Managing the decline of fossil fuels in a fossil fuel intensive economy: The case of the Netherlands

To prevent dangerous climate change a majority of remaining fossil fuel reserves need to stay in the ground. This requires a transition towards a low-carbon energy system. For this transition to succeed specific attention should not only be given to building-up the desired low-carbon system, but also to breaking down and phasing out the old fossil fuel-based aspects of the energy system. The Netherlands, a fossil fuel intensive economy with a historically strong fossil fuel-based energy regime, provides an interesting case for the study of such a fossil fuel phase-out. Despite a long history of policy making aimed at increasing adoption of renewable energy (RE), the Netherlands ranked 2nd last in the European Union with 6% RE in 2017. This has been attributed to the strong independencies between the Dutch government and the fossil fuel industry. This chapter reports on a study mapping the financial interdependencies between the Dutch government and the fossil fuel industry and discusses its implications for the possibility of a managed decline of fossil fuels. It was found that fossil fuel related activities form an important source of revenue for the Dutch national government and the government was found to be tightly interwoven with the fossil fuel system, with ownership and financial relations found in all segments of the fossil fuel value chain, from production and exploration to use and R&D, and at the local, regional, as well as national levels of government. Through state owned enterprises the government, to some extent, itself makes up a large part of the industry. This raises questions regarding the role of government in managing the ‘decline’ of an industry and under what conditions a fossil fuel phase out can occur.

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