2023-11-22 10:40:00
Her economics language fits well with the Sinterklaas period. Roots and sticks. Gülbahar Tezel (51) talks regarding it constantly when she talks regarding the Dutch climate rules for large companies. The carrots are a reward. The rod is the rod for those who are not sweet.
“The Dutch government uses a lot of sticks for the industry,” Tezel notes. “There are also roots that take away some of the pain.” Industrial groups are increasingly paying for their CO2 emissions, she means, but at the same time they receive all kinds of (subsidy) support.
For Tezel, who as top woman heads a new sustainable think tank at consultancy firm PricewaterhouseCoopers (PWC), it is crystal clear how the balance works out. “The industry is having a hard time, partly due to the increasing number of climate regulations and CO2 policy.”
Not an ideal world
That is good news for the climate, it is a logical thought. If the polluter pays, fossil factories will extinguish their furnaces and the world will look a little cleaner. “In an ideal world, where all countries implement the same strict policies, that would be the case,” says Tezel. Her tone immediately reveals that she means: forget it, that’s not the case.
“Globally, regarding 25 percent of CO2 emissions are taxed, but industry is usually exempt. And the price that is available is currently of little value in most countries.” Europe does impose a CO2 tax at the border on environmentally unfriendly imports, in the hope of protecting the EU market. But export companies are fully exposed to global competition. According to Tezel, the policy in the Netherlands, in which many industrial companies pay the European CO2 price (ETS) and see various ‘sticks’ being waved, is ‘quite sharp’.
One consequence may be that industrial activities move from the Netherlands to abroad. “Leakage effects,” she calls them. The CO2 no longer enters the atmosphere here, but elsewhere. “It’s not helping the climate.” In fact, the top advisor says, if fossil energy sources abroad are dirtier and environmental standards are looser, it might result in additional CO2 emissions.
Leakage of CO2 emissions ‘is not a big bang’
That warning has been sounding for years, in the national debate regarding policy for polluting companies. But following the Central Planning Bureau established that companies will not simply close their businesses and move abroad due to climate policy, the discussion seemed to have been settled. Wrongly, says Tezel. “People think: CO2 emissions will leak away if a company closes its doors tomorrow. But that leakage is a gradual process, not one big bang.”
While an industrial group in the Netherlands is increasingly struggling, a parent group usually decides to give priority to sister companies within the international portfolio of factories, Tezel explains. It might happen that the Indian company Tata gradually scales down the steel factory in IJmuiden and the Norwegian owner of Yara eventually replaces the factory in Sluiskil.
The current high energy prices in Europe may be temporary, Tezel estimates. “Now Europe is expensive for the industry and cheap fossil countries seem lucrative. But with plenty of wind, sun and green hydrogen in 2030, a sustainable European industry might potentially be competitive once more.” In short, her fear is that Europe will eventually be ideally equipped for green industry, but that many factories will already be on course for closure.
‘Don’t say too lazily: oh, we can do without that industry here’
The Netherlands Environmental Assessment Agency recently also mentioned CO2 leakage as a conceivable scenario. It is too simplistic to dismiss warnings from the business community regarding companies leaving as unfounded scaremongering to weaken climate policy, says Tezel, who is also an economics professor in Tilburg.
She calls for more refinement in the social debate regarding large companies, such as the chemical sector and manufacturing industry. “We should not say too lazily: oh well, we can do without that industry here.” Tezel points to increasing international demand for products such as plastics, cardboard, steel and fertilizer.
And can’t customers simply pay a little more if Dutch companies have higher costs for their pollution or invest in sustainability? “As an economist you are quite pessimistic regarding human nature,” she says – without using the word ‘I’. “Your starting point is that companies and consumers are not prepared to pay a cent more for social costs if they can buy cheaper elsewhere.” Of course there is a group of conscious, idealistic customers who do that. “A small group is not enough,” thinks Tezel.
Also read:
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The European Union is going Imposing a CO2 tax at the border and thus wants to tempt other countries to put a price tag on pollution.
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