Dutch Go Forward with Carbon Tax
The Netherlands, one of the world’s most environmentally vulnerable countries, plans to introduce a new carbon tax in the 2021 budget, pressuring other EU members to do similarly. The original plans to implement this policy stalled amid the COVID-19 pandemic, however, as of September 12, they have gotten back on track.
The Netherlands finds itself at considerable risk as sea levels rise in the warming climate. Roughly half of the Netherlands lies just a meter above sea level while 26 percent of the country, owing to centuries of land reclamation, lies below sea level. The Dutch system of dams, dikes, and drainage presently keeps the sea at bay. The system, among the most advanced in the world, has earned the title of one of the Seven Wonders of the Modern World.
The Netherlands first imposed a carbon tax as a means to reduce greenhouse gas emissions as early as 1990. This latest tax, however, comes after the country’s Supreme Court recently mandated the government to cut Dutch greenhouse gas emissions to 25 percent of 1990 levels by the end of 2020.
The tax targets the CO2 emissions of corporations. Exemptions for lower levels of carbon emissions will, for the time being, stay in place. The allowance for these lower level emissions will, however, become continuously restrictive. Starting at 30 euros per ton when enacted, the tax will increase to 150 euros per ton by 2030.
Despite the urgency of the climate emergency, the plans experienced delays in April due to the economic fallout of the COVID-19 pandemic, with sources telling the Financieele Dagblad that “it is not opportune to saddle companies which have been hard hit by the coronavirus crisis with an extra tax.”
The new tax has plenty of critics. Major corporations such as Tata Steel, Yara, and Dow Chemical have voiced their opposition to the policy, arguing that they would have to adopt less competition practices to remain in compliance. Prime Minister Mark Rutte emphasized the importance of balancing environmental and economic concerns, stating that “this tax needs to be reasonable. It needs to deliver significant CO2 reductions, without chasing companies away.” Dutch officials expressed hopes that other EU countries would follow suit to prevent Dutch companies from simply moving their operations elsewhere.
The carbon tax joins several other recent Dutch and European reforms designed to promote climate protection. The Dutch hope one day to impose a seven euro tax on all airline tickets as well as a much larger, pan-European plan to institute a carbon tax on imports into the EU market. European governments and institutions appear more interested than ever in bold and progressive climate action.