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© 2023 International Monetary Fund

SIP/2023/022

IMF Selected Issues Paper

European Department

Assessing Recent Climate Policy Initiatives in the Netherlands

Prepared by Chen Chen, Koralai Kirabaeva, Emanuele Massetti, Danielle Minnett, Ian Parry, Tjeerd Tim, Sylke von Thadden-Kostopoulos (all FAD), and Geoffroy Dolphin (EUR)

Authorized for distribution by Bernardin Akitoby

February 2023

ABSTRACT:

The Netherlands has committed to the EU's ambitious targets for cutting greenhouse gas emissions by 2030 and emissions neutrality in 2050 but at the same time is also vulnerable to sea-level rise and flood risks. This paper reviews recent mitigation policy initiatives in the Netherlands, including carbon levies for the industry and power sectors, energy and car tax reforms, and air passenger taxes, and recommends some modifications to these initiatives. The paper also provides assessments of hazards and macroeconomic risks from weather shocks and climate change and assesses the adaption plan against key principles on mainstream climate change into macro-fiscal planning.

RECOMMENDED CITATION: Chen Chen, Geoffroy Dolphin, Koralai Kirabaeva, Emanuele Massetti, Danielle Minnett, Ian Parry, Tjeerd Tim, and Sylke von Thadden-Kostopoulos, 2023. “Assessing Recent Climate Policy Initiatives in the Netherlands.” Selected Issues Paper 2023/022, International Monetary Fund, Washington, DC.

JEL Classification Numbers:	Q31; Q35; Q38; Q48; H23
Keywords:	Carbon levy; carbon pricing; climate change adaptation; climate change mitigation; emissions trading system; energy taxes; floods; green PFM; Netherlands climate strategy; price floor; sea-level rise
Author's E-Mail Address:	IParry@imf.org and EMassetti@imf.org

View Table

JEL Classification Numbers:	Q31; Q35; Q38; Q48; H23
Keywords:	Carbon levy; carbon pricing; climate change adaptation; climate change mitigation; emissions trading system; energy taxes; floods; green PFM; Netherlands climate strategy; price floor; sea-level rise
Author's E-Mail Address:	IParry@imf.org and EMassetti@imf.org

Front Page

SELECTED ISSUES PAPERS

Assessing Recent Climate Policy Initiatives in the Netherlands

NETHERLANDS

Title Page

KINGDOM OF THE NETHERLANDS-THE NETHERLANDS

SELECTED ISSUES

February 8, 2023

Approved By

European Department

Contents

• ASSESSING RECENT CLIMATE POLICY INITIATIVES IN THE NETHERLANDS

• A. Introduction

• B. Mitigation

• C. Assessing Climate Risks and Adaption Initiatives in the Netherlands

• D. Summary of Policy Recommendations

• FIGURES

• 1. Household Burden from Price Shocks and Budget Shares for Energy, Selected

• 2. Trends in International Fuel Prices

• 3. Impact of €50 Pure Carbon Charge on Production Costs for Selected Industries in the Netherlands, 2030

• 4. Impact of a €25/tCO2 Carbon Tax on Residential Natural Gas Prices in the Netherlands

• 5. Projected Revenue from km-Based Taxation, 2030

• 6. Current and Efficient Fuel Prices, Selected European Countries, 2020

• 7. Temperature and Precipitations: Observed Trends and Projections

• 8. Extreme Heat and Intense Rainfall: Projections

• 9. Projections of Drought Indicators

• 10: Debt-to-GDP Under Different Climate Change Scenarios

• BOXES

• 1. Supporting Public Investments in Clean Technology Infrastructure

• 2. The Delta Programme

• 3. A Stylized Cost-Benefit Analysis of SLR Using CIAM from 2050 to 2079

• TABLES

• 1. Climate-Related Investments in the Dutch Recovery and Resilience Plan

• 2. Tax Rates on Natural Gas and Electricity by Consumption Bracket

• 3. Percent change in GDP per Capita

• 4. Economic Damage from Weather and Climate-Related Extreme events, 1980–2020

• 5. Estimated Damage for 2018-2050

• 6. Welfare Change from Selected Climate Impacts (Percentage of GDP) for the Central Europe North region and EU-27+UK for Two Levels of Global Warming

• ANNEXES

• I. The Coastal Impacts and Adaptation Model (CIAM)

• References