Positive trends in reduction of Dutch greenhouse gas emissions, but hurdles are still abundant

The Netherlands successfully decoupled production-based greenhouse gas emissions from economic growth between 1990 and 2022, marking a significant environmental achievement. Methane and nitrous oxide emissions showed stronger reductions than carbon dioxide. Despite these positive trends, rising biomass-related CO2 emissions present a hurdle. Key policies like landfill regulations and the chemical sector's inclusion in the European Emissions Trading System contributed to this progress. However, the country's current trajectory suggests it may struggle to meet its 2030 target of a 55% reduction compared to 1990 levels, highlighting the need for intensified efforts.

A report by Rabo Research urges further research into consumption-based emissions to fully understand the Netherlands' global climate impact. Sectors such as energy and agriculture must accelerate their low-carbon transitions, with electrification and innovative technologies crucial to future success.

© Rabo Research

Decoupling success and GDP growth

The Netherlands has demonstrated remarkable progress in separating economic growth from environmental impact. By 2022, Dutch GDP per capita rose by 63% compared to 1990 levels while simultaneously achieving significant emission reductions. The country's energy intensity of GDP decreased by 50%, though the carbon intensity of energy only dropped by 2%. Total greenhouse gas emissions peaked in 1996 and have remained below 1990 levels since 2011. Between 1990 and 2022, the Netherlands reduced its GHG emissions by 44 megatons, with methane (CH4) and nitrous oxide (N2O) contributing 18 and 9 megatons to this reduction. The trend elasticity of -0.29 indicates absolute decoupling, a significant achievement in environmental economics.

© Rabo Research

Energy-related greenhouse gas emissions reached 163 million metric tons of CO2 equivalent in 2022. The industrial sector bears significant responsibility, with just twelve manufacturing companies accounting for over 70% of total manufacturing CO2 emissions. The chemical, basic metal, and petroleum industries emerge as the largest emitters of non-biomass CO2. In 2022, major manufacturers, including Chemelot, Nyrstar, and Yara, reduced or halted operations due to high energy costs. The transport sector has improved since 2007, primarily due to stricter EU emissions standards and enhanced fuel efficiency.

Agricultural and methane emissions

Agriculture is crucial in the Netherlands' emissions profile, accounting for 76% of all Dutch methane emissions in 2022. Historical data shows methane emissions reached their lowest levels in 2004-2005, coinciding with minimum cattle numbers. The sector experienced an emissions increase between 2014 and 2017 following the removal of milk production quotas, though emissions decreased again from 2017 to 2022. The agricultural sector now faces the challenge of reducing emissions by 27% in 2030. This target aligns with the Netherlands' commitment to the Global Methane Pledge, which aims for a 30% reduction in methane emissions by 2030 compared to 2020 levels.

© Rabo Research

Challenges in Meeting 2030 Targets

Current trends indicate that the Netherlands may fall short of its 2030 climate goals. The Netherlands Environmental Assessment Agency (PBL) projects that greenhouse gas emissions will only fall by 44% to 52% by 2030 compared to 1990 levels, missing the 55% reduction target. The built environment sector, responsible for 12% of total emissions, faces a projected 14% gap from its climate target. The industry faces particular challenges, with PBL projecting industrial GHG emissions at 38.5 Mt CO2-e by 2030, indicating a 31% gap from the target. Grid congestion poses a significant obstacle, delaying new solar and wind connections and affecting overall climate targets.

Future solutions

Meeting the 2030 targets requires accelerated action across all sectors. Carbon capture and storage (CCS) and hydrogen technology present promising solutions for industrial emissions reduction. Electrification could potentially halve industrial emissions, though high costs and infrastructure limitations currently hinder progress. The energy sector must achieve 70% renewable electricity production by 2030, up from 53% in early 2024. The government has implemented financial incentives, including subsidies and interest-free loans, to encourage sustainable investments, particularly in the built environment. However, PBL's analysis suggests that no climate sector will meet its 2030 target without significant acceleration of current efforts.