The political economy of renewable energy : studying the primary interest of relevant actors in the Energy Sector of the Netherlands

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Michiel Tolman 10118438

MSc Thesis Political Science – International Relations

Research Project Global Politics: Power and Politics at the Sub-State Level Supervisor: Professor Jeffrey Harrod

Second Reader: dr. Mehdi Amineh 27 June 2014

Graduate School of Social Sciences

The Political Economy of Renewable Energy

Studying the primary interest of relevant actors in the Energy Sector of the

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List of Abbreviation’s

BP British Petroleum

CBS Centraal Bureau Statistiek

CWE Central-West-European

EC European Commission

ECN Energieonderzoek Centrum Nederland

EE Energy Efficiency

EIA Energy Information Administration

Eia Energie Investerings Aftrek

ENTSO-E European Network of Transmission System Operators for Electricity

ENTSO-G European Network of Transmission System Operators for Gas

EREC European Renewable Energy Council

ETS Emissions Trading System

EU European Union

GoO Guarantee of Origin

IEA International Energy Agency

IMF International Monetary Fund

INGO International Non-Governmental Organization

INRO International Research Organization

ISO Independent System Operator

LNG Liquid Natural Gas

MNC Multinational Cooperation

NKPW Nationaal Kritisch Platform Windenergie

NAM Nederlandse Aardolie Maatschappij

NGO Non-Governmental Organisation

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NRO National Research Organization

NWE North-West-European

R&D Research and Development

RE Renewable Energy

REN21 Renewable Energy Policy Network for the 21st Century

RvO Rijksvoorlichtingsdienst voor Ondernemend nederland

RWE Rheinisch-Westfälisches Elektrizitätswerk Aktiengesellschaft SDE+ Stimuleringsregeling Duurzame Energieproductie

SER Sociaal Economische Raad

STEP Social Technological Economic Political

TNO Toegepast Natuurwetenschappelijk Onderzoek

TEN-E European Networks for Energy

TSO Transmission System Operator

UK United Kingdom

UN United Nations

UNEP United Nations Environment Programme

US United States

VoC Varieties of Capitalism

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List of Figures

Figure 1.1 Import Dependency on Russia

Figure 1.2 Share of energy from renewable sources (in % of gross final energy consumption) Figure 2.1 Members rate of NGOs in the Netherlands lobbying for the shift to renewables Figure 2.2 The three major Dutch energy corporations

Figure 2.3 The detrimental negative feedback for renewable energy

Figure 3.1 Electricity Generation in the Netherlands (in 2011 60% was based on gas) Figure 3.2. Cheap Coal, Expensive Gas and Decreasing Whole Sale Prices

Figure 3.3 EU Wholesale Prices Compared to Coal and Gas prices and the Share of RE. Figure 3.4 Weekly Average Wholesale Power Prices in the CWE Region

Figure 3.5 Strategic Map of the Dutch Political-Economy of Energy. Relevant actors, Policies and Macro-Economic Trends

Figure 5.1 Importance of Natural Gas Revenue for the Dutch State Figure 5.2 The Importance of Natural Gas for the Dutch Economy Figure 5.3 The Main Players in the Dutch Gas Sector

Figure 6.1 Share of Electricity Generated by Renewables and Fossil Fuels Figure 6.2 The Level of Concentration in the Dutch Energy Sector: C3 Index Figure 6.3 The Level of Concentration in the Dutch Energy Sector: HHI Index. Figure 6.4 Eneco’s RE Share in the Energy Mix and Total RE Production Figure 6.5 Source Origin of Essent’s Energy Supply (in %)

Figure 6.6 Margins of Electricity Generated by Coal (CDS) and Gas (CSS) in the Netherlands Figure 6.7 Energy Generation of Nuon in TWh

Figure 6.8 Source Origin of Nuon’s Energy Supply (in %) Figure 6.9 Sustainability Ranking of Electricity Suppliers Figure 7.1 Rising Fossil Fuel prices

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1. Introduction

1.1 Relevance and Current State of Affairs.

Throughout recent history, the EU and its member-states have faced different challenges. Currently, one of the biggest challenges lies in the energy sector. Secure and accessible energy are two of the cornerstones on which the European Union (EU) and its member states are built. The old way of using oil, coal and gas for the production of energy and electricity seems to become increasingly unmaintainable for a couple of important reasons. Two of the most prominent challenges for the existing way of doing business include: environmental and public health preservation and safeguarding energy supply.

IMF chief Lagarde called climate change the biggest economic challenge of the 21st century at the World Economic Forum in Davos: ‘Unless we take action on climate change,

future generations will be roasted, toasted, fried and grilled.’ The most recent examples

reflecting the concerns and discussions over environmental degradation in the EU, were felt in two of the major states in Europe. The air pollution in Paris and the floods in Great Britain in February and March 2014 created a society-wide discussion about safeguarding the interest of environmental and public health preservation. The natural disasters adnd their negative effects on society, were linked by a number of politicians to global warming initiated by CO2 emissions. Labour opposition leader Miliband even called global warming an issue of ‘national security’ (BBC, 2014). Even though global warming is a contested concept, the thick and unhealthy smog that plagued Paris in the beginning of 2014 was is a direct consequence of environmental degradation and creates to a threat to human health (Reuters, 2014: CBC, 2014).

The growing insecurity of the energy supply is the second challenge that most of the EU states face today. Domestic fossil fuel sources like Dutch and British gas, which together currently provide 38% of the EU gas demand, already reached their gas peak long ago (Bilgin, 2009: 4483). Increasingly, the member states are turning to the world market where upcoming countries like Brazil, India and China are joining the already crowded geopolitical game for finite fossil resources like gas and oil (Klare, 2001;Amineh and Houweling, 2007). An example of the game is the fight for Turkmenistan’s gas. Turkmenistan, which has one of the largest gas reserves in the world (EIA, 2013), could be an import supplier that diversifies the EU’s gas supply.. But the EU has to be quick and decisive. Already, in December 2009

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8 China and Turkmenistan opened a new pipeline (EIA, 2013), transporting gas that could have also flowed to the European Union.

A recent illustration of the vulnerability of the EU supply is its dependence on Russia for fossil fuels like gas, oil and, to a lesser extent, coal (figure 1.1). Russia is not afraid to use gas as a political weapon (Umbach, 2006: 67-70; Weisser, 2007: 1). The conflict with Ukraine in 2006 and 2007 shows, that Russia is willing to shut down the supply of gas, or increase prices, in order to achieve political goals. In the most recent conflict between the West and Russia, with Ukraine (again) as point of contention, Russian president Putin said that that Moscow saw until now no need for counter sanctions against the West, but could reconsider the participation of Western companies in its economy, including energy projects (EurActiv, 2014).

Figure 1.1: Import Dependency on Russia

*1. Natural gas data is from BP’s statistical Review, since UNCTAD was underestimating gas imports. 2. Natural gas data is for Europe (continental) and not EU-27.

Source: UNCTAD, BP Statistical Review on Financial Times (2013a).

Besides the two main arguments for an energy transition NGOs, leftist green parties and renewable energy companies provide other arguments (like the creation of green jobs and rising prices for finite fossil fuels) for a transition towards the use of renewables (Greenpeace, 2014a; WWF 2013: 9).

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9 The EU’s energy sector is under severe pressure from, environmental groups and relatively small renewable energy corporations on the one hand, who all lobby for more energy efficiency (EE) and the use of renewable energy (RE), and on the other hand, the big incumbent energy corporations with vested interests (Moe, 2011: 260-262), who lobby for the old-way of doing business and the usage of fossil (oil and gas) and solid (black and brown coal) fuels. The EU member states are central actors in this power play and actively try to shape the situation. This is done by creating diverse policies which have the intention of fostering renewable energy development and/or the traditional energy industry. The European Commission (EC) formulated clear goals for its members in 2020: lowering greenhouse gas emissions by 20% (or even 30%, if the conditions are right) from their 1990 levels, having 20% of final energy usage come from RE sources and EE being increased by 20%. These are called the 20-20-20 goals (EC, 2007: 4, EC, 2014d: 2).

Although the EU, the UN and international agreements like Kyoto put pressure on this shift towards energy generated by wind, solar, wave, tidal, geothermal, hydro and biomass power, the recent developments do not look promising. A significant number of the EU states will not be able to meet their country specific goals within the 20-20-20 framework of the European Commission (EC, 2013a). On the other hand, a number of members will have fewer problems in reaching the 20-20-20 goals. There is a big difference in the end share of renewables and the energy mix between, for example, Denmark (26.0% RE of end use) and Spain (14.3%) on the one hand, and the Netherlands (4.5%) and the United Kingdom (4.2%) on the other hand (see Figure 1.2).

Figure 1.2

Share of energy from renewable sources (in % of gross final energy consumption)

2004 2007 2010 2011 2012 2020 Goal EU28 8.3 10.0 13.5 13.0 14.1 20 Belgium 1.9 3.0 5.0 5.2 6.8 13 Bulgaria 9.6 9.4 14.4 14.6 16.3 16 Czech Republic 5.9 7.4 9.3 9.3 11.2 13 Denmark 14.5 17.9 22.6 24.0 26.0 30 Germany 5.8 9.0 10.7 11.6 12.4 18 Estonia 18.4 17.2 24.7 25.0 25.2 25 Ireland 2.4 3.6 5.6 6.6 7.2 16 Greece* 7.2 8.5 9.7 11.8 15.1 18 Spain 8.3 9.7 13.8 13.2 14.3 20

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10 France 9.3 10.2 12.7 11.3 13.4 23 Croatia 13.2 12.1 14.3 15.4 16.8 20 Italy 5.7 6.5 10.6 12.3 13.5 17 Cyprus 3.1 4.0 6.0 6.0 6.8 13 Latvia* 32.8 29.6 33.5 33.5 35.8 40 Lithuania 17.2 16.7 19.8 20.2 21.7 23 Luxembourg 0.9 2.7 2.9 2.9 3.1 11 Hungary* 4.4 5.9 8.6 9.1 9.6 13 Malta* 0.3 0.4 0.4 0.7 1.4 10 Netherlands 1.9 3.1 3.7 4.3 4.5 14 Austria 22.7 27.5 30.8 30.8 32.1 34 Poland 7.0 7.0 9.3 10.4 11.0 15 Portugal 19.2 21.9 24.2 24.5 24.6 31 Romania 16.8 18.3 23.2 21.2 22.9 24 Slovenia 16.1 15.6 19.2 19.4 20.2 25 Slovakia 5.3 7.3 9.0 10.3 10.4 14 Finland 29.2 29.8 32.4 32.7 34.3 38 Sweden 38.7 44.1 47.2 48.8 51.0 49 United Kingdom 1.2 1.8 3.3 3.8 4.2 15 Norway 58.1 60.2 61.2 64.6 64.5 67.5 Source: EC (2013a)

1.2 Case Study

In light of the different paths of renewable energy development for each member state, it seems interesting to inquire, why, at the EU-member state level, the renewable energy development has been impeded or supported. This thesis takes the Dutch energy sector in relation with the international energy sector as a case study for the following reasons. The Dutch have one of the smallest percentage of renewable energy in their total energy usage (see Figure 1.2). Furthermore, the prospects do not look promising. The growth of the share of renewable energy in the power mix, is dramatically behind on the in fulfilling its target of 14% in 2020. If the share of RE in the energy mix continues to grow at the same pace over the next 18 years as it did over the past 12 years, the RE share will be 6% in 2020 and 7% in 2030 (Ecofys, 2012: 8). Still, 9.7 million Dutch households use so-called ‘green electricity’, which is claimed to arrive from RE production (TenneT, 2012; Trouw, 2012a, see Section 6.5.1 for the explanation). Since the Dutch are part of the bigger European energy market, specifically the Central-West Energy market (CWE), and the Dutch energy sector is influenced by international macroeconomic trends (EC, 2013a, EC, 2013b) and the European policy regime, the case study has to include an inquiry into the international energy sector

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1.3 Research Question

Before the answer to the question can be found of ‘why the development of RE is impeded in the Netherlands’, it is important to outline the most influential actors operating in the energy sector. After outlining the four most influential actors, the question that should be asked about those actors is: ‘Who is impeding and who is supporting the transition towards the increased usage of renewables?’ In order to know who impedes or supports this transition, the interest of the influential actors should be assessed. After all, actors are guided by interests and try to secure their interest by using different strategies (Szarka, 2010: 838-839). Subsequently, to unravel power issues, the interests of actors should be studied (Moe, 2011: 260-264). In studying their interests, the writer hopes to provide an explanation for the lack of growth in the share of RE in the energy power mix. The thesis does not necessarily accept, that public demonstration of the actors immediate material interests, provides an answer. This thesis will therefore use a critical qualitative methodology to arrive at the primary interests and secondary interests of the actors being studied. An interest is primary when the actions of the actor under study try to safeguard the interest. When the actions of the actor does not, or only rather, try to secure an interest, this interest is termed a secondary interest. The concrete research question of this thesis will therefore be:

What are the primary interests of the different powerful actors involved in the Dutch (renewable) energy sector?

The critical methodology will be applied by using the triangulation approach. Triangulation is a technique that facilitates the validation of data through cross verification from two or more sources. In general, it refers to the application and combination of several research methodologies in the study of the same phenomenon (Bogdan & Bicklen, 1982). The triangulation metaphor is from navigation and military strategy that use multiple reference points to locate an object's exact position (Smith, 1975: 273 in Jick 1979, 602). Given basic principles of geometry, multiple viewpoints allow for greater accuracy. Similarly, social-science researchers can improve the accuracy of their judgments by collecting different kinds of data bearing on the same phenomenon (Jick, 1979: 602). Triangulation can in that

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12 sense give a more detailed and balanced picture of the situation and can also capture a more complete, holistic, and contextual portrayal of the unit(s) under study (Jick, 1979: 603). By combining statements of multiple sources and actors, the thesis tries to overcome the weakness or intrinsic biases and the problems that come from assessing the interest of corporations and governments based on only one source.

For example, an electricity company can claim that it wants to ‘go green’ on its website. This statement can also be part of a greenwashing campaign of the corporation. Greenwashing describes the practice of making unwarranted or overblown claims of sustainability or environmental friendliness in an attempt to gain market share (Dahl, 2010: 246). To check the statements of the actors under study, a cross-verification of that statement should be undertaken. After critically analyzing the current policies, the future plans and trends in the data it can be shown that the actor is not increasing its share of RE. If that is the case, the thesis will conclude that securing environmental and public health preservation, is not a primary interest. The concrete appliance this so-called critical triangulations approach, will be explicated in section 4.

To assess the interest, websites, documents, reports and data from Eurostat, BP, ECN, Platts, CBS, EIA, IEA, Rijksoverheid, Nuon, Eneco, Essent, Consumentenbond, ECOFYS, Greenpeace, WWF, SER, ACM, Tennet, Consumentenbond, UNEP and different newspapers will be used. Besides that, secondary literature will be used for analysis. See chapter 4 for the concrete application of the method.

1.4 Structure of Thesis

In order to get an understanding of actors and forces that create and influence the Dutch energy sector the STEP approach will be introduced in section 2. The STEP framework describes Social, Technical, Economic and Political forces that create and influence the energy market and inhibit or foster renewable energy development (Valentine, 2010: 2796). The section will argue, that technological development is inherent to political-economic decisions. Further increasing the renewable energy industry is therefore a political-economic choice. It concludes that the most powerful actors are the big corporations, who are electricity producers and suppliers, and the Dutch government, as lawmaker and policy initiator.

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13 In chapter 3 the international context which influence the Dutch energy market will be brought forward. The German ‘Energiewende’ (Energy Transition) is the most important influence in the international context which will continue to influence the Dutch energy sector to a large and increasing extent. Chapter 4 explains the applied method of triangulation. Chapter 5 and 6 contains the primary research of the three level interest-assessment, of the Dutch state, Essent, Nuon and Eneco. In chapter 7, the six core findings of the thesis will be presented. After this presentation of the results, the author tries to show the reader how the established six primary interests can be better secured with using a strategy based on RE instead of fossil fuels. In the last chapter, the conclusion, the thesis will rehearse the most important findings of the research and suggestions for further research will be brought forward.

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2. The Dutch Energy Sector: Relevant Actors and

Forces

2.1 STEP-approach

Based on the STEP approach all influential actors in the (renewable) energy sector will be outlined (Valentine, 2010: 2796). The outlined actors, forces (in Section 2) and macroeconomic trends (in Section 3) together provide an oversight of the Dutch political economy of renewable energy. The relevant actors, forces and macroeconomic are portrayed in the strategic map (see Figure 3.5). The government and three incumbent corporations are the most powerful actors in the Dutch political-economy and are therefore studied in section 5 and 6.

2.2 Social actors

In this paragraph societal actors and their beliefs and interests towards renewable energy are discussed. The term ‘societal actors’ is a wide concept and therefore needs to be demarcated. In this thesis the term ‘societal actors’ aims at those actors that are non-state and non-commercial in nature and have ambitions that regard the Dutch (renewable) energy sector. They are either promotional groups or protective groups (Hague and Harrop, 2007: 210). Although there might be many actors that fit this description, for the purposes of this thesis only three categories of societal actors will be studied. These categories all influence the sector: (I) INGOs and NGOs (Figure 2.1), (II) local renewable energy cooperatives and renewable corporations, and (III) Not-In-My-Back-Yard (NIMBY) organizations.

Social actors that promote the development of renewable energy in the Netherlands are INGOs like Greenpeace and the WWF, among others. They underline the importance of an energy transition towards total renewable energy usage. In their ‘Energy [R]evolution’ paper, Greenpeace calls lobbying a well-articulated pathway to achieve the transition to a global sustainable energy future, a future in which renewables play a central role (Greenpeace et al, 2012: 4). Reports like ‘Energy [R]evolution’ are created to support the lobbying practices with facts. Public actions and media campaigns are one of the robust weapons Greenpeace uses. In the beginning of 2014, Greenpeace tried to stop the Oeljanovoil tanker from bringing North Pole oil to the harbor of Rotterdam by blocking the harbor. Blocking the harbor for the Oeljnovoil, was done in order to put, fossil fuel usage and the need for an energy transition, back onto the agenda of the Dutch government and back

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15 in the public eye (NOS, 2014c). In general, Greenpeace blames big energy corporations like RWE (owner of Essent) and Vattenfall (owner of Nuon) for preventing a clean energy future: “Rather than reading the sign of the times, these corporations are stubbornly sticking to their

old business models, for instance pushing forward the mining of lignite (lignite, often referred to as "brown coal", is one of the most carbon-intensive fuels around).” The NGO claims that

transforming the energy system will lead to the reduction of climate change, foster public ownership of renewable generation assets, and stimulate job growth within a green energy economy (Greenpeace, 2014a).

The WWF likewise lobbies at different governmental and corporate levels for using the untapped potential for cutting energy use and maximizing indigenous power sources that could deliver cheaper and more secure energy. It warns that this still untapped potential is at risk because of a lack of political ambition. ‘There is a particular need for greater clarity on policy frameworks for renewable energy and energy efficiency after 2020 – just one investment cycle away,’ the WWF states in its newest report, which tries to put Europe back on track for 100% renewable energy (WWF, 2013: 3). The WWF underlines the importance of increasing the share of renewables:

“Almost 8 out of 10 Europeans (78%) agree, that fighting climate change can boost the economy and create jobs. Meeting our climate change and energy targets by 2020 would generate up to 5 million jobs. Cutting overall emissions by 30% instead of 20% would create up to 6 million new European jobs by 2020. In addition to these significant jobs benefits, by reducing its dependence of fossil fuels the EU would also be able to cut its more than 500 billion euro annual fossil fuel import reliance” (WWF, 2013: 9).

Next to the INGOs, different local Dutch NGOs try to foster the transition to renewables. ‘Natuur & Milieu’ (Nature & Environment), one of the two big environmental NGOs in the Netherlands together with ‘Milieudefensie’ (Environmental Defense), have been in a fight for years, to block the further construction of a coal plant in the Dutch North-East Eemshaven that belongs to the incumbent energy corporation Essent (daughter of mother holding RWE, see also subsection 6.2.1 and 6.2.2) (Natuur & Milieu, 2013a). Nonetheless, ccording to Hans Berkhuizen, director of Milieudefensie, the interest of the incumbent corporation and multinationals usually dominates policies and future plans in the energy

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16 supply strategy of the Netherlands (Natuur & Milieu, 2013b). The different NGOs mentioned above, took part in the negotiations for the Dutch Energy Accord of 2013 which will be analyzed in subsection 5.2.1

Figure 2.1 Members rate of NGOs in the Netherlands lobbying for the shift to renewables.

Name NGO Memebers in 2013 Difference with 2012

WWF 826.000 -44.000

Greenpeace 453.000 -13.000

Milieudefensie 84.566 +1038

Organisatie voor Duurzame Energie (ODE)

14.765 +446

Natuur & Milieu 8607 +6

Source: Vroege Vogels Parade 2013, Vroege Vogels Parade 2012.

Besides the (I)NGOs, certain civil groups take initiatives to enhance the renewable development, by forming different small cooperation’s. These actors are state and non-corporate and can be termed purposive actors, which means that they are primarily driven by ideals and non-material interests (Szarka 2010: 838).

There are numerous of those electricity cooperation’s making small communities self-sufficient like: De Windvogel, Regge-Strrom en Windunie. The renewable energy cooperation’s are have aligned themselves into the ‘Stichting Duurzame Energie Koepel’ (Renewable Energy Foundation) (see Figure 2.4). The goal of this interest group is to enhance its influence on the political and policy spheres so that the renewable energy goals can be reached and CO2 pollution is confined (Duurzame Energie Koepel, 2014). On the EU level the foundation is part of the European Renewable Energy Council (EREC).

At some places in the Netherlands the construction of renewable energy installations is confronted with geographic interest groups. These interest groups have the mentality of ‘build it anywhere but here’ and are therefore termed ‘Not In My Back Yard’ (NIMBY) groups (Horst, 2009: 2705-2710).

The NIMBY concerns in the Netherlands are specifically focused on wind-mills and the gas exploitations in Groningen. Actors like NKPW (National Platform Against Windenergy), TegenwindN33 (Anti-wind) and Windmolenklachten (Windmill Complaints) create petitions, organize public actions and try to influence local and national parliamentarians via lobbying. A large amount of the NIMBY movements have organized themselves in the European

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17 Platform Against Windfarms (EPAW, 2014b). In the North of Holland, NIMBY groups like ‘Schokkend Groningen’ (Shocking Groningen) gained momentum in the beginning of 2014 with their anti-gas exploiration protests (Schokkend Groningen, 2014a).

2.3 Political and Economic forces

In the following section the theoretical role of the state and the corporation in the political-economy will be explained by using Varieties of Capitalism (VoC). Furthermore, the most powerful actors in the Dutch energy sector will be introduced.

The VoC model tells us that the government and corporations both play an influential role in the political economy. The government can act as an umpire in the market (liberal market capitalism) and therefore not support the transition towards renewables. In the liberal market system, competing firms operate in a flexible labor market, seeking to enhance profitability for the shareholders who want a return. (Hague and Harrop, 2007: 146). The government and judicial system are umpire and make sure that the game is played according to the rules (Letza et al, 2004: 247).

The government can likewise act as an coordinator (coordinated market capitalism) )(Hall & Soskice in Hague & Harrop, 2007: 146-151).In a coordinating role, the government can provide strategic direction to the industry (Hague & Harrop, 2007: 151). This can be done providing different instruments for initiating a development which secures the public interest. An interpretation of public interest could be increasing the share of RE to secure environmental and public health preservation.

Instruments to promote RE can be feed-inn tariffs, quota obligations, tenders and/or energy tax exemptions. They can be combined with other political programs like: soft loans, tax allowances, exemption for renewables and information campaigns (Reiche & Bechberger, 2004: 846). Furthermore the state can support the development of storage capacity for renewable electricity and upgrade the infrastructure in order to deal with the stochastic nature of RE. Likewise, the state can lack systematic funding for renewable energy. It can also subsidize fossil fuels. Indirectly, this can be done by not internalizing the external costs, subsidizing R&D in fossil fuels, create tax exemption for electricity generated by fossil fuels and create direct subsidies for those two forms of energy (Valentine, 2010: 2796-2802)

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18 The most powerful actors in the Dutch energy sector are the government, as policy maker and regulator, and the (incumbent) energy corporations: Nuon, Essent and Eneco, based on the number of employees, the turnover rate and the number of customer (See Figure 2.2).Essent, which is part of the mother holding RWE and Nuon, part of the mother holding Vattenfall, both possess the bulk of the Dutch electricity generation facilities (Consumentenbond et al., 2014: 5). Together, the three control around 80% of the Dutch market (Figure B page 69) and they stand united in their lobby group Energie-Nederland (Energie-Nederland, 2014). In total, the Netherlands contains 29 electricity providers, which have 1000 households or a minimum of 50 business partners that were active on the market in 2012 (Consumentenbond, et al., 2014: 5). Seven of those corporations are active in more than one country. Eleven of the corporations possess own production capabilities for the generations of electricity. Eighteen of the corporate providers trade in electricity, but do not generate electricity themselves (Idem) Incumbent fossil fuel corporations enjoy considerable cost economies thanks to historical subsidization of fossil fuel generation, decades of cumulative Research and Development (R&D) investment and political lobbying in favor of the fossil fuel sector (Valentine, 2010: 2804). The lobbying by the industry is done on national level and international level since the EU directives influence the policies of member states like the Dutch (Eising, 2009: 399).

After the primary research in section 5 and 6 the thesis will explain the current role of the Dutch government and provide an suggestion for the future role for the Dutch state based on safeguarding its interests in the (future) energy sector.

Figure 2.2 The three major Dutch energy corporations

Turnover Employees Customers

Eneco 5.3 billion 7000 2.2 million

Essent 6.3 billion 3600 2.2 million

Nuon 3.7 billion 4800 2.1 million

Source: Eneco, 2013: 7, 149; Essent, 2014l; Nuon, 2013: 1.

2.4 Technical state-of the art

The current level of efficiency of renewable techniques, influences the cost-price of renewables and therefore the amount of RE in the power mix. This chapter argues that it is technically possible to use RE on a large scale, that pay-back times for investors are decreasing and in order to enlarge the share of RE, the detrimental negative feedback for

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19 renewable energy should be broken (Figure 2.3). It therefore refuses to argue from a technological determinist perspective that the growth of RE is not possible.

The existing techniques, to generate RE, are not (yet) economic viable vis-à-vis techniques that generate energy based on fossil fuels (IEA, 2014b). But, the argument that it is impossible to use the current techniques to generate large amounts of renewable energy, is proven fault, when one looks at the development of the renewable energy sector in countries like Denmark, Germany and Spain (EC, 2013a: 12,13,17; Romero, 2012: 322; Bayer 2013: 288-295; González, 2008: 2917-2920.). The developments in those countries show, that the implementation of suitable policies can enable the successful integration of higher shares of RE then was thought only a few years ago (REN21, 2013: 89).An important role has to be played by the state in providing the right economic incentive fostering the generation of RE (REN21, 2013: 89, IEA, 2014b). Long term investments are needed. This is currently shown in Germany, where the ‘Energiewende’ (Energy Transition) started at the end of the nineties and currently makes the country an exporter of RE generated electricity (Energie-Nederland et al., 2013: 4-10; EC, 2013a: 12-13).

The IEA claims that any country can, cost-effectively, reach high shares of RE in the power mix (IEA, 2014a). Technical hurdles mainly behold the current state of efficiency of RE techniques. To increase the efficiency of RE techniques, long term investments are required with a relative large (but rapidly decreasing) payback time (IEA, 2014b). A major problem is the political uncertainty supporting long-term subsidies. Furthermore, the grid needs to be upgraded in order to cope with decentralized electricity accession and the stochastic nature of most RE (IEA, 2014b). The IEA states that:

“Our detailed modeling shows that in the long term a fully transformed power system with 45% of wind and solar in annual electricity generation – that is over ten times more than in most power systems today – that system is only about 15% more expensive than a system with no variable renewable energy at all (….).In the future, wind and PV are expected to have lower costs. Combined with increasing prices of CO2, the extra system costs of such high shares of variable renewable energy could be brought down to zero” (IEA, 2014b).

The IEA rapport clearly shows that the technique is existing and when applied in the right way, sufficient to establish the transition towards an energy system mainly based on

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20 renewable generation. Technical hurdles are there to overcome, with targeted investments in the renewable energy R&D and in demonstration projects (Effendi & Courvisanos, 2012: 250). Critics can state that it is just too expensive to invest in renewable technologies. But when there is no investment in these technologies, the efficiency of technologies not be enhanced When investments are made in RE technologies, the detrimental negative feedback circle for renewable energy can be broken (figure 2.3). Investments in R&D and demonstration projects lead to more knowledge about renewable energy techniques which enhances the efficiency of, for example, a solar panel. This increased efficiency leads to a decrease in the costs of renewable energy, which leads to a decreased payback time, which leads, to more investments and the increased use of RE (Effendi & Courvisanos, 2012: 250).

The challenge lies in the political-economic sphere. In this sphere, all relevant actors should cooperate and coordinate in order to create an overarching structure to enhance the transition. The argument is further constructed by the United Nations Environment Programme (UNEP), which states that the main issue holding back investment is instability in the policy regime for renewable energy. Future investment is likely to coalesce in countries that can offer policies that command investor confidence and have the need for extra generating capacity and strong renewable power resources. (REN21, 2013a: 11).Most of the alleged constraints to achieving higher shares of renewables, have either resulted from a lack of political will to enact the required enabling legislation and actions, or they have been disproven as technical solutions to overcome the various challenges (REN21, 2013: 89).

Romero underlines the UNEP statements, by pointing out that among other reasons, a solid, stable and predictable economic policy and legal system led to the remarkable growth of the RE sector in Spain from 2008 until the present (Romero, 2012: 322).

In conclusion, technological development and the implementation of RE is a political-economic choice, and therefore a consequence a political-political-economic power play. As shown in the introduction, the Dutch state chose to sign the 20-20-20 goals. Somewhere in this political-economic power play, the development towards RE is halted in the Netherlands. Section 5 and 6 try to explain this absence by inquiry the interests of the four relevant actors which were mentioned before.

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21 Figure 2.3: The detrimental negative feedback for renewable energy

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3. The Creation of The Internal European Market For

Gas And Electricity: The German Influence

3.1 Introduction

Due to the further integration of grid networks in the North West European market, the Dutch energy market is increasingly influenced by its neighbors, and vice versa. The development of the European Union’s (EU) internal energy market for gas and electricity led to an interesting situation in the Dutch energy sector. Though Dutch electricity generation is mostly fuelled by gas (Figure 3.1), its integration into the internal EU energy market led, from 2012 onwards, to a decreased competitive position for the gas sector. Especially during windy and sunny days, the Dutch gas plants cannot compete with renewable electricity generated in Germany and plants which use cheap imported coal from the USA to generate electricity.

This chapter start by showing the EU dedication for the continuing integration of the European energy market. In the second part, with help of EU quarterly reports of the energy market and data from Platts, a leading global energy information provider, the latest trends in the integrated Central-Western-European (CWE) market will be described. The third part explains why the influence of Germany’s cheap renewables in the CWE market will not fade away and how the German state continues to play the role of initiator and coordinator of the energy transition that influences the Dutch market.

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23 Figure 3.1: Electricity Generation in the Netherlands (in 2011 60% was based on gas)

Source: CBS, 2012

3.2 The Further Integration of the Internal European Market for Gas

and Electricity

The European energy market has a fundamental problem. The problem, that the EU is not able to create enough energy based on its own supply. In the gas sector, the predicted figures show the EU’s growing vulnerability (EC, 2006: 3; EC, 2007a: 1, EC, 2007b: 3-4 ): the reliance on gas imports will jump in 2020 to 63% of the gas demand and in 2030 to 84% of the gas demand according to the International Energy Agency (IEA, 2008a: 19). The commission states that, the EU should assist member states in diversifying supply by looking for other suppliers, by creating better energy storage facilities and by constructing Liquid Natural Gas (LNG) terminals (EC, 2007b: 10-11). The most important challenge is to create a wide range of energy resources to decrease the dependence on a few, instable and occasionally repressive authoritarian regimes for energy resources and to diminish environmental degradation created by CO2 pollution.

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24 The challenge to secure the supply of energy led to the call for a common EU energy policy. The objectives of such European Energy market are, to create a competitive, consumer-friendly (private and industrial) and energy efficient environment. According to the European Commission, failing to achieve these objectives will result in high energy prices for European consumers and will threaten the competitiveness of the EU’s economy. A key element in this strategy of creating the EU energy market, is the creation of a modern, well-connected energy infrastructure (EC, 2010b: 11-14). In the 2007 Priority Interconnection Plan, significant shortcoming in the infrastructure were defined (EC, 2007b: 9). The plan underlined among others, the importance of creating a smart, interconnected European wide grid, which is capable of incardinating significant amount of stochastic renewable electricity. This grid will contribute to sustainable development and preserve the environment Furthermore, a secure and diversified energy supply which should be established (EC, 2010b: 12-13).

Most recent developments in the EU single energy market include the February 2014 pilot, which aims to integrate parts of the Northern, Central and Western energy markets with each other into one big North-West-European (NWE) market for joint electricity trading consisting of EU countries: Belgium, Denmark, Estonia, Finland, France, Germany, Austria, UK, Latvia, Lithuania, Luxembourg, the Netherlands, Poland and Sweden and non-EU member Norway (EC Press Release, 2014a). In the beginning of 2014, the Commission and the member states made the first agreements about an energy framework for after 2020. The framework consists of two concrete agreements: A reduction in greenhouse gas emissions by 40% below the 1990 level, an EU-wide binding target for renewable energy of at least 27%. Furthermore, the agreements consists of unspecified goals like: renewed ambitions for energy efficiency policies, a new governance system and a set of new indicators to ensure a competitive and secure energy system (EC Press Release, 2014b). This agreement are now on the floor for debate in the European Parliament and the European Council. Energy Commissioner Günther Oettinger emphasized the further integration of the electricity and gas market and the importance of further integration of RE in that same market: ‘The internal energy market provides the basis to achieve this goal and I will continue to work on its completion in order to use its full potential. This includes the 'Europeanisation' of renewable energy policies".(EC Press Release, 2014b).

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3.3 The German influence

So what are the consequences, for the electricity prices of an integrated electricity market in the existing CWE region? How is the Dutch electricity market influenced by this process of electricity and gas supply and demand? In order to provide a clear picture of the consequences for the Dutch market, the thesis will look at certain trends which disrupted the Dutch and other national electricity markets from 2011 till present day.

The German electricity markets plays a key role in these trends. Together with the Netherlands, Belgium, Luxembourg and France, Germany is since 2007 integrated in one market, the CWE market. This means that the countries can exchange electricity and that cross border capacities of the different countries can be utilized more efficiently (TenneT, 2014). Traditionally, the German energy market is seen as a market that relies heavily on importing energy and electricity since there is an overall scarcity in energy resources (EIA 2014b). But since 2012, this image has changed rapidly due to Germany’s ‘Energiewende’, the German transition towards electricity based on increased generation of renewable energy which started in the nineties.

The EU keeps an close eye on the developments in the NWE market, via its quarterly reports on the electricity and gas market. Based on the two last quarterly electricity and gas reports of the EU, three major market supply-related trends can be seen that influence directly the Dutch electricity and gas market: (1) the increased renewable generation of cheap electricity in Germany overflowing other markets, (2) the decreased usage of expensive gas for electricity generation in the CWE region and other European regions like Italy and Great-Brittain, (3) the weakening export position of the Dutch gas and electricity market. These developments are predecessors for what will come if countries like Spain, Germany and Denmark will continue scaling up their renewable energy generation in combination with an EU ensuring further electricity market integration of the different EU states.

First of all, the German renewable generation has created different price shocks in the market since 2012. On the 24th of March 2013, for the first time in German EPEX market history, there were four hours of negative hourly prices during the afternoon hours, a phenomenon which has only occurred during night hours in the past. Even more, on the 16th of June 2013, on a Sunday afternoon, the combined share of wind and solar assured more than 60% of power generation, reaching an all-time high record in the country (EC,

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26 2013a: 15). This resulted in several hours of negative power prices (falling below -100 €/MWh in Germany and Belgium), while in neighboring France prices fell below-200 €/MWh, due to oversupply in the regional power system. Furthermore in March 2014, day-ahead electricity prices in continental Europe recorded a fifth consecutive monthly decline as surging German solar and wind output helped chase prices lower in neighboring countries, according to data just released by Platts, (Platts, 2014). Falling power prices in the last few months have occurred alongside an increasing share of renewables in the European power mix (Figure 3.3). Besides an increasing share of wind and solar generation, hydro-based power generation in rainy periods can substantially contribute to lowering the generation costs in some European countries, as happened in the second quarter of 2013. But, the German electricity market remains vulnerable for fluctuations in electricity due to falling sun-hours or windless days (EC, 2013a: 12).

Secondly, in Italy, Germany and the UK the share of, relative costly, gas is decreasing in the power mix since gas is expensive (Figure 3.2) and replaced by relative cheap coal and RE. While in 2011 and 2012 natural gas represented between 45% and 50% of the Italian power generation mix, in the second quarter (Q2) of 2013, the share of gas fell below 30% in June 2013. In the same month, the share of hydro was more than 26%, with solar contributing 16% of total generation and the share of wind was close to 5%. These (partly subsidized) renewable energy sources contributed to reducing generation costs and wholesale power prices in Italy (EC, 2013a: 16). In Germany gas-fired generation remained unprofitable in the first and second half of 2013, the share of solid fuels in the German power generation mix rose above 50%, which was higher than in 2012 (45%) and in 2011 (43%). The UK shifted from gas to coal usage for power generation, but remained to have relative high electricity wholesale prices compared to the rest of the CWE region (except for the Netherlands). This is partly explained due to the lack of RE. While in January-May 2010 gas-fired generation assured 46% of the total electricity production and coal’s share was 30%, in the first five months of 2013 the share of gas went down to 26% and that of coal rose to 43% (EC, 2013a: 12). These developments mean that gas exports and imports, including the Dutch gas exports, are declining in the EU-market. The lack of competitiveness of Dutch gas generated electricity made the Dutch decouple the electricity prices from the German market, so that the Dutch dominance of costly gas-fired generation could be sustained, instead of shutting all plants down (EC, 2013a: 12). In 2013, the Netherlands still

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27 exported gas to the UK but since the UK started to diminish its costly-gas generation it is the question how long this trade relation will be sustained in this manner.

The third trend is that the Netherlands is importing more electricity than it exports, due to the high prices for domestically gas-generated electricity. In the CWE area, prices started to recouple in Q2 2013, after significant price divergences observed in earlier periods. After the end of wintry weather at the beginning of April in countries like France, prices fell and were realigned with German prices as show in figure 3.4.The Dutch market was the only market in the CWE region which continued to experience significant price premiums compared to Germany (Figure 3.4). This led to major electricity imports in the Netherlands. In the second quarter of 2013, the Dutch electricity market received large amounts of electricity from Germany (2011 GW/h), Norway (1310 GW/h) and Belgium (1244 GW/h). The export to those countries did not reach more than 2GW/h (Germany), 412 GW/h (Belgium), 73 GW/h (Norway) (EC, 2013a: 24).

Figure 3.2: Cheap Coal, Expensive Gas and Decreasing Whole Sale Prices.

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28 Figure 3.3: EU Wholesale Prices Compared to Coal and Gas prices and the Share of RE.

Source: Platts, BAFA, ENSTO-E in EC, 2013a: 8

Figure 3.4: Weekly Average Wholesale Power Prices in the CWE Region

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3.4 Continuing German influence – The coordinating role of the German

state.

The two quarterly reports clearly show the influence of the German electricity and gas market on the Dutch market and the problematic competitive position the Dutch have in the integrated European energy market. This section explains the German government, as initiator and coordinator of the transition (see VoC Section 2.3), is going to sustain and expand this influence.

The German political-economic actors decided to continue on the path of energy transition. In the longer term, the German government, through its Energy Concept (2010) and its energy reforms (2011), has set itself the goal of making the country one of the most energy efficient and environmentally sound economies in the world, while maintaining competitive energy prices and a high level of prosperity (EIA, 2014a: 9). This ambitious and long-term project can only succeed with broad public acceptance. Since Germany is breaking fresh ground in many aspects of its overall energy policy strategy, the government understands the importance of monitoring this fundamental transition closely and to fine-tune the process where necessary. At the same time, the monitoring process – Energy of the Future – is designed to inform the public comprehensively about the restructuring of the energy system, to promote public participation and to increase acceptance of the reforms. The core of Germany’s ambitious energy goals include a reduction in greenhouse gas (GHG) emissions by 40% by 2020 and by 2050 at least 80%, and a decrease in energy consumption by 20% by 2020 and by 50% by 2050 (base year 2008). The proportion of energy consumption covered by RE has to rise to 30% by 2030 and to 60% by 2050 (EIA, 2014a: 9-10).

Besides these clear ambitions, Germany is not blind for the risks that the energy transition brings. Current German leader Merkel is taking one step back on the renewable energy path, in order to take two steps forward in the future. This slow-down is needed to prevent a ‘renewable bubble’ and outrages governmental costs. Gabriel, German minister of Economy and Energy claimed: “Restart means no longer following the illusion that the energy transformation can be achieved by expanding renewable energy as quickly as possible, but to make sure that the expansion will be safe and predictable” (New York Times, 2014a). Merkel and Gabriel proposed a plan to reduce the average subsidy for wind, solar

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30 and other renewable power sources (Wall Street Journal, 2014). This will stabilize governmental expenditures and soothe the renewable industry, which provided on its peak moment in June 2013, 60% of German electricity. Since the Energiewende is mainly financed by higher energy taxes, Germany faces the domestic problem of high electricity prices for industry and households. While Gabriel said he could not promise that energy prices would go down, he said the goal of the changes was to put the brakes on further increases, by scaling back green subsidies and limiting the expansion of onshore wind and solar capacity (New York Times, 2014). To make an end to disturbing speculations, Merkel made once again clear that the Energiewende will be continued:

"Make no mistake: the world is watching with a mixture of incomprehension and curiosity whether and how we will succeed in this energy turnaround (…) If we succeed, then I am convinced that it will be another German export hit." (Merkel - CNS news, 2014).

The recent political back-up show the strong support of the German government to continue the Energiewende. This means that the Dutch energy market will remain influenced by cheap German renewables the coming years and that is has to change its strategy in order to increase its international competiveness and save its domestic energy industry and jobs. The strange of strategy to secure the Dutch interests, will be explained in section 7.

3.5 Strategic Map: Overview of Actors, Policies and Macro-Economic

Trends

The goal of the designed map 3.5, is to give a simplistic overview of the influential actors in the Dutch energy market (Figure 2.4). The map shows the domestic and international actors influencing the sector (see section 2,3,5,6), the EU policy targets (see section 3) and the macroeconomic (market) trends (see section 3,5,6) influencing the Dutch energy sector. The map can be used throughout the whole thesis as a reference work which helps the reader to establish the overview over the different actors, policies and macro-economic trends in the Dutch political economy of energy.

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Figure 3.5: Strategic Map of the Dutch Political-Economy of Energy. Relevant actors, Policies and Macro-Economic Trends

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4. Applied Method: Interest Assessment on Three

levels

As explained in the first section, the thesis will assess the interests of the four most powerful actors in the Dutch energy sector, namely: Nuon, Essent, Eneco and the Dutch state. The following section will explain how the approach of critical triangulation will be applied, to find an answer to the research question: ‘What are the primary interests of the different powerful actors involved in the Dutch (renewable) energy sector?’.

The bulk of this thesis research is devoted to understanding the basic or core interests of actors, without necessarily accepting that demonstration of their immediate material interests provide an answer. In that sense, this research will try to demystify the ‘primary’ interests of the actors involved. An interest is primary when the actions of the actor under study try to safeguard the interest. When the actions of the actor does not, or only rather, try to secure an interest, this interest is termed a secondary interest. In order to structure the research, the interest of actors is assessed on three levels.

The first level interest assessment shows the public statements of the actors. These public statements consists of current policies and future plans and try to secure certain interests. These public statements form the image that the actors projects to the outside world. Concretely, in the first level (I) the interest of the actors is assessed, based on their public statements shown in the different headings and paragraphs on their websites and is called the ‘public statements level.’ The second level (II) assesses the interest of the actors

based on their own produced, (a) more extensive (annual) reports and (b) trends in the data of the actor under study. This level can be termed the ‘Dependent in depth study level’. The public statements of the first level are in the concluding sections compared with the findings from the second level. The third level is the most interesting part, because often only then, the primary interest of actors is shown by comparing the statements of the actor under study with the statements of other actors and data which was not found in the second level analysis. This level is called the ‘independent in-depth study level’. Since this thesis is built on a critical view, it is likewise important to keep in mind, that all statements in the third level also can be used by competing actors to slander the actor under study. The findings of the research will be structured per relevant actor in the three levels (I, II and III).With the

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analysis in the second and third level, the image creation on the first level can be confirmed or rejected and the primary interests of the actors can be assessed based on a triangulation of different resources.

The thesis will be mainly based on qualitative research. The qualitative sources that will be analyzed per actor are:

Level 1: Public statements level

 Corporate and governmental website and audiovisuals.

Level 2: Dependent in-depth study level

 Corporate and governmental own (annual) reports, statements about (long-term) strategy and quantitative data.

Level 3: Independent in-depth study level

 (a) Statements about the assessed actor by other corporate and governmental actors: website news and statements, reports, articles interviews, audiovisuals.  (b) Statements about the assessed actor, by relevant NGOs: website news and

statements, reports, articles, interviews, audiovisuals.

 (c) Statements about the assessed actor by relatively independent actor: website news and statements, reports, articles, interviews, audiovisuals.

 (d) Statements about the assessed actor by investigatory journalists and critical scholars: website news and statements, reports, (scientific) articles, interviews, audiovisuals.

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5. Interest Assessment: The Dutch National

Government

This research starts by assessing the primary interest of the Dutch government, the image the government tries to create, and how the primary interests of the government are secured. Firstly, a close examination is made of various statements on the Dutch government websites regarding (renewable) energy. Secondly, the Dutch National Energy Accord for Renewable Energy (Energiekkoord voor Hernieuwbare Energie, SER, 2013) is analyzed. Thirdly, found data about the importance of the Dutch gas sector are analyzed and consequently, statements from different independent actors like investigatory research groups, newspapers, lobby groups NGOs and NROs are studied.

5.1 Level I Assessment:

The Governmental Websites

5.1.1 Renewable Energy

According to the Dutch state, the country is becoming less dependent on fossil fuels by increasingly using renewable energy (Rijksoverheid, 2014a). The formulated governmental target is to increase the amount of renewable energy, while having a balanced amount of different forms of energy.Four different subsections describe the relevance and necessity of Dutch wind energy, bioenergy, solar energy and geothermal energy. The product of these sources of energy is so-called green electricity (Rijksoverheid, 2014l). The Government claims that the transformation of the energy sector should not outlive the current benefits the consumers and corporation are having now. Furthermore, using a mix of energy, where fossil fuels play an important role, mobilizes the strength and stability of the energy sector. A stable supply of energy is vital (Rijksoverheid, 2014a). Under the heading ‘Energy Policy Netherlands’, the energy transition is presented as a given fact. This transition has to happen in a responsible way. The ‘Energie Akkoord’ (Energy Accord) is a new step in this transition. The Dutch government asserts that it wants to work more closely with entrepreneurs and researchers on new techniques to strengthen the energy sector and enhance green electricity provision. This could lead to new economic growth. The Dutch government proclaims that the 20-20-20 goals are of the upmost importance in order to create a CO2-free society. The goal is to increase the amount of renewable energy to 14% of the energy

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35 used by 2020 and 16% by 2023. Existing legislation is being adapted to cope with trends like a rising amount of (local) renewable energy and increasing international electricity and gas trade. (Rijksoverheid, 2014b). The government asserts that, in order to make renewable energy competitive on the long term (2050 and afterwards), innovation is necessary.

5.1.2 Subsidies

Under the heading ‘Stimulation Renewable Energy’ (Duurzame Energie Stimuleren) the government states that it will introduce a larger supportive fiscal package. The government proposes: higher taxes on natural gas and the abolishment of taxation for electricity produced by coal from the start of 2016 (Rijksoverheid, 2014e). In 2012 and 2013, the Dutch government subsidized small-scale solar power generation. This gave an extra impulse for RE generation and to the public awareness for renewables. This economic incentive was abolished after 2013. From 2015 onwards, the Dutch government will exempt home tenants that have their own solar panels from paying energy taxes. This is already the case for homeowners. (Rijksoverheid, 2014f).

The SDE+ (Stimulation Renewable Energy Production) is the most prominent subsidy that the Dutch government provides for larger scale production of renewable energy. Corporations and (non-profit) organizations can get subsidies. The SDE+ is paid via an increased electricity bill of citizens and companies (Rijksoverheid, 2014g). In 2014, 3.5 million euros will be available to support projects (RvO, 2014a).

The Dutch government sees the Emission Trading Schemes (ETS) as an important instrument to reduce CO2 pollution within the EU. After all, the ETS system reduces CO2 emissions for the lowest possible costs. The government supports the idea of including the transport sector in the ETS system, although they argue that its competitive edge should be safeguarded. Lastly, the government sees CO2 storage as an important instrument to reduce CO2 in the atmosphere, although no concrete measures are taken to support further creation of storage facilities.

5.1.3 Top Sector

The Energy Sector is labeled a ‘Top Sector’ by the Dutch government. In other words, it is a sector with high potential and high priority (Rijksoverheid, 2014h). Its close position to the sea, the strong international position of its harbors and the presence of gas pipeline storage possibilities and infrastructure, puts Holland in the perfect position to become an energy

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36 hub in Europe. Under the heading ‘refortification of the Energy Sector,’ the Dutch government elaborates the importance of the energy sector for the Dutch economy. The sector is responsible for a 36 billion euros turnover and provides 100.000 jobs. Via the so-called ‘Top Sector Approach,’ the Dutch government wants to foster innovation in the sector. The ‘Top Team’ guiding the focused investments, consists of people from the government, the scientific world and the business realm (Rijksoverheid, 2014h; 2014j).

The government state that being one of the leaders in the development of renewable energy, is beneficial for the Dutch international competitive position. The technologies can be exported and the Dutch state becomes less vulnerable for fossil fuel price shocks and less dependent on other countries for energy supply. (Rijksoverheid, 2014e). The government wants to foster the creation of new technologies in coordination with researchers and entrepreneurs. Through this renovation, corporations can compete with each other in the area of renewable energy development. The government wants to help this renovation process without providing so-called expensive and ineffective exploitation subsidies. The Dutch energy supply should be trustworthy, payable and sustainable (Rijksoverheid, 2014j).

5.1.4 Fossil Fuel Importance

The Dutch government emphasizes the importance of a balanced energy mix of renewable and fossil-fuel energy (Rijksoverheid, 2014i). The mix will keep the energy supply secure and the costs low. The statements further continue outlining the importance of fossil fuels the coming decades, since they are the cheap and a more stable form of energy generation. In order to create, cheap and stable energy prices, the further integration of a common European energy market should be enhanced.

Gas remains an important source of energy, both now and in the future for three reasons. Firstly, it is clean compared to coal. Secondly, the production of energy can be easily controlled in gas plants, and, thirdly, the worldwide availability of gas supplies is high (Rijksoverheid, 2014d). Starting around 2025, the Dutch will produce less gas then they use and by that time, the today’s Dutch government wants to become the ‘gas hub’ of Europe. Knowledge development for storage, trade, production, and transit ability in the gas sector is therefore crucial. The government argues that, since they are the biggest gas producer in the EU, the country will get significant revenues with a strong and renewed gas sector. By becoming the so-called ‘Gasrotonde’ (gas-hub) of Europe, the government wants to