeld thinks: “That would immediately lead to the cessation of production of many industrial companies. Then they would leave the Netherlands. That is where the Netherlands is failing, but also the climate, nothing to worry about.”

NOS op 3 previously made this explanation video about tax benefits for large energy consumers:

Pollute more, pay less… how!?
  • The fossil sector will receive between 39.7 and 46.4 billion euros in subsidies, even more than expected
  • Government policy inhibits innovation: ‘Established companies pampered too much’
  • Economy

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