According to Glastuinbouw Nederland, the outgoing cabinet's Budget Day proposals undermine the horticulture sector's security of existence. As a result, vegetables, fruits, flowers, and plants will become even more expensive in the Netherlands. The advocacy group calls for a fundamental review of the current degressive energy tax system.
Unaffordably healthy and green
On Prinsjesdag, or Budget Day, the cabinet finally presented the controversial Fiscal Measures for Horticulture Act. With this law, the government wants to phase out both the reduced horticulture rate and the CHP input exemption between 2025 and 2030. Glastuinbouw Nederland is very concerned about the increased burden these proposals will place on growers. Indeed, on behalf of the Lower House and the agriculture ministry, Wageningen Economic Research (WEcR) previously found that this would increase the total burden on growers from €24 million in 2019 to €740 million in 2030. The new study by Trinomics on behalf of the Ministry of Finance also confirms this unprecedented impact despite a gradual introduction of these measures until 2030. Ignoring this impact on food and green production in the Netherlands, the government is pushing ahead without delay.
Adri Bom-Lemstra, president of Horticulture Netherlands: "These measures put an end to smaller, medium-sized and extensive family farms. For half of the Dutch growers, it will become unprofitable to still grow tomatoes, peppers, cucumbers, strawberries, and other soft fruits or flowers and plants. Where energy costs rise two to sometimes five times, these costs can be passed on to consumers to a limited extent. Abolishing the horticultural tariff and curtailing the CHP input exemption, therefore, particularly inhibits climate frontrunners in growing healthy and green products on Dutch soil. Healthier food and a greener environment thus become even more unaffordable for citizens, and growers end up in the red."
The energy transition in reverse
Horticulture has had its own CO2 sector system for ten years, the first sector to do so. Recently, this system was revised by the government and the sector with the Convenant Energietransitie Glastuinbouw 2022-2030, with a more ambitious climate target and a stronger incentive for individual growers to green their greenhouses and save even more energy. Just like EU ETS. The sector system thus secures our climate target in 2030 and climate neutrality in 2040. The additional policy is, therefore, not needed. What is needed is a stable policy that continues to offer growers prospects for the future and action to ensure financially healthy horticulture, as agreed with the government in the covenant.
Bom-Lemstra: "That agreement is under great pressure. Not only do these measures cost smaller and more extensive companies their livelihoods, but they also make investing in the energy transition impossible for those who remain. The agreed balance between standardization, CO2 pricing, and energy-saving incentives is now definitely lost. Whether this policy helps the transition at all is open to debate. To survive in this degressive energy taxation system it forces extensive growers to use more energy, making growing cheaper. That is the energy transition in reverse!"
Proposal: the energy tax system shaken up
Away from fossil subsidies and towards a fairer energy taxation system. That is what the Netherlands and Gastuinbouw Nederland want. With a flat(ter) energy tax system, everyone - from citizens to industry - pays the same amount for their natural gas and electricity. A fairer system in which exemptions for industries disappear: every kilogram of CO2 emissions is compensated equally. Additional CO2 pricing can be applied per sector so that each sector actually achieves its CO2 reduction target. Although every kilogram of CO2 has an equal effect on climate change, the cost of CO2 reduction varies greatly from one sector to another. The level of this additional price incentive is determined based on the measures and investments needed to meet this sector-specific climate target. This creates the right price incentive that ensures climate targets are met and avoids unnecessary costs for businesses.
"If the government really wants to work on the energy transition, the tax system needs a fundamental shake-up instead of this panic football. A flatter energy tax that communicates with existing systems like ETS and our CO2 sector system gives entrepreneurs action and future perspective in the Netherlands' green economy. Until then, the reduced horticultural tariff and the CHP input exemption remain the band-aids in the current degressive system to prevent food and green poverty. It is now more important than ever that food and ornamental crops remain affordable for citizens. That too is fair climate policy," Bom-Lemstra called on the business community and NGOs to work together on a fairer pricing policy.
Source: Glastuinbouw Nederland