Phasing out plan for fossil fuel subsidies

The 'Phasing out plan for fossil fuel subsidies' is a report by the Netherlands Ministry of Climate Policy and Green Growth, published in October 2025. It outlines the Dutch government's strategy to eliminate fossil fuel subsidies through a 'Whole of Government Approach,' focusing on international cooperation, European Union alignment, and national policy adjustments. The plan emphasizes the 'polluter pays' principle and utilizes both an 'external costs approach' and an 'inventory approach' to identify and quantify fossil fuel benefits, which amounted to 18.0 billion euros in 2024.

• The Netherlands calculates fossil fuel subsidies using two methods: the 'external costs approach,' which compares implicit and explicit CO2 pricing against quantified climate damage costs, and the 'inventory approach,' which assesses specific subsidy expenditures and tax schemes.
• In 2024, the calculated price gap, representing the fossil subsidy for the Netherlands, was 18.0 billion euros, based on a reference price of 174 euro/tonne CO2.
• The Netherlands established the Coalition on Phasing Out Fossil Fuel Incentives Including Subsidies (COFFIS) in 2023 to facilitate joint national implementation, share lessons, and address international barriers to phasing out subsidies.
• The Dutch government advocates for the expansion of the EU Emissions Trading System (EU ETS) to include waste incineration plants from 2028 and considers including emissions from long-distance flights and international maritime shipping if global actions prove insufficient.
• The Netherlands is implementing a multiannual increase in energy tax rates for natural gas through 2030, with the highest rate for consumption up to 170,000 m3/year rising to 65.5 eurocents per m3.
• A new differentiated air passenger tax is planned for 2027, where rates are based on flight distance: 29.40 euros for destinations within the EU or under 2,000 km, 47.24 euros for mid-range (2,000-5,500 km), and 70.86 euros for long-distance flights over 5,500 km.
• The government identifies several subsidy schemes to be phased out or reduced, including the reduced energy tax rate for greenhouse horticulture (phased out by 2035), the input exemption for natural gas electricity generation (restricted by 2030), and the exemption in coal tax for dual and non-energy use (scrapped from 2027).
• Certain fossil fuel advantages cannot be unilaterally phased out by the Netherlands because they are mandated by international treaties or EU directives, such as the exemption for kerosene in international aviation and fuel oil exemptions for maritime shipping.
• The Netherlands uses seven policy considerations to decide on national adjustments to subsidies: pricing of external effects, budgetary revenue, prospects for action/carbon leakage/playing field, fairness, legal obstacles, feasibility, and positive impact on business innovation.

APA

International Institute for Sustainable Development (2025). Phasing out plan for fossil fuel subsidies. https://www.iisd.org/system/files/2025-11/netherlands-uitfaseerplan-fossiele-subsidies-english.pdf

Chicago

International Institute for Sustainable Development. Phasing out plan for fossil fuel subsidies. 2025. https://www.iisd.org/system/files/2025-11/netherlands-uitfaseerplan-fossiele-subsidies-english.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Phasing out plan for fossil fuel subsidies |date=October 2025 |url=https://www.iisd.org/system/files/2025-11/netherlands-uitfaseerplan-fossiele-subsidies-english.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2025phasing, author = {{International Institute for Sustainable Development}}, title = {{Phasing out plan for fossil fuel subsidies}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = oct, url = {https://www.iisd.org/system/files/2025-11/netherlands-uitfaseerplan-fossiele-subsidies-english.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }