With the Budget Memorandum and Budget for next year, a Tax Plan is also drawn up, as a series of fiscal measures or bills to make the plans possible. For Dutch horticulture, there are three: subjecting horticulture to a CO2 levy, phasing out the reduced rate on gas (boiler gas), and phasing out the possibilities of using gas at all to generate electricity with a combined heat and power installation. The plans, which do not lie, were announced on Budget Day.
The Environmental Taxes Act will have a new component from January 1, 2025. There will be a CO2 levy on horticulture, i.e., a tax on carbon dioxide emissions. It will be €1.35 per tonne of carbon dioxide. (In perspective: 1 cubic meter of gas accounts for about 1.8 kilos of CO2; a company using 100,000 cubic meters on an annual basis emits 180,000 kilos of CO2, or 180 tonnes, or €243).
Tariffs on gas use are also going up. Small consumers (between 0 and 170,000 cubic meters annualized) currently pay 7.9 cents tax on the use of 1 cubic meter. Next year, that will be 9.4, 18 in 2025, 26.7 in 2026, and so on, until finally, in 2030, the rates are aligned with those of the regular user, namely 62.8 cents.
The large user (170,000-1 million cubic meters) goes from 3.6 cents now to 8.4 next year to 15.9 in 2025 to 19.4 in 2026 etc. See chart below.
Top to bottom: lowered tariff for gas use in horticulture in euro cents per m2, electricity generation exemption per kWh, amount of gas (Nm2). Click here to enlarge the table.
Limiting electricity generation exemption - the lower the efficiency, the more tax
The most abstract of the three is limiting the input exemption. This is designed to avoid double taxation because generated electricity benefits the public grid. Since this is only partly the case - some of the electricity is used itself, some of the input is converted into heat, and that too is for own use - it is proposed 'to also tax (gas input for) heat and electricity for own use with energy tax from January 1, 2025.'
What that looks like can be read in the bill in question. "Currently, natural gas used in electricity generation plants is fully exempt if an electrical efficiency of at least 30% is achieved. The electrical efficiency of most plants is well above 30%. For example, the electrical efficiency of modern power plants is about 55%, and CHP plants in horticulture are about 43%. Only installations set up at industrial companies sometimes realize an efficiency below 30% and therefore do not claim the input exemption."
"The government proposes to drop the 30% efficiency requirement and instead exempt 0.18957 Nm3 of natural gas per kWh of electricity generated. This measure maintains the input exemption for electricity generation but henceforth taxes natural gas for heat generation. In practice, the measure amounts to exempting the entire natural gas input for installations achieving an electrical efficiency of 60% or higher. Operators with installations achieving an electrical efficiency below 60% will now pay energy tax on part of the natural gas input. The lower the electrical efficiency of a plant, the greater the natural gas share on which energy tax must be paid."
Want to check it out yourself? The Bill on Fiscal Climate Measures Horticulture can be found here.
Are the plans feasible, or, in civil servants' terms, is it in the 'doability' of entrepreneurs to meet all these increases? The question is asked rhetorically and therefore answered: "None of the measures in this bill make greater demands on the doability of those involved. Thus, the doability of the measure is not a concern. In addition, the measure only affects companies, making doability generally less of a concern."
Noted. Several times here, people refer to a report by BlueTerra and Trinomics, which calculates the effects of phasing out energy tax exemptions. However, this makes no statements on feasibility.
"Prinsjesdag budget undermines livelihood security horticulture"
Adri Bom-Lemstra, president of Glastuinbouw Nederland, clearly has a different opinion. "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. Abolition of the horticultural tariff and curtailment of the CHP input exemption, therefore, particularly inhibits climate frontrunners in growing healthy and green products on Dutch soil. Healthier food and a greener environment will thus become even more unaffordable for citizens, and growers will end up in the red."