Earthquakes and soil subsidence caused by gas extraction in the province of Groningen, the Netherlands : the framework of energy justice applied to implications of gas extraction in Groningen

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1 Title page

UNIVERSITY OF AMSTERDAM

GRADUATE SCHOOL OF SOCIAL SCIENCES

MASTER THESIS ENVIRONMENTAL GEOGRAPHY

Earthquakes and soil subsidence caused by gas

extraction in the province of Groningen, the

Netherlands

The framework of energy justice applied to implications of

gas extraction in Groningen

Student:

Herman Hilverda, 10181105

Supervisor:

dr. Eric Chu

Second Assessor:

Prof. dr. Joyeeta Gupta

E-mail address:

hermanhilverda@hotmail.com

Date of publication: 26 June 2017

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2 Source picture on title page: NU.nl (2015)

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Abstract

This study aims to explore and explain the implications of earthquakes and soil subsidence resulting from gas extraction in the province of Groningen in the North of the Netherlands from the evaluative framework of energy justice. Energy justice has three pillars: distributive, recognition and procedural justice. In this study, 15 interviews with municipal and provincial administrators, representatives of associations and foundations, journalists and experts are analyzed. Since gas extraction commenced in 1963, the risks and benefits have not been distributed evenly across the country. When in the late 1980s earthquakes and soil subsidence started to become an issue, claims for a relationship with gas extraction were not taken seriously. In 2012, an earthquake of 3.6 on Richter scale happened, which was a tipping point in the process of recognition for the risks of gas extraction. However, both residents and local administrators experience that receiving compensation for damage to houses can be a long and frustrating process. Today, residents and local administrators can design a new damage settlement protocol. This study aims to contribute to a better understanding of the spatial and social implications of earthquakes in Groningen, and to contribute to the emerging research agenda of energy justice in the field of energy geography.

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Introduction

In 1959, the biggest onshore natural gas field of Europe was discovered in the municipality of Slochteren, Groningen in the North of the Netherlands. Since then, vast amounts of gas have been extracted. This generated revenues for the NAM, the company that extracts the gas, and for the Dutch State, that receives the largest share of the revenues. As a result, the Netherlands has been able to finance its social welfare state and invest in large infrastructure projects. That the process of gas extraction was not without risks became clear in the 1970s, when reports attributed soil subsidence to gas extraction. In the late 1980s, the first earthquake happened and this event prompted many technical investigations on the relationship between gas extraction and soil subsidence and earthquakes. The conclusions of these reports were reassuring, since there would only be a minor change on earthquakes, and damage to properties of residents would also be minor. Therefore, there was no need to reduce gas extraction. In 2012, however, an earthquake of 3.6 on Richter scale happened. It now could no longer be ignored that gas extraction is causing earthquakes. The consequences are big: numerous houses are damaged, causing stress and feelings of unsafety for residents. However, for affected residents the process of to receive sufficient compensation for damage to their houses, is experienced to be difficult and unfair. Today, the monumental operation of inspecting and possibly strengthening all the buildings in the earthquake area will commence soon. Moreover, a new damage settlement protocol must be designed by local administrators and residents, since after political and social pressure, the NAM withdrew from the damage settlement process.

The section above is, in short, the history of the gas extraction and its consequences in Groningen. In the field of energy geography, the research agenda of energy justice is emerging (Sovacool & Dworkin, 2015; Jenkins et al., 2016). Energy justice is a concept derived from the field of environmental justice (Walker, 2012). Like environmental justice, energy justice consist of three pillars: distributive justice, justice as recognition and procedural justice. Distributive justice is the notion of the distribution of the risks and the benefits of energy generation in time and space. Justice as recognition is the notion whether the (in)justice of the distribution of risks and benefits is being recognized. Procedural justice is the question about who has a say in the process of the distribution of the costs and benefits, specifically whether local residents and administrators can have formal influence on this distribution. In this thesis, I will explore the case of gas extraction in Groningen from the lens of energy justice and I will do so on the basis of the following research question:

How can the risks and impacts of gas extraction in Groningen be explained through the lens of energy justice?

In three chapters, I will analyze the three pillars of energy justice with data collected from the field. In the Spring of 2017, I stayed three weeks in Groningen and interviewed local administrators and

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residents, as well as experts, journalists, representatives from associations and foundations. The questions to be answered in the consecutive chapters are the following:

How are the risks and benefits of gas extraction being distributed?

Are the risks resulting from gas extraction being recognized by the NAM and the State?

To what extent do both local administrators and residents have a say in procedures concerning the consequences of gas extraction?

In general, the analytical chapters encompass the past (distributive justice), the present (recognition) and future (procedural justice). However, since some issues encompass more timeframes there might be some overlap in the chapters. Moreover, since the case of gas extraction in Groningen, earthquakes and damage settlement is still developing, I decided not to include developments after I the time I did the field work. The scope of the thesis is therefore from the beginning of the gas extraction until the beginning of May 2017.

The thesis is organized as follows. First, the theories of energy geography and energy justice are introduced. Second, the methodology is explained more in-depth. Third, three analytical chapters of the three pillars of energy justice in the case of Groningen are presented. The thesis ends with a conclusion and discussion.

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Theoretical framework

Problem identification: spatial dimensions of the distribution of sources,

risks and profits of fossil fuel extraction, hence the need to study

“energy geographies”.

Direct and indirect profits of fossil fuel extraction

Direct and indirect risks of fossil fuel extraction

Resource extraction can result in spatial patterns of unequal economic development, which pose governance challenges related to energy access, energy security, and issues of climate and energy justice, including the unequal burdens of energy extraction. “People and places unevenly experience the costs and the benefits of energy extraction, generation, financing, distribution and consumption” (Practical Action, 2010 cited in Newell & Mulvaney, 2013: 135). This notion of distributive energy injustice is shaped by different actors and institutions with sometimes conflicting interests, and their actions can influence international flows of energy provision and consumption (Newell & Mulvaney, 2013). Many authors relate the extraction of fossil fuels to issues of violence (e.g. Kennedy, 2014; Pasqualetti & Brown, 2014; Argent, 2016). For example, an increasing demand for energy might be a rationale for military conflicts in order to secure energy supply. According to Newell & Mulvaney (2013), these types of conflicts can especially be seen recently in the Middle East and North Africa. Ross (2012) goes as far to say that “countries that are rich in petroleum have less democracy, less economic stability and more frequent civil wars than countries without oil” (Ross, 2012 cited in Newell & Mulvaney, 2013). The concept related to this statement is the concept of the resource curse.

According to Badeeb et al. (2017), the resource curse was first coined by Richard Auty (1993). Others (i.e. Apergis et al, 2014) credit Meade and Russell with coming up with the thesis of the natural resource curse in 1957. Adam Smith and David Ricardo, the founding fathers of current (neo)liberal economic thinking, expected that nations with plenty resources have an economic advantage over nations without resources. Auty (1993) however, demonstrated that the relation between resources and economic prosperity does not have to positive per se. Indeed, recourse rich countries tend to rely on the revenues from the resources, which results in a lack of investments in other sectors of the economy and makes it harder to adapt when, for example, the mine is deplete of minerals. This especially applies to developing countries (Karl, 2005), which are associated with weak democratic institutions and corruption. Therefore this might explain the lack of investments in healthcare, education and the economy. In short, both the state (in the short term) and extracting companies profit from the resources, but the people near resource sites have to carry the burdens. These burdens include environmental degradation, lack of political influence on process of the distribution of revenues and underdevelopment of the regional economy. One would expect that resource extraction

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creates jobs in a region, but according to Karl (2007), this is not the case per se. Oil and gas extraction requires a skilled workforce, which is often not present at the location, so these employers have to be flown in by the companies. Thus the sector creates only a few jobs at the location (Karl, 2007). According to the Dutch Safety Board, the mining sector in Groningen created 5400 direct and indirect jobs from 1963 onwards (Onderzoeksraad voor Veiligheid, 2014). However, this source does not mention whether locals or ‘expats’ fill these jobs, and what the rate is of direct and indirect jobs.

A specific kind of resource curse is the Dutch disease: “a decline in the export manufacturing and agricultural sectors, and inflation of domestic goods and service, caused by changes in real exchange rates and flows of capital and labor towards the boom sector” (Ross, 1999 cited in Kennedy, 2014: 264). If a state would spend the revenues of a resource well, for instance in investments with a high return rate, there would not be such a phenomena as the resource curse. However, this is often not the case and the money is used to finance domestic expenditures, such as the welfare state or to fill gaps in the budget. According to Stiglitz (2005), this also can result in an overvaluation of the exchange rate, and therefore negatively influencing export of goods produced in the industrial or agricultural sector. This is because the revenues in the gas sector increase, and so the national currency appreciates, which means that other sectors (i.e. industrial and agricultural) will get more expensive as well. The result is that these sectors will become less competitive. Norway, a country with a lot of recourses as well, decided to put all the revenues in a state fund (Larsen, 2006). According to Verhulst et al. (2014:6), the average revenues of this fund are 5,6%, and only 4% is annually added to general budget of the Norwegian state.

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Defining energy geographies: looking at the politics of governance

arrangements in the state-resources frame

Introducing field of energy geography

Governance arrangements in the state-resource frame

“Decisions to allocate, use and consume energy are in particular ways for particular purposes are mostly made out of the public eye and rarely in democratic forums. Whether for reasons of commercial confidentiality or geo-strategic sensitivities, public participation and deliberation around questions of energy governance has traditionally been very weak” (Newell & Mulvaney, 2013: 135) Hence, a geographical view on the relationship between actors in the energy sector and communities present at a resource site is needed in order to understand the processes in energy governance.

According to Pasqualetti and Brown (2014), the relationship between energy and society is age old, but has to be given more concern today. Their article was published in the relatively new journal

Energy Research & Social Science (2014), which aims to connect these two spheres as human

demand for (renewable) energy influences society as a whole. Pasqualetti and Brown argue that there is a nexus between energy and society, and geography embraces energy and society. The authors state: “the sphere of geography is (…) particularly helpful in understanding the environmental and geopolitical ramifications of the entire supply chain” (Pasqualetti and Brown, 2014:123). In other words, a geographical perspective is best suited to understand the spatial and scalar pathways of energy production and consumption. Calvert (2015) shares this view of a geographical perspective best suited to understand the relation between different places of energy consumption and production. Geography has acquired more attention in the last years in understanding energy issues – Calvert attributes this to, one the one hand, increasing demand for energy by consumers and, on the other hand, on the growing concern of climate change (2015).

Much has been written about the impact of oil and gas extraction on the livelihoods of indigenous communities (O’Faurcheallaigh, 2013; Argent, 2016; Calvert, 2015). Often an oil company has only one goal, and that goal is to extract the resource in the most efficient way. Therefore it has little interest in economic development of the region where it extracts the recourses. From the perspective of liberal economic theory, the discovery of a resource would be beneficial for a region and can be the basis for economic development as it brings jobs for rural communities (Stevenson, 2014). However, other authors have demonstrated that this is not always the case. Empirical evidence provided by, for example by Zarsky and Stanley (2011), demonstrate that often communities in rural extractive regions do not benefit from the extraction activities, and that it sometimes even undermines existing economic activity. O’Faurcheallaigh attributes that to the fact that oil companies are often profit-driven, vertically organized multinational firms, and have both the financial resources and the power to

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extract the resource (2013). The oil industry is a capital intensive sector, which means that extracting oil requires vast investments, but the profits are also high (Karl, 2004). The vertical organization contributes to a top down decision making process, and because of the high profits, oil companies have the financial resources to keep on investing. Moreover, resources flow from the extractive region to industrial centers, and leaves the extractive region underdeveloped, which results in spatial patterns of uneven economic development. O’Faurcheallaigh (2013: 21) notes that this phenomena can also be found in Australia (Newton, 1979) and the United States (Peluso et al. 1994).

The relationship between state agencies and rural communities is often a relationship with unequal power – states tend to have commercial interests and give resource extracting companies room to develop by ignoring the rights and interests of communities present on the site (O’Faurcheallaigh, 2013). O’Faurcheallaigh’s article is a case study of a remote aria in Western Australia, inhabited mainly by Aboriginals, where gas has been found. Given similar situations elsewhere, he is not too optimistic that the local communities will be included in the decision making process and will receive a fair share of the generated revenues from the gas extraction. However, the local communities did have influence in the process, when they refused to have the gas extraction developed on their lands, which was accounted for in legislation. This happened party mostly because the indigenous people had the rights to their lands. Moreover, O’Faurcheallaigh attributes this to the fact that today there is more global recognition of the rights of indigenous people and that companies have to take these into account. This can also be attributed to the ability of the communities to organize themselves and have an uniform communication. For resource extracting companies, this means that they need to acquire a ‘social license to operate’ (SLO) (e.g. Nelsen, 2006 for mining activities and Moffat & Zhang, 2014 for other extracting industries). A SLO is not an official license given by a government, but according to Nelsen a “SLO is a means to earn accountability, credibility, flexibility and capacity for both stakeholders and industry” (Nelsen, 2006: 161). Stakeholders in this sense are people that will potentially suffer from the extracting activities. In Europe, where we tend to think these matters are accounted for by states and companies, this is not necessarily the case. More research on European examples is therefore needed. This will be demonstrated in the presentation of the case of Groningen.

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The justice and equity dimensions of energy justice: energy poverty and

environmental justice

Energy poverty

Environmental justice: Distributive, Procedural and Justice as Recognition

The concept of Environmental Justice is in short about a fair distribution of environmental impacts among people. Gorden Walker assesses this concept in his book (2012) and divides environmental justice in three spheres: distributive justice (are environmental hazards evenly distributed?), procedural justice (do affected communities have a say in the process of decision making?) and justice as recognition (are the affected communities being recognized in their harm?). In his book, Walker applies these spheres to the examples of flood vulnerability and climate change, but not on harm caused by resource extraction activities. To a certain extent, this is has been done by O’Rourke & Connoly (2003), who address the environmental and social impacts of the production and consumption of oil with the use of an environmental justice framework. However, O’Rourke and Connoly mostly focus on the distribution of burdens related to oil extraction, and do not make mention of procedural justice or justice as recognition.

Walker notes that environmental justice is a normative notion. Normative means that a notion is not universal, because everyone has different ideas of how things ought to be. In other words, this means that justice does not mean the same for everyone. In order to make a claim of an unfair situation, evidence has to be provided by the claim-maker. Evidence is descriptive, so a justice advocate can choose whether or not to mention certain aspects of the situation. This relates to the issue of framing, according to Walker, “Framing is a nation that the world is not just “out there” waiting to be unproblematically discovered, but has to be given meaning, labelled and categorised, and interpreted through ideas, propositions and assertions about how things are and how they ought to be” (2012: 4).

It may be clear that in the process of claim making, normative notions and presented evidence are very much related. In this process, a claim maker has to demonstrate the exposure, vulnerability and responsibility in a situation and this process can be very complex. In relation to gas extraction, this means that neighbouring communities are exposed to the extraction activities. The communities may or may not be able to cope with the resulting physical and psychological damage. And finally the responsible actor (the state or the oil company) may or may not be cooperative in the process of recognition and therefrom following measures to compensate the victims of the extraction.

Because energy provisioning is in the private sector and not in the public domain, it is difficult to hold parties responsible for environmental injustice issues, all the more because these parties are often ‘powerful elites or multinational corporations’ (Newell & Mulvaney, 2013). Environmental justice

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advocates have a long history of successfully litigating against companies and states which interfere in environmental injustice practices (Agyeman et al. 2002; Figueroa, 2009; Mohai et al. 2009, Walker, 2012). However, most examples presented by these authors encompass, among other examples, issues of polluting industries, air quality and mining activities in the United States or developing countries. Very little has been written on environmental justice in oil or gas extracting companies in Europe.

At first sight the relationship between energy and justice may not be so apparent, but our collective energy decisions have moral implications (Sovacool & Dworkin, 2015). The authors argue that energy justice has three key elements: “Costs, or how the hazards and externalities of the energy system are imposed on communities unequally, often the poor and marginalized. Benefits, or how access to modern energy systems and services are highly uneven. Procedures, or how many energy projects proceed with exclusionary forms of decision-making that lack due process and representation” (Sovacool & Dworkin, 2015: 437). Energy justice therefore act as an appropriate analytical tool to investigate the case of the earthquakes in Groningen.

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Situating the theories in the Groningen case and identifying the gap in

knowledge

In the late 1950s, a gigantic gas field was discovered in the Dutch province of Groningen. The discovery of the gas made it possible for Dutch households to heat their houses and to cook on gas, moreover it financed for a great part the Dutch welfare state. Since the 1980s, there have been several earthquakes in Groningen, but the NAM (the company responsible for the extraction) and the state was reserved in acknowledging the relation between gas extraction and earthquakes, as it is dependent on the revenues generated by the gas extraction (Verhulst et al. 2014), and Dutch households being dependent on the gas for cooking and heating (Trommelen, 2016). The relationship was finally acknowledged, but this did not result in a hold in gas extraction. To date, all political parties wish to reduce the volume of gas being extracted or turn off the gas tap completely. This might be related to the fact that attention has been given to the subject in the satiric late night show Zondag met Lubach and comedian Freek de Jonge started a protest as well, which resulted in a national dander on the way the NAM treats the victims of the earthquakes. In the light of the coming parliament’s elections in March 2017, the political parties must take a stand on the subject.

Many articles and reports have been written on the Groningen gas field (Van Eck et al, 2006; Fokker & Van Thienen-Visser, 2015; van Thienen-Visser & Breunese, 2015; Juez-Larré et al, 2016; Spetzler & Dost, 2016; Van de Voort & Vanclay, 2015; Kester, 2017). Except from the latter two contributions, all articles have a technical perspective on the situation in Groningen. The main conclusion that can be drawn from the articles is that the relation between gas extraction and earthquakes is scientifically proven. On the other hand, the literature on the impacts of the earthquake on the residents in the area is rather limited.

Van de Voort & Vanclay (2015) assess the impacts of earthquakes on the local residents and how this influences their trust in the NAM and the government. This article gives a good overview of the history of the situation in Groningen, but does so from an environmental impact assessment point of view. This means that the article is mainly focused on the environmental and social impacts of the earthquakes in Groningen, and the authors argue that a new environmental and social impact assessment has to be undertaken for the NAM to remain their ‘social license to operate’. Despite written by two cultural geographers, the article lacks a geographical perspective because it not address in depth the conflicting interests of the different stakeholders, such as the NAM, state and the affected residents, and the scalar and spatial distribution of the gas revenues.

This literature review demonstrated that much has been written on the relationship between states and companies and rural or indigenous communities in, mostly, developing countries. Compared to the Randstad, Groningen has a low population density, but compared to other resource rich areas in the

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world, Groningen has still a relatively high population density. Thus, a knowledge gap exists in the governance of risks and profits of resource extracting activities in rural areas of developed countries. Moreover, the field of energy geography has not been applied yet on this case, and neither is the evaluative framework of environmental justice.

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Methodology

The type of the research that was conducted is explorative. I explored gas extraction in Groningen and its consequences from the perspective of energy justice. For this, I used the qualitative method of in-depth interviews. I interviewed administrators of affected municipalities and the provincial executive of Groningen, responsible for the dossier of earthquakes. I also interviewed representatives of several projects sponsored by NAM’s livability fund, as well as the president of this fund. Moreover, I interviewed representatives from associations and foundations that defend the interests of different groups in the society of Groningen, including the Groninger Bodem Beweging (Groningen Ground Movement) and the Stichting Groninger Dorpen (Foundation Groningen Villages). Furthermore, I interviewed a law professor, journalists of the local newspaper and the local television station, an official from the National Coordinator Groningen (NCG) and an official from GasTerra, the company that buys and sells gas that the NAM extracts. Lastly, I attended an evening for affected residents to find out about their experiences with the NAM and the State. I also wished to interview a representative of the NAM, but I was not able to make an appointment with the NAM. In appendix 1, a complete anonymized list of the persons I have interviewed, can be found.

During the interviews, I asked questions concerning distributive justice, justice as recognition and procedural justice and how this is experienced by the representatives. During the interviews, I also tried to understand the role of the NCG and the implementation of the Meerjarenprogramma

Aardbevingsbestendig en Kansrijk Groningen 2017-2021 (NCG, 2016a). In the phase prior to the

interviews, I assessed this multi-annual plan, which is the policy the province as a whole can cope with the consequences of the earthquakes. From this policy, I deducted the role of municipalities and its citizens in the light of energy justice.

The research design can be considered as a case study design (Yin, 2009). I will investigate two municipalities and its projects, Loppersum and Slochteren, in depth. I chose these two municipalities because Loppersum is the middle of the gas field and Slochteren is the place where the gas originally has been discovered. The interviews will be semi-structured and topics of distributive and procedural justice will be addressed, as well as justice as recognition. Indicators for this are, among others, distribution of revenues of gas extraction, the municipality’s say in the procedure and if a municipality feels that the earthquakes and resulting losses are being recognized.

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Table 1: indicators of energy justice, based on Walker, 2012, Sovacool & Dworkin, 2015 and Jenkins et al., 2016

Distributive Recognition Procedural

Risks of gas extraction Recognition by NAM Access to information

Benefits of gas extraction Recognition by national government Participation in decision making process

Vulnerability* Compensation Access to legal processes

Need* Say in distribution of risks

Responsibility* Say in distribution of benefits

Say in distribution of compensation *these concepts have been defined more in the next table

Table 2: definitions of selected concepts in table 1 Concept Definition

Vulnerability Notion of who is vulnerable to the risk of resource extraction Need Notion of who is in need for compensation for the exposed harms

Responsibility Notion of who is responsible for the environmental hazards resulting from gas extraction

The data is analyzed from the evaluative framework of energy justice. This means that I looked for the indicators of energy justice (distributive, procedural and recognition) mentioned in table 1, and what this means for the municipalities and province in practice. I realized that the list of indicators might not be complete and more indicators might arise during the interviews. However, I did expect new indicators to be able to be subsumed under one of the spheres of energy justice (distributive, recognition and procedural). During the analysis, I compared the different notions of the spheres of energy justice and this will result in a complete picture of how the relation between the NAM and the affected municipalities is.

In order to find out what the NAM finances and sponsors, I assessed NAM’s website which has a list of projects the NAM sponsors. With this information, I looked for the contact details of the respective projects or organizations of which there are 12 in total. To get to the NAM, I first tried to reach the contact persons who work with the projects and request him or her for an interview.

The conducted interviews have been recorded and transcribed in Dutch and therefore the coding was also been done in Dutch. The names of these files will be [interviewee X + occupation interviewee] to ensure that anonymity is guaranteed and interviewees could be confident to speak their minds. A thematic analysis was done in Dutch, using tables and indicators. This will be the basis of the eventual analysis in the thesis, which was of course written in English.

Reliability and validity

The notion of reliability is about whether or not a study is repeatable, and if the outcomes would be the same if the study would be repeated (Bryman, 2012). The case of the earthquakes in Groningen

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because of the gas extraction activities is an evolving case. The opinions and experiences of the interviewees may be changed in a year, or even during the process, because of not foreseen developments (e.g. more severe earthquakes or the announcement of a royal compensation for every affected community). During the three weeks I was in Groningen for the field work, there were indeed some developments. For example, the NAM withdrew from the damage settlement process, and negotiations about a new damage settlement protocol were in an impasse. These issues will be revisited in the analysis section.

It is clear that this influences the reliability and therefore, it is important to note that the project only gives an exploration and explanation of the situation of developments before and during Spring 2017. This is connected to validity, which is the question concerning whether the right conclusions are drawn from the analysis results (Bryman, 2012). It is therefore important to keep the research questions in mind at any time, e.g. does an interview reflect someone’s view on my definition of energy justice?

There were some practical constraints in doing this research. I was not sure whether someone from the NAM was willing to be interviewed by me on this subject. The NAM already has an image problem, and it might be not in their interest to be interviewed by a student. I hoped to cope with that by asking them to help me understand the recent court ruling. I stated my independence and objectivity to the NAM when I approached them for an interview. This is justified by the fact that I have no interest to tear down the NAM, but merely wish to understand the case from an perspective of energy justice, and the NAM is one of the involved actors in gas extraction. I approached the NAM several times, but eventually I was not able to make an appointment for an interview.

On the other hand, the representatives of the community side (i.e. representatives of municipalities, province and projects) were more willing to be interviewed. This can be explained by the fact that they might think that the problems around human induced earthquakes and the resulting damage needs to be exposed more, especially in other areas of the Netherlands.

Units of analysis

The units of analysis are governmental representatives from the local, provincial and national governments. The local governments are the municipalities Loppersum en Slochteren, the provincial government is Groningen, and an official from the National Coordinator Groningen (NCG) can be considered as a representative of the national government, because the NCG is under the ministerial responsibility of the Minister of Economic Affairs. From the societal groups, the units of analysis are representatives of the Groninger Bodem Beweging (Groningen Ground Movement, GBB), Stichting

Groninger Dorpen (Foundation Groningen Villages), Stichting Groninger Landschap (Foundation

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the local newspaper and a local television station, and a law professor. Lastly, representatives of three organizations that received finance from NAM’s livability fund, who were able to tell the story of their financed project and also give a resident’s point of view. The resident’s point of view came also forward during a social movement evening for affected residents.

Next to interviews as a source, I assessed Multiannual Earthquake Resistant and Promising

Groningen Plan of the NCG. In this policy plan, the plans of the NCG for the future of Groningen are

presented. Four times per year, the proceedings of the NCG are published and I assessed the quarterly report of first three months of 2017. Some interviewees referred to other policy documents, court rulings or ministerial decisions as well, therefore these documents were also analyzed.

Ethical aspects

The objective of this project was not to expose the NAM, the objective was to understand the earthquakes resulting from gas extraction and the consequences from a lens of energy justice. That is why during the interviews, I asked only ask exploratory and explanatory questions.

Before an interview started, the interviewee and I agreed on several issues. For the transcription of the interview and the following analysis, it is necessary that the interview was recorded. However, an informant had to agree that the interview was recorded. I stated that the recording will be saved in a password protected folder and will be deleted as soon as I have received my diploma. In the transcription, the name of the informant will be made anonymous, as well as in the thesis itself. It is useful to mention someone’s function and place of work, in order to conduct a fruitful analysis. The rationale behind this is that informants need to feel free to give their opinions on anything and talk about their experiences without being constrained by an idea that this might get back to them.

I mostly interviewed representatives from the ‘victim’ side of the earthquakes, because I expected that the ‘responsible’ side will not be too willing to be interviewed by me. Nevertheless, I tried to make an appointment with the NAM, however unfortunately in this I did not succeed. It was important to try to be as objective as possible, and not sympathize with the victims and not consider the NAM as the enemy of every citizen in Groningen. As stated, the objective is not to expose the NAM, but merely to understand the earthquakes resulting from gas extraction and the consequences from a lens of energy justice

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Analysis

Past: distributive justice

Introduction

This chapter analyses the first pillar of energy justice, distributive justice. Distributive justice in the light of energy generation is the notion of whether the costs and risks are evenly distributed across time, place and space, as well as the distribution of the benefits of energy generation (Sovacool & Dworkin, 2015). This chapter notes that the distribution of the advantages and disadvantages of gas extraction in the province of Groningen is experienced to be unfair by the residents of Groningen, but at the same time it is acknowledged that the gas field is just in Groningen and it cannot be moved. Moreover, the ‘economic motor of the Netherlands’ happens to be not in Groningen, but in the West of the country, so it is reasonable that more of the revenues flow to that part of the country. In this chapter, I will give an overview of the history of the gas extraction in Groningen and the calls for a fairer distribution of the revenues, as well as an overview of several politicians and scientists who have claimed the existence of the relationship between gas extraction and soil declines and related earthquakes. In this chapter, the sub question to be answered is: how are the risks and benefits of gas extraction being distributed?

History of gas extraction in Groningen

In 1959, on the land of farmer Boon in Kolham in the municipality of Slochteren, Groningen, a large field of low caloric natural gas was discovered by geologists of the Nederlandse Aardolie

Maatschappij (Dutch Oil Company, or NAM). According to the Mining Law, which was instituted

under Napoleonic rule in 1810, the State is the owner of all the natural resources under the ground. Four years later, in 1963, gas extraction began. The Dutch State gave the NAM the concession to extract the gas. The concession was fully given to the NAM in the first place because the NAM discovered the oil, but more importantly, because the Dutch State wished to exploit the gas itself with the use of a state company. Since the Netherlands is not a member of the Organization of the Petroleum Exporting Countries (OPEC), Shell warned the Dutch State that its wish could lead to problems with OPEC if the State would extract the gas (Correljé, 1998). The Gas Building was constructed in order to secure the State’s influence on the gas extraction. The Gas Building will be discussed later in this chapter.

The NAM was founded in 1947 and since then has been extracting oil and gas from relatively small on- and offshore locations in the Netherlands. Because the gas field in Groningen was estimated to be very large, new agreements had to be made and concessions had to be given. The new agreements were secured in the Gas Building. The ownership of the NAM is split 50-50 between Shell and ExxonMobil, two giants in the oil industry. Most of the income generated from gas extraction flows to

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the State as a whole, so the minister of Finance administrates it as income. It is however not clear exactly what percentage of the gas revenues flow to the State. Some of the interviewed say 90% to 95% while others speak of 70% to 80%. This might relate to the fact that the Gas Building (Gasgebouw) only recently became more transparent as a result of European guidelines concerning the liberalization of the energy market (Gastel et al, 2014). The Gas Building is a legal construct in which the roles and responsibilities of different actors (State, private and private-public actors) around the gas extraction are laid down.

When the gas field was discovered, it was estimated to be 60 billion cubic meters (Gastel et al, 2014). Since then, the estimates changed regularly and eventually it was discovered that the Groningen gas field is the biggest onshore gas field in the world with 2900 billion cubic meters of gas (idem). Until today, 2065 billion cubic meters of gas has been extracted (NAM, 2017b).

The Gas Building

Before coming to the distribution of the costs and risks of gas extraction, it is relevant to explain the roles and responsibilities of the different actors in the Gas Building. On page 23, the Gas Building can be found (Creeze, 2016; interviewee 6). The construction of the Gas Building is very complex and some actors are wearing different hats. The construction of the Gas Building is relevant because in this legal construct the different roles and responsibilities of the concerned actors are secured. In relation to human induced earthquakes, an examination of the Gas Building can provide a starting point to find out who is responsible for which aspect of gas extraction. Moreover, to know the Gas Building will contribute to a better understanding of the concerned actors and their behaviour. In order to avoid confusion, I will address the different actors one by one.

As mentioned earlier, 50% of the NAM is owned by Shell and another 50% by ExxonMobil. The NAM has a concession from the State to extract the gas from the Groningen field. The NAM then sells gas to GasTerra, which in turn sells the gas on the gas and oil market. Before 2005, this was done by Gasunie, a state enterprise that was responsible for both trade and transport of the gas. In the light of the European guidelines for the liberalization of the energy market (Gastel et al, 2014), Gasunie was split into the trading company GasTerra and Gasunie remained a state enterprise only responsible for the transportation of gas.

As any other company, the NAM pays taxes and levies for its activities to the State. Since NAM is a privately owned company by Shell and ExxonMobil, there is no obligation to publish annual reports on profits and taxes. ExxonMobil and Shell are quoted companies, so they do publish annual reports, it is however not possible to find exact figures of their tax obligations. Nevertheless, new European regulation require oil- and gas companies to publish their payments to the government (European Parliament, 2013). Recently, the NAM published its annual financial report of the year 2016. In 2016,

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the NAM had a turnover of €3.5 billion and made a profit €526 million, from which almost completely flows to Shell and ExxonMobil (NAM, 2017a). This figure encompasses all activities of the NAM, so not only gas extraction in Groningen, but also offshore oil and gas extraction. In 2016, NAM payed €3 billion to the Dutch State (NAM, 2017a). This year was the first year NAM published its annual financial report.

The State Supervision on the Mines supervises the activities of the NAM and advises the national Ministry of Economic Affairs on the gas extraction and safety issues. The NAM is for 60% owner of the Maatschap Groningen (Partnership Groningen), which is responsible for the costs and the risks of the exploitation and management of the gas fields. Although Maatschap Groningen is owned 60% by the NAM owns 60% of the NAM, it has a say of 50% in the decision-making. According to Correljé (1998) this was the outcome of the negotiations between Shell, ExxonMobil and the Dutch State in the early 1960’s.

The State is the only owner of Energie Beheer Nederland (Energy Management Netherlands, EBN) and its dividend generated by its activities flow to the State. It is EBN that generates the revenues of gas for the State. EBN is the 40% owner of GasTerra B.V. and is also owns 40% of Maatschap

Groningen (Partnership Groningen). However, EBN has a 50% say in the decision-making process.

In conclusion, Maatschap Groningen is managed 50-50 by a state actor (EBN) and a private company (NAM), but NAM owns 60% and EBN 40%. The Maatschap Groningen is the actor that carries the economic costs and risks of gas extraction, and is the actor that decides on the volume of gas to be extracted from the gas field. Since Maatschap Groningen is both privately and publicly owned, both the NAM and the State are liable for the decisions made by the Maatschap.

GasTerra B.V. is a company that trades in gas. It buys gas from the NAM and sells it on the market to energy companies and industries. When, for example, an energy company wishes to generate electricity with the use of gas, it can buy gas from GasTerra. It is Gasunie that is responsible for the transportation of the gas via pipelines or ships. GasTerra also trades internationally because of the liberalization of the energy market in the European Union since the 2000’s. This means that it not only trades in Dutch gas, but also in Norwegian or Russian gas. GasTerra is 25% owned by Shell and 25% by ExxonMobil, the State is the 10% owner of GasTerra, and EBN owns 40% of GasTerra.

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23 Nederlandse Aardolie Maatschappij B.V. (NAM) Shell ExxonMobil Maatschap Groningen (Partnership Groningen) GasTerra B.V. Energie Beheer Nederland B.V. (EBN) (Energy Management Netherlands) Dutch State State Supervision on the Mines 50% 50% 40% 100% 10% 25% 25% 40% 60% dividend Taxes and levies

Supervision on

dividend

Gas from the

Groningen-field Market

Concession for exploitation of

Costs and risks of exploitation for

Is being sold to

Sells gas to Gas Building

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Distribution of costs and risks of gas extraction

Considering the distribution of the risks and costs of gas extraction, one has to be aware that the relevant assets in this case are not owned by the same actors. The underground gas is owned by the State and only the State can give concessions to an oil company to extract it. The ground above the gas, however, is owned by land- or home-owners and, as a consequence, the properties on these plots are privately owned as well. It is not up to the homeowner to say whether he/she wants the gas to be extracted, but it is the State that makes the decision. What we will see, however, is that the residents of the area are bearing the risks of the gas extraction.

Already in 1972, the young new member of parliament Jan Terlouw for the liberal democratic party D66 claimed that there was a relationship between gas extraction and soil decline in Groningen. The then Minister of Economic Affairs, Harrie Langman, said that this relationship was not true (Schenk & Timmer, 2009). He based his statement on a report produced by the NAM, which concluded that soil decline due to gas extraction was only happening at a very slow rate, so it was not necessary limit gas extraction (Schenk & Timmer, 2009).

On the other hand, the NAM seemed to realize that gas extraction was not without risks. A board member of the local tennis club in the village of Middelstum, Loppersum, who I spoke to because the tennis club received a subsidy of NAM’s livability fund for solar panels on the roof of the canteen, used to work at the regional water authorities (interviewee 5). She noted that in the 1970s, the NAM established a fund for water authorities to adapt to soil decline (idem). Soil decline is happening in Groningen in the shape of a ‘soup plate’, where soil subsidence most in the center of the field while at the border the soil declines at a slower rate (see also map 3 on page 35). The ground water level remains more or less the same, so in the middle of the ‘soup plate’ the soil is getting wetter. In the Netherlands, soil subsidence is a natural phenomenon that is quite common and is often tackled via the use of water pump stations to pump water away to ditches and canals. In Groningen, however, soil subsidence happens faster because of gas extraction (interviewee 5). In a sense, one could argue that the NAM did recognize their liability in the soil subsidence because they financed the building of water pump stations. The fund was completely financed by the NAM and the NAM transferred 650 million guilders to the fund (Correljé, 1998). The water boards called these specific stations ‘NAM water pump stations’ since they were eventually financed by the NAM (interviewee 5). Other things that were financed with subsidies from this fund were, for example, the improvement of dykes in order to make them stronger and better able to absorb shocks in the ground and soil subsidence.

Report Dutch Safety Board (2014)

In 2014, the Dutch Safety Board published a damning report on the extent to which residents’ safety was taken into account in the decision-making process of gas extraction (Onderzoeksraad voor Veiligheid (OVV), 2014). The Dutch Safety Board is an authority that independently can decide to

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investigate people’s safety in many areas of society, including (chemical) industries, transport and construction sites. The Dutch Safety Board decided to conduct the investigation after the most severe earthquake of Huizinge in 2012 which caused damage to properties and ‘the confidence of residents in the safety of the gas extraction and the parties involved reached a low point’ (OVV, 2014:5). According to the writers of the report, it was long thought that the risks of earthquakes to happen were minimal and ground subsidence was a natural phenomenon on which gas extraction had a minimal effect (OVV, 2014). The aim of the report was to examine to what extent residents’ safety was taken into account in decisions concerning gas extraction.

The conclusion was strong: residents’ safety was not at all taken into account. The authors write that three factors explain why this was the case. Firstly, safety was not included as a separate interest in the system of responsibilities around gas extraction; secondly, among the involved parties, which are Economic Affairs, the NAM and Maatschap Groningen, there was a lack of urgency in conducting research on reducing the uncertainties and risks of gas extraction; and thirdly, in regard to the citizens of Groningen, there was a lack of communication and accountability (OVV, 2014). According to the Safety Board, the Gas Building has always been a nontransparent structure in which the different actors were understanding each other’s interests and were always looking for consensus, and as a result, there was no room for critique or back pressure (OVV, 2014).

The Safety Board also made some recommendations for the future of gas extraction (OVV, 2014). First of all, the actors in the Gas Building need to recognize their failure to take residents’ safety into account and should assign residents’ safety a strong position in future decision concerning gas extraction. One way to do this is to include a citizens’ perspective in the decision-making process. Lastly, the Safety Board recommends that the State Supervision on the Mines should get a more independent position in relation to the Ministry of Economic Affairs. In March 2017, the Safety Board published report in which an update was provided of how the recommendations were followed up (OVV, 2017). I will revisit this report in the next chapter.

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Map 1: Earthquakes in Groningen from 1986 until today (only earthquakes with a magnitude of 2.0 or higher are shown), source (NAM, 2017b)

In the scheme of the Gas Building, it can be seen that the Maatschap Groningen is responsible for the risks and costs for gas extraction. However it is not clear what this exactly means – are these standard economic costs and risks that apply to every company that does business or are the costs and risks as a result of earthquakes caused by gas extraction also taken into consideration at the Maatschap Groningen? Moreover, both the State and the NAM point their finger at the other when considering the responsibility earthquakes since both the State and the NAM are in the Maatschap Groningen. Many people in the region consider the NAM to be responsible for the misery done to them, but it is the State that gives concessions and receives the largest share of revenues, and it is a state firm that has an equal say in the management of gas exploitation. I will revisit the local impacts in the chapter on justice as recognition. Many people in Groningen that have cracks in their houses feel that they have been carrying the costs and risks of earthquakes, while the companies can get away with it. All the more because it is very difficult for residents to receive a decent compensation for the damages done to their properties, procedures are extended and it is up to the resident to prove that the damage has been caused by earthquakes, instead of the NAM has to prove that is has not been caused by earthquakes. This issue of recognition will be addressed more in depth in the next chapters on recognition and procedural justice.

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Distribution of revenues of gas extraction

As stated above, the revenues of gas extraction do not stay in the province of Groningen. A share of the revenues is earned by the NAM, but the biggest share goes to the State. In that sense, every citizen of the Netherlands benefits from the revenues generated by gas extraction, addition to residents of Groningen. The coordinator of the earthquake dossier in Slochteren – the municipality where gas was first discovered – noted that,

‘(…) mensen zeggen van: “Ja, je profiteert er toch ook van?” Ja natuurlijk dat is zo, maar alleen het gaat om de evenredigheid en de balans. (interviewee 1)

‘Of course also people in Groningen benefit also from gas extraction, but what is important are proportionality and balance.’ (interviewee 1, own translation)

In this section, I will address the distribution of the revenues of the gas extraction on the basis of a report by the Dutch Court of Audit, a report of Statistics Netherlands, and data from the conducted interviews.

When gas extraction activities began in 1963, an engineer, Willem Meiborg, wrote an open letter to the local newspaper of Groningen in which he predicted that the revenues would not be distributed evenly across the country:

‘Nog is er geen gas in huis of in de kranten staat al hoe groot de winsten voor de Staat (Holland!) en voor de oliemaatschappijen zullen zijn, enz. Maar welke voordelen zullen ter beschikking worden gesteld voor de besturen en voor de bewoners der noordelijke provincies? Daarover leest men tot heden niets’ (Meiborg, 1963)

‘Not a single house has been connected to the gas network and already the State (Western provinces!) and the oil companies are predicting high profits. What will be the benefits for the local administrators and residents? Nothing is said about that yet’ (Meiborg, 1963, own translation).

Moreover, he calls for a fund to be established to cover damages attributed to future soil subsidence, which will be more severe because of gas extraction. Meiborg did not receive a serious response from neither the NAM nor the State, but today his prediction became the truth. I was not able to find out what the responses of others were in that time, but his grandson, Willem Meiborg, is still fighting for recognition of the harm done to the residents in Groningen by the NAM.

Report of Court of Audit (2014)

According to the Dutch Court of Audit’s report in 2014, in the period from 1960 to 2013, the Dutch State earned around €265 billion from gas revenues. From this figure, €239 billion has been used for

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general means such as welfare benefits, education, and healthcare, though it cannot be traced exactly where and what this money has been used. The reason for this it that the revenues have been part of the general budget, and was in this setting not assigned to specific projects. A total of €26 billion has been used for the Fonds Economische Structuurversterking (Economic Structure Enhancement Fund, FES), which existed from 1995 to 2010, to finance infrastructural projects such as the Amsterdam South-Axis and the Amsterdam ring road (Verhulst et al., 2014). The fund was managed by both the Ministry of Economic Affairs and the Ministry of Finance (Wet Fonds economische structuurversterking, 1995), which mean that these ministries have the power to assign money to specific projects.

In the report, the authors also describe three scenarios of how the Dutch government could use gas revenues in the future (Verhulst et al, 2014). First, revenues can be used for the general budget, but then it would be difficult to trace how the money is spent. Moreover, when there are limitations on gas extraction, for example because of the increased awareness of the risks of gas extraction such as earthquakes and soil subsidence, financial cuts will be made by the Ministry of Finance. The second option would be to reinstall an enhancement fund in order to trace how the money is spent and, in this way, invest more in Groningen, for example in infrastructure projects or in regional employment. Finally, the third option is for the State to decide where to invest the revenues through establishing an investment fund – as Norway did – and only use the interests of the fund for state expenditures. The advantage of this last scenario is that the fund, if invested well, will generate long-term financial gains.

According to Verhulst et al. (2014), in the general budget of the Netherlands from 1963 to 2013, gas revenues contributed approximately 10% to 20% of the total budget. As a result of a limitation of gas extraction because of the earthquakes, this figure has been decreasing. In 2013 9,8% of the total budget was attributed to gas revenues and, in 2014, this percentage was down to 6,4% (Notten, 2015). After the severe earthquake of 2012, the gas production was not limited immediately, but under societal and political pressure, the gas production was limited from 2013 onwards. I will get back this decision in the chapter on justice as recognition.

It is evident that gas extraction is an important component of the Dutch economy when it comes to the national budget; however, gas extraction is not a labor-intensive industry (Notten, 2015). This means that since the discovery of the gas field in Groningen, employment associated with gas extraction has not grown very much. Moreover, the labor income quote in gas extraction – meaning the proportion of income costs against the total generated profit of gas extraction – is around 4% compared to an average of 43% in the Netherlands in general (Notten, 2015: 13). This means that compared to other sectors, labor costs of gas production are 4% of the price, while in other sectors the average labor costs are 43% of the price. In other words, the profits generated through gas extraction goes mostly to the State and the NAM, while the local labor pool gets a relatively small share of the profits. This

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means that the revenues are not evenly distributed, the international operating firms and the Dutch State receive the biggest share while local employees receive a relatively small share.

Economic Structure Enhancement Fund (FES) (1995 – 2010)

The FES was established in 1995 with the intention to save a part of the gas revenues and to invest them into infrastructure projects to improve the economic structure of the Netherlands (Wet Fonds economische structuurversterking, 1995). Economic structure refers to transport infrastructure such as (rail)roads and harbors, but also to ‘technology-, telecommunication- and knowledge infrastructure’ (idem: article 3). In its lifetime (1995 to 2010) the total budget of the FES was €33 billion, which is 78% financed by gas revenues while the rest comes from the sales of state participations and savings on interest charges, (Verhulst et al, 2014). These are activities on the financial market conducted by states in order to generate income with other means than tax regulations. State participations can be seen as shares in company in which the State invests, and these shares can be sold on the financial market. When an individual buys shares of the State, it lends money to the State, these shares are called obligations. An interest is calculated to cover the risk for the lender and make it interesting for someone to lend money to the State. When the interest rate on State obligations decreases, the interest for the State to pay will decrease as well. As a result, the State can save on the interest charges and in this context, this money is used to invest in the FES.

To be funded by the FES, a project had to be of national interest and had to enhance the economic structure which is referred to above. For example, 80% of the FES was used to finance infrastructure projects such as the Amsterdam Ring Road, the High-Speed Line from Schiphol Airport to Belgium, and the Betuweline from the Rotterdam Harbour to Germany (Verhulst et al., 2014). The FES did not directly fund a specific project, but a ministry (e.g. the then Ministry of Transport and Water, now Infrastructure and the Environment) could add financial means of the FES to a budget of a project. It was up to the ministries to account the expenses in annual reports.

There were also plans for a High-Speed Line from Amsterdam to Hamburg, Germany, via Groningen, to be financed by the FES, but it was decided in 2007 that the plan would not be executed. The reasons for the abandonment of the plan were the high costs and expected low advantages (Centraal Planbureau, 2006). As a compensation, the province of Groningen received a fund from which local (building and infrastructure) projects were financed. There is € 2,6 billion in the fund, which is to be invested in the development in the Northern economy, as well as the accessibility of the Northern provinces (Province of Groningen, n.d.). According to a law professor of the University of Groningen, it is not bad per se to do investments in other parts of the country, but Groningen did not benefit much from these investments:

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‘Die Zuiderzeelijn is toen niet doorgegaan en toen was er wat geld over en dat is weer naar

het Groninger Forum gegaan. Nou goed, daar is voor een deel natuurlijk aardgasgeld mee gemoeid. Dat geldt ook voor allerlei andere projecten, de zee beveiliging in Zeeland, ontzettend veel grote projecten zijn ervan gefinancierd, de Betuwelijn, de tunnel in Maastricht. Daar zijn veel dingen van betaald. Wat op zich zelf ook prima is, je moet gewoon investeringen doen in je land. Maar de regio zelf heeft daar niet bijzonder veel van geprofiteerd.’ (interviewee 11)

‘The Zuiderzeelijn did not go on and then there was some money left and it went to the Groninger Forum [a cultural center]. Well, there is a lot of natural gas money involved. This also applies to all kinds of other projects, the sea security in Zeeland, a huge number of large projects were financed, the Betuwelijn, the tunnel in Maastricht. There are many things being paid from the gas revenues. What in itself is fine, you just have to do investments in your country. But the region itself has not benefited much from that.’ (interviewee 11, own translation)

In 2006, the now abolished Institute for Research of Government Expenditures (IOO) published a report showing that only 1% of the FES was used in the three northern provinces of the Netherlands, while 88% of the fund was invested in the three western provinces (IOO, 2006). When confronted with this figure, the mayor of Loppersum, responded:

‘Je kunt wel zeggen dat is maar 1% geweest in het kader van investeringen in infrastructuur, maar we moeten ook met elkaar eerlijk zijn dat de economische motor van Nederland draait in het Westen.’ (interviewee 13)

‘You can say that only 1% of the fund has been invested in infrastructure, but we must also be honest that the economic engine of the Netherlands is running in the West.’ (interviewee 13, own translation)

His colleague in Slochteren said that if the government had been investing more in the North in the first place, there would more economic activity in Groningen and consequently more FES-investments in infrastructure would be possible (interviewee 1). This is related to the main argument of this chapter, namely that the revenues of gas extraction are not evenly distributed across the country, while the risks of gas production are carried by local residents in Groningen. However, a critical note can be placed at this statement, since the unemployment rates are highest in Groningen and population shrinkage is an problem which is also present in the region (CBS, 2016a), it can be asked whether such large investments will be helpful to ‘uplift’ the region when there are already many socio-economic problems present, without even considering the problems with earthquakes.

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Commission Langman

In 1997, a commission chaired by Harrie Langman, former Minister of Economic Affairs, who had claimed in the 1970s that there was not a relationship between gas extraction and ground movement, presented a report arguing that the northern provinces should receive more money from the national budget to invest in the local economic structure (Commissie Langman, 1997). One of the arguments for this was that a fair share of the revenues of the gas produced in Groningen should be invested in the region where it was extracted. As a Minister of Economic Affairs, he already advocated that economic policy should be focused more on the development of regions other than only ‘the West’ and this resulted in a spread of the government services (e.g. part of Statistics Netherlands to Limburg and the Agency Telecom to Groningen) (Herderscheê, 2016). This was also the main argument of the report that his commission presented (Commissie Langman, 1997)

Several interviewees mention the ‘Langmangelden’ (Langman monies) as an improvement of Groningen’s economy (e.g interviewee 1 and 3). However, more should be invested in the Northern provinces to boost the economy and employment. The mayor of Slochteren comments on that:

‘Kijk wat het Rijk zelf heeft gedaan met de spreiding van de rijksdiensten, dat is ook zo'n mooie noodgreep. We hebben het Kaskade in Groningen, daar zitten nog een paar van die instellingen. Maar in verhouding is dat natuurlijk heel weinig geweest en veel van die rijksdiensten gaan weer naar Den Haag toe. In een tijd waarin je eigenlijk veel makkelijker op een afstand met elkaar kan communiceren door digitale technieken.’ (interviewee 1)

‘Look at what the State did with the spread of public services, which is also a nice makeshift. We have the Kaskade in Groningen, there are some of these institutions. But in relation to that, of course, that has been very little and many of these public services go back to The Hague. At a time when you can easily communicate with each other at distance through digital techniques.’ (interviewee 1, own translation)

What he means is that place and space in the digital era are of less relevance than it used to be, so for a national department it does not really matter where it is located.

Conclusion

This chapter has demonstrated that the distribution of the costs and revenues of gas extraction in Groningen are not evenly distributed across time, space and place. In the history of gas extraction, most revenues have been used in the national budget and, in this way, very little has been invested in Groningen. On the other hand, people in Groningen have also benefit from the welfare state through education and healthcare. Yet the economy in Groningen is not the most dynamic in the country, so if the State would have invested more in the region, there would be more economic activity, according to local and provincial administrators (interviewees 1, 4 and 13). More economic activity would lead

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to better employment opportunities and should therefore improve the region as a whole. Since the regional policies of Langman and his continuing plea for regional focus in his 1997 report, a lot already has been invested in Groningen. Still unemployment rates remain high and population shrinkage is an issue as well. Added to these socio-economic problems is the issue of soil subsidence and earthquakes, which together make cause a vicious circle downwards. In the last chapter, I will present some recommendations how the situation could be improved. In the light of distribution across space and place, it is evident that local residents in Groningen carry the risks of earthquakes and soil subsidence, as well as resulting damages on their property, while the whole country profits from the gas revenues. In the words of the mayor of Slochteren:

‘Het is prima dat Nederland volop heeft geprofiteerd van het Groninger gas, dan vervolgens staat er ook tegenover, dat is een kwestie van nationaal fatsoen, dat je het hier netjes regelt.’

(interviewee 1)

‘It’s great that the Netherlands has benefited from the Groningen gas, and then it is a matter of national decency things will be taken care of in a fair way.’ (interviewee 1, own translation)