At the end of 2020, the Dutch government ran the first round of its SDE++ subsidy programme. For the first time the programme included support for CCS in industry. The renewed government support for CCS in the Netherlands is rooted in the self-imposed but legally required emission reduction targets on its path to achieve net-neutrality by 2050.
The 2019 ‘Climate Agreement’ that resulted from a stakeholder dialogue programme of so-called ‘Climate Tables’ across Dutch actors identified the tools to achieve set emission reduction targets for each sector. For industry, it meant the elimination of an annual 14 million tonnes of CO2 by 2030. CCS was identified as one of the necessary actions to ensure industry can meet its targets.
This policy brief outlines and explains the current framework that is in place to deliver CCS as one of the decarbonisation solutions for Dutch industry through a combination of support instruments, most notably the SDE++, and increasing penalties for emitting CO2 through a new carbon tax that effectively tops up the EU ETS price.
Summary & Key aspects of the CCS policy framework:
- Through the carrot and stick approach of the SDE++ and Carbon tax, the Dutch government is rewarding early deployment of CCS.
- CCS application is fundamentally motivated by emission reduction requirements and objectives and is solely targeting industrial emissions.
- CCS is capped at a total of 7.2MtCO2 from industrial processes and about 3MtCO2 per year for waste gas power generation from industrial processes, i.e. at the Tata Steel Mill in Ijmuiden.
- The SDE++ provides a 15-year CfD-like subsidy support covering the ‘uncommercial’ cost of CCS operation, i.e. the cost above the EU ETS price. Free allowances under the ETS are retained and volumes of CO2 from industrial applications that are captured and stored do not incur a charge under the new Dutch carbon tax system.
- No new industrial CCS subsidies will be granted after 2035 to reflect its role as a transitionary technology.
- Ownership of Transport and Storage (T&S) infrastructure is retained by operators, who are publicly owned (e.g. EBN and Gasunie 100% by Dutch government and the Port of Rotterdam Authority 50/50 between the Municipality and the Government).
The Industrial CCS Support Framework in the Netherlands