MPs set to abolish CO2 levy after industry warns of job losses

MPs are set to vote to abolish a tax on CO2 emissions after intense lobbying from companies who warned it would drive jobs out of the Netherlands.

The VVD said on Tuesday it no longer supported the measure, an additional levy on top of European carbon taxes, despite the efforts of VVD Green Growth minister Sophie Hermans to retain it.

“Dutch industry is known around the world for its innovative strength and we want to keep reaping the rewards in the future,” the party said in a statement.

The VVD is now expected to back a motion tabled by the Christian Democrats (CDA) calling for the levy to be scrapped. The PVV and BBB, voted for a previous motion by the CDA to abolish the tax, despite a commitment in the coalition agreement to retain it.

Companies said they would have to pay an extra €75 per tonne of CO2 emissions than their European competitors when the full impact of the levy took effect in 2035, but Hermans said it was key to making Dutch industry sustainable.

Several chemicals firms, including the US-based LyondellBasell, pigment specialist Tronox and plastics producer Indorama have closed their Dutch operations in the last year. Altogether more than 1,000 jobs have been lost in the Port of Rotterdam industrial area.

The tax has been applied since 2021, but the costs were initially borne by the government through a compensation scheme. The level of compensation is being gradually scaled back until 2035 to give companies time to cut their emissions.

But companies in the chemical, steel and plastics sectors said it would force them to move to other countries, taking jobs out of the Netherlands while doing nothing to make their industries more sustainable.

Opposition party GL-PvdA said abandoning the tax was a blow to the Netherlands’ hopes of achieving its climate change targets. “After years of stagnation and severe cuts to climate policy, the CDA and VVD are now on the brink of scrapping the CO2 levy,” a statement by the party said.

Folkert Idsinga of NSC, the only party from the disbanded coalition that still supports the plan, said the VVD had “said goodbye to climate policy and thrown its own minister under the bus”.