The Netherlands has long been considered a good location for energy-intensive industries. Dutch greenhouse horticulture is very extensive, several industrial clusters have been established, and the port of Rotterdam has a strong attraction for chemicals and refineries, among others. This industrial capacity - with its high labour productivity - is of considerable importance for the Dutch economy in a broad sense. Not only because of its large indirect employment, but also because it forms the basis for the manufacturing industry, which makes products such as windmills and fertilisers. These products make an important contribution to the strategic autonomy of the Netherlands and Europe, making basic industry important for, among other things, the success of the energy transition and stability in the food supply.
Recently, we have seen a series of developments that negatively affect the favorable business climate of the Netherlands, particularly for energy-intensive industries. Dutch companies, as in the rest of Europe, face high gas and electricity prices as a result of the sanctions introduced after the Russian invasion of Ukraine. This is often as much as two to three times what American companies pay. Whereas in our surrounding countries the government is trying to accommodate these sectors with tax breaks, the Dutch government has actually decided to make gas and electricity more expensive for large consumers with some measures. In recent years, the Dutch government has also shown with varying policies that it does not have a consistent long-term vision of where it wants to go with the industry. Some measures are at odds with others. As a result, the energy-intensive industry does not really know where it stands. This leads headquarters abroad to postpone investment decisions or move to locations outside the Netherlands.
While the Netherlands is becoming less and less attractive for industrial production relative to its neighbors, the same is true for Europe as a whole. In addition to affordability, the security of supply and/or delivery of energy for European companies is surrounded by increasing risks. Europe is almost entirely dependent on imports for almost all fuels. In addition, other industrial powers have extensive government stimulus programs, such as the Inflation Reduction Act (IRA) in the United States (US) and similar programs in China. The European Union (EU) is a lot less generous with such state support and instead comes up with mostly obligations for companies (such as CSDD and CSRD), which require more administration and controls and thus increase costs. This fits into a broader picture in Europe, where (fossil) energy-intensive companies are slowly but surely losing their social license-to-operate. The focus here is strongly on climate policy, with politicians giving affordability, availability, and strategic independence a lower priority than in other parts of the world.
In this report, we look at recent developments and describe the reasons for the changing investment climate. This overview is needed to arrive at the right strategic choices for the benefit of the Dutch investment climate. Not having a long-term vision is also a choice, but one with potentially major consequences.
