The Hague eyes higher tax for larger industry emitters

The Dutch government has decided to maintain the planned rate of increase of its CO2 tax on industry until 2028, after which it will apply a higher tax to emissions that are further over the levy's threshold.

Industry tax measures put forward by the government in its 2024 tax plan package were rejected by the senate in December, prompting the government to reexamine the package in its spring memorandum published this week.

The government has opted to maintain the current price path for its national CO2 tax on industry until 2028, beyond which point the first 50,000t of taxed emissions will continue on the same path, but for emissions beyond this level the tax will increase to €216 in 2030.

This approach "takes into account the limited action prospects of some of the smaller emitters, without losing the incentive for the larger emitters in particular," the government said.

The Dutch national CO2 tax on industry introduced in 2021 levies the difference between the EU emissions trading system (ETS) price and a tax level determined by the government, which rises every year, essentially setting a minimum carbon price for covered companies.

For 2024, the tax stands at €74.14/t CO2 equivalent (CO2e), up from €55.94/t CO2e last year. The EU ETS benchmark front-year contract has closed at an average of around €61.95/t CO2e this year, Argus data show.

The government has turned down a motion to include a hardship clause for companies unable to pay the levy because of "missing preconditions" as "legally and technically undesirable and impracticable", but has commissioned external research to investigate possible alternatives.

The Dutch government intends to submit a draft climate plan for 2025-30 for public consultation by the autumn, it said in the memorandum.

By Victoria Hatherick