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Netherlands

Netherlands

Silent murder of green energy -- Black budget day feared

Dutch wind power spent last month in a state of dispirited limbo as it awaited publication of the new centre right government's budget on September 3. "Wind energy in the Netherlands is on hold," said Mathieu Kortenoever of the Dutch wind industry association Newin. The new coalition government, comprising the centre right CDA, the right wing VVD and libertarian-populist LPF, announced its intention take an axe to tax breaks on green electricity as soon as it came to power in May, aiming to save some EUR 165 million. In total the government hopes to lop EUR 500 million off renewables subsidies.

According to Diederik Samson of green power retailer Echte Energie the "silent murder of green energy" is taking place in Holland. "The prices for green power will rise drastically and the successful green power market, which has now grown to one million households, will come under considerable pressure," he says. "But the greatest cause for concern is that investors in renewable energy sources such as wind turbines and solar panels will put their plans on the shelf." Kornelis Blok, professor at the University of Utrecht, agrees: "Offshore wind farms are absolutely not feasible without a tax break for wind energy."

The tax break exempts electricity from renewable energy from the levy applied to grey power, making it possible for green power retailers to sell their product to consumers for the same price, or cheaper, than grey power. The tax break provides the principal means of financial support for Dutch wind power.

The government says it remains committed to promoting renewable energy, but argues that cuts in subsidies are necessary to improve the cost effectiveness of renewables support and discourage the "free rider effect" -- people making use of subsidies they do not require.

The renewables lobby, headed by the DE Koepel Association, acknowledges the free-rider problem. "Too much Dutch tax revenue leaks abroad to foreign renewables producers through the import of green electricity," it points out. The government, it says, should sharpen regulations by limiting tax breaks to renewable energy projects developed since 1990. "A complete revision of the regime would seriously damage the investor confidence vital for the sector's growth," it warns.

The wind sector's fears have been further fuelled by both the Triodos and ABN Amro banks suspending their green investment funds on the grounds that "government proposals would bring investment returns below those of ordinary bonds." The Metaal Unie, the trade association of 11,000 companies in the metals industry, has also shelved plans for the collective purchase of green electricity for its members.

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