Phasing out plan for fossil fuel subsidies

The Netherlands is implementing a multi-level approach to phase out fossil fuel subsidies, focusing on international cooperation through the COFFIS coalition and EU-wide mechanisms like the EU ETS and CBAM. Nationally, the government uses an 'external costs approach' to identify price gaps, which amounted to a fossil subsidy of 18.0 billion euros in 2024. The plan includes raising energy taxes on natural gas through 2030, introducing a differentiated air passenger tax in 2027, and phasing out specific exemptions for greenhouse horticulture and coal use. However, several subsidies remain due to international treaties (e.g., the Energy Taxation Directive) or concerns over carbon leakage and social fairness.

• The Netherlands calculates fossil fuel subsidies using two methods: an 'external costs approach' that compares CO2 pricing against quantified climate damage, and an 'inventory approach' that assesses specific subsidy expenditures and tax schemes.
• In 2024, the calculated price gap, representing the fossil subsidy in the Netherlands, was 18.0 billion euros.
• The Netherlands established the Coalition on Phasing Out Fossil Fuel Incentives Including Subsidies (COFFIS) in 2023 to coordinate national implementation, share lessons, and address international barriers to subsidy reform.
• The Dutch government is advocating for the expansion of the EU Emission Trading System (EU ETS) to include waste incineration plants from 2028 and is evaluating the inclusion of long-distance aviation emissions in 2026.
• Energy tax rates for natural gas are being raised through 2030; for consumption up to 170,000 m3/year, the rate will increase from 25.2 eurocents per m3 in 2017 to 65.5 eurocents per m3 by 2030.
• Starting January 1, 2027, the Netherlands plans to implement a differentiated air passenger tax based on flight distance, with rates ranging from 29.40 euros for short flights to 70.86 euros for long-distance flights (> 5,500 km).
• Several high-value subsidies cannot be unilaterally phased out by the Netherlands because they are mandated by international treaties or EU law, such as the exemption for fuel oil in maritime shipping (5,952 million euros in 2025) and kerosene in international aviation (2,845 million euros in 2025).
• The government is phasing out the reduced energy tax rate for greenhouse horticulture between 2030 and 2035 to encourage the adoption of sustainable heating techniques like heat pumps and geothermal heat.
• The Netherlands is introducing a green gas blending obligation on January 1, 2027, targeting a chain emission reduction of 2.85 megatonnes of CO2 by 2031.
• The Dutch government maintains certain exemptions, such as the energy tax rebate for electricity connections (4,797 million euros in 2025), viewing them as essential burden compensation for households.

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} }