Liekuut | Abolishing fossil subsidies offers opportunities

In ‘Liekuut’ — which means ‘straight ahead’ or ‘straightforward’ in the dialect of Groningen — we regularly share the view of one of our academics on a topical issue. In this way, we show how UG researchers are contributing to the societal debate.

Because of the Extinction Rebellion protests, everyone knows they exist: fossil subsidies. As a result of those same protests, serious consideration is now being given to abolishing them. That is a good thing, according to Bert Scholtens , Professor of Sustainable Banking and Finance at the University of Groningen, as the regulations have overshot their mark and are downright unfair. Moreover, the creation and implementation of such policies are devoid of any transparency. In his opinion, we would do well to operate within a policy that is transparent, fair, and international.

Stop doing stupid things

‘Climate sceptics often claim that it is pointless for the Netherlands to devote efforts to the climate, given that we are only a small country. I think it is far too easy to wait for something to happen internationally, because doing so results in only postponing the problem. The Netherlands is indeed a small country, but that is no reason to do nothing. Our contribution to greenhouse gas emissions is more than proportionate in terms of population size. Moreover, it is always possible to stop doing stupid things. One example is favouring companies that produce large amounts of emissions. This is bad, not only because of its impact on the climate, but also because it is unfair. As a result of wholesale schemes, companies are paying much less for their energy. This is the case, even though, in terms of emissions, it makes no difference whether the energy is used to heat a greenhouse or to charge a smartphone. This is price discrimination, made possible with public money. This really has to change.’

Acquired right

‘Fossil subsidies, or the package of exemptions, concessions and schemes for companies that use a large amount of energy (including from fossil sources), once had a clear purpose: to stimulate industry and the economy in order to build the Netherlands. This was much needed after the Second World War, but no thought was ever given to ending such schemes. The world has since undergone tremendous changes. Because an end to these schemes was never discussed, they are now an acquired right for the companies that benefit from them. This can also be observed with homeowners who believe they are entitled to mortgage interest deductions and farmers who believe they are entitled to production subsidies from the European Union. Abolishing these rules is therefore extremely difficult, as those who profit from them are likely to oppose any such action. They have the ability to do this as well: big players and lobbyists have access to policymakers. This creates a very uneven playing field. Moreover, the relative lack of transparency concerning how such policies were established makes it more susceptible to influence through lobbying, such that the goalposts can be moved during the game. After all, no one can see it.’

New policy

‘Anyone who wants to change policy must start with transparency and making choices transparent, so that we can see where our public funds are being spent. There is actually little to be said against that, except for those who have something to hide. This is particularly bad when working with public funds. In addition, we should not simply abolish the subsidies; we should also help the companies who are affected. This is because their products are still in high demand. It is therefore only fair to help these companies. We want their products, but not the manner in which they are produced. It can be done. Big companies are involved, but only a few. We could therefore say, “We want to get rid of subsidies in five years and, during those five years, we’re going to help you adapt.” This is the only way out of this problem.’

Cooperation

‘Everything that happens on this planet is interrelated economically, ecologically and socially. The products we make are not made from start to finish in the Netherlands. We should therefore strive to make the entire chain more sustainable — not just our own bit, because that would result in us simply exporting the pollution. European or, even better, global cooperation is thus indispensable. Here too, however, we must continue to strive for transparency, accountability and insight, so that we know what is being done with our money, and why.’

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