Taxing energy

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In a bid to boost the use of "green electricity" in the Netherlands, the Dutch government has announced it will exempt consumers opting for electricity generated from renewable resources from its Regulatory Energy Tax (REB) -- also known as the "ecotax." The tax break is set to shave around NLG 0.03 off the kilowatt hour price of clean power.

Introduced in January 1996, REB is intended to curb domestic and small-business energy use and reward producers of clean energy through a rebate system. The decision to extend the rebate system to the green electricity consumer was taken after the Dutch government's proposals to levy a lower rate of Value Added Tax (VAT) on green power was vetoed by the European Commission.

"The proposed exemption from REB represents a comparable stimulus [to switch to green power]," says the economic affairs ministry. "For companies, this exemption is actually more favourable, because they would not have benefited from a reduction in VAT."

The Dutch government is also toying with a plan for tradeable green power certificates held by utilities. The plan would oblige electricity distribution companies to provide 3% of their total power sales from renewable sources of energy (Windpower Monthly, May 1997). Proof of compliance will be a green certificate, issued by an independent watchdog. The plan requires the utility to sell the 3% of renewables power to consumers in the Netherlands. A distribution utility with no access to green power generation will be required to buy its certificates from another utility, providing an incentive for development of more renewable energy power plant in the Netherlands by utilities or independent power producers.

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