Coal plants and CO2 reduction: carbon tax no longer on fuels but on electricity

Since 1987 the Durch government enforces a fuel tax on fossil fuels used for the generabon of elecricity in the Netherlands. This tax was heavily increased in the early nineties as a measure to influence CO2 emissions.

This fuel tax led to a substantial increase of the price of electricity produced by coal-fired power plants in the Netherlands. The fuel tax on coal actually is Hfl. 24.28 per mton, i.e. about Hfl. 0.90 per gigajoule whereas the tax on gas is roughly half this amount per GJ. Since the tax is on the fuel, it does not apply on imported electricity and therefore it distorts competition.

Recently the Dutch government and the Dutch power plant owners came to agreement on measures designed to bring out further reduction of CO2 emissions in the next few years.

In terms of the Kyoto protocol the Dutch power plants will have to reduce CO2 emissions by 6 min. ton per year by 2008.

Co-firing is the main issue. The govemment declared its willingness to stimulate increased use of biomass as a co-firing product through the use of financial/tax measures. The fuel tax will no longer be for the account of the electricity producers but will be passed on to the end users per Januay 1, 2001. This reintroduces a level playing field since imported electricity and domestically generated electricity are now once again taxed equally.

The power plants estimate that the maintained and possibly enlarged use of biomass as well as the use of RDF (Refuse Derived Fuel) will lead to a reduction of CO2 emission of about 3 min. ton per year. Further reduction could be reached through participation in the benchmark energy efficiency (2 min. ton) and coalgas switching (0.5 min. ton) in the Demkolec plant in Buggenum. Furthermore, government and power plants will continue to develop other methods of CO2 reduction.

Jochen Feuerborn from 2001-10-01