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Biofuels in the Netherlands

General
The new Dutch renewable energy support scheme, SDE, has been operational since April 2008. Per category, the SDE sets a fixed reference price based on the average production costs, given the duration of the subsidy. The actual feed-in premium varies as a result of annually determined correction values that correspond to the possible revenues of electricity sales on the market. In other words, the annual SDE feed-in premium would be equal to the fixed reference price minus the yearly set correction value. This is the major difference between SDE and MEP, the previous Dutch feed-in support scheme, as the latter was based on a fixed feed-in premium. Another important difference between these two support schemes is the definition of an annual subsidy ceiling for new projects per category.

As of September 2008, a new financial support scheme is in operation: the programme 'Duurzame warmte' (sustainable heat), announced by the Ministry of Economic Affairs in June 2008.  The objective of this subsidy scheme is to stimulate the installation of solar water heaters, heat pumps, and micro-CHP in approximately 70,000 households. The scheme applies to existing dwellings only (built before 1 January 2008) and targets private owners and social housing associations. In the period up to 31 December 2011 a total budget of  M€ 66 is available.

According to the Directive 2009/28/EC of the European Parliament and of the Council on the promotion of the use of energy from renewable sources the target for the share of energy from renewable sources in gross final consumption of energy in the year 2020 for the Netherlands is 14% (in the year 2005 the share was 2.4%). The Directive has a mandatory 10 % target for transport to be achieved by all Member States, which refers to renewable sources as a whole, not biofuels alone.

Renewable energy projections according to the National Renewable Energy Action Plan for the Netherlands

The National Renewable Energy Action Plan (NREAP) for the Netherlands was submitted in July 2010. The target according to Annex I of Directive 2009/28/EC is 14% for the year 2020 and the projected NREAP share in that year is 14.5%.  According to the projection, the most important contribution in the year 2020 is expected from wind power (32.4 TWh or 2787 ktoe, 38% of all renewable energy). Second important contribution is expected from biomass (renewable heating and cooling) (1520 ktoe, 21% of all renewable energy). The third largest contribution is from biomass (renewable electricity) (16.6 TWh or 1431 ktoe, 19% of all renewable energy). Wind power contributes with 11.2 GW (32.4 TWh) in the year 2020 (onshore wind 6.0 GW and 13.4 TWh, offshore wind 5.2 GW and 19.0 TWh). For solar photovoltaic the 2020 contribution is projected to be 0.7 GW (0.6 TWh). For solar thermal the 2020 contribution is projected to be 23 ktoe. The two most important biofuels are projected to contribute 552 ktoe (biodiesel) and 282 ktoe (bioethanol / bio-ETBE) by 2020. The renewable electricity production from solid biomass amounts to 12.0 TWh (1030 ktoe) and for biogas it is expected to be 4.7 TWh (401 ktoe). The consumption of renewable heat is expected to amount to 650 ktoe for solid biomass and 288 ktoe for biogas. A contribution of 582 ktoe is expected from bio-methane for grid feed-in by the year 2020.

Transport
Excise exemption was abolished in 2007. Instead of that the suppliers of petrol and diesel for road transport purposes are required to ensure that biofuels account for a certain percentage of their sales in the Netherlands. For 2007 the proportion is 2%, calculated on the basis of energy content. In 2008 and 2009 the percentage will be gradually increased to 3.25% and 4.5% respec-tively. This will ensure a smooth transition towards the target for 2010.

At the end of 2006 the Dutch cabinet allocated a total of 60 million Euros of subsidies for pro-jects relating to innovative biofuels which can bring about a significant reduction in CO2 emissions. This scheme will run until the end of 2010.

A minimum share of renewable sources has been implemented for both bio-ETBE and bioethanol (‘biopetrol’) and biodiesel in order to develop both markets. Companies are (to an extent) free in their choice of biofuels  to achieve the minimum share required. In 2010, the minimum requirement is 4% for the share of biofuels  in road transport, 3.5% for bio-ETBE and bioethanol  and 3.5% for biodiesel (percentages of gasoline and diesel, respectively, for road transport). In 2010, the consumption of bio-ETBE and bioethanol and biodiesel was 0.4 Mtoe or 16.6 PJ: 0.16 Mtoe or 6.7 PJ bio-ETBE and bioethanol, and 0.24 Mtoe  or 9.9 PJ biodiesel.

Including double counting, 1.10 Mtoe  or 46 PJ of renewable energy will be consumed in the transport sector in 2020, of which ‘non-Article 21(2)’ biodiesel and ‘non-Article 2’ bioethanol/bio-ETBE 0.905 Mtoe or 37.9 PJ, electricity from renewable energy sources 0.024 Mtoe or 1.0 PJ, and biofuels with double counting 0.155 Mtoe or 6.5 PJ. The contribution from ‘non-Article 21(2) biofuels of 0.905 Mtoe or 37.9 PJ is based on 0.28 Mtoe or 12 PJ bio-ETBE and bioethanol and 0.55 Mtoe or 23 PJ biodiesel.

The aim of the TAB (Tankstations Alternatieve Brandstoffen) is to set up a nationwide network of filling stations where alternative fuels are available to everyone. To achieve this, a subsidy can be applied for to set up a filling point for an alternative fuel such as natural gas/green gas, E85 (bioethanol) and/or B30 (biodiesel). The fuels that are eligible differ for each tender. The first tender was open for natural gas, biogas and bioethanol. The second tender was also opened up for biodiesel.

IBB (Innovatieve Biobrandstoffen) is a subsidy programme, supporting projects that improve or renew the process for supplying innovative biofuels to the transport sector. The scheme is implemented on behalf of the Ministry of Transport, Public Works and Water Management.

The Action Plan for Electric Driving includes various government measures, not only support schemes. The package is described below. The Dutch Cabinet is investing in electric driving in order to become less reliant on fossil fuels, to stimulate the economy and to protect the environment. In July 2009, the Ministers for Transport, Public Works and Water Management and Economic Affairs presented the Action Plan for Electric Driving. The key aim of the plan is to turn the Netherlands into an international pilot project for electric driving in the period 2009-2011, and then, on the basis of the established framework and useful experience gained, to scale up the project and expand it into a large-scale market launch.

Since 1 April 2010, the tax authority has applied a lower excise duty tariff to E85 within the ‘Uitvoeringsregeling Accijns’ (rule of law relating to the application of excise duty’). This tariff takes account of the lower energy content of ethanol compared with lead-free petrol. The excise duty correction applies only to E85 produced in accordance with the Renewable Energy Directive. Subject to conditions and restrictions, a reimbursement of excise duty is granted in the sum of 27% of the excise duty tariff for lead-free petrol. As a result, the price of E85 at the pump is lower than the price of lead-free petrol. Flexifuel car drivers will now be more inclined to fill up with E85.

The table below lists the main biofuel-related measures in the Netherlands. The table has been taken from the ELOBIO project.

 

 

Valid until

 

Tax incentives / mandates

 

2003

Since 2003, a tax exemption has been granted on a project basis for pure biofuels (three projects on PPO, one on biodiesel). The total amount of PPO and biodiesel that can benefit from this exemption is limited to 7.5 million litres per year.

 

2006

In 2006, a general tax reduction was given for max 2%vol of biodiesel and ethanol blended in diesel and gasoline, respectively. This tax reduction was only valid in 2006.

2006

2007

Transport Biofuels Act 2007: from January 2007 a biofuel obligation is in place. The obliged parties (fuel distributors) have to show administratively that 2% (by energy) of their overall amounts of gasoline and diesel consist of biofuel. Pure biofuels also count towards this requirement, as long as the required market share is achieved. Suppliers may also trade any surplus market share with other suppliers. The obligation gradually increases by 1.25% per year to 5.75% by 2010. For the gasoline and diesel markets separately, minimum shares start with 2% in 2007 and increase by 0.5% per year to 3.5% in 2010.

 

 

 

 

 

Other incentives / support programmes

 

2005

A project group under the leadership of prof. dr. Jacqueline Cramer started formulating sustainability these criteria for bio-energy at the end of 2005. Their report was presented mid 2006, and indicates how the government can prevent biofuel and green electricity production from damaging nature and the environment. In order to achieve this, the government plans to include sustainability criteria in the regulations concerning biofuels for road transport and the MEP scheme (environmental quality electricity production)

 

2006

A subsidy scheme for R&D projects on ‘innovative biofuels for transport’ was established.

2007

2007

The Dutch Cabinet will be looking into the possibilities in Europe of demanding a higher percentage (20%) of biofuels, should these meet sustainability criteria.

 

2008

The Dutch government has decided to cancel implementation of the Reporting Sustainability of Biofuels Act on 1 January 2009. The government plans to harmonise its efforts with the European approach. Developing national policy for matters covered by a proposed guideline is also not in line with European procedures.

 


Sources

ELOBIO, Inventory of biofuel policy measures and their impact on the market, September 2008,  http://www.elobio.eu/publications

Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC (Entry into force on June 25th, 2009), download from http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32009L0028:EN:NOT

Report from the Netherlands for 2006 pursuant to Article 4(1) of Directive 2003/30/EC on the promotion of the use of biofuels or other renewable fuels for transport
http://ec.europa.eu/energy/res/legislation/biofuels_members_states_en.htm

The National Renewable Energy Action Plans (NREAPs) are all published on the Transparency Platform on Renewable Energy: http://ec.europa.eu/energy/renewables/transparency_platform/action_plan_en.htm (sourced July - December 2010)

Renewable Energy Projections as Published in the National Renewable Energy Action Plans of the European Member States, http://www.ecn.nl/nreap (sourced December 2010)




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