December 7, 2016 / 1:15 PM / 8 months ago

Dutch to stop subsidizing renewables in long-term climate strategy

3 Min Read

AMSTERDAM (Reuters) - The Netherlands will gradually phase out subsidizes for renewable energy and shift its climate change strategy to areas such as energy saving and carbon capture, the government said on Wednesday.

A week ago, the Netherlands announced a 33 percent increase in subsidies for solar, wind, geothermal and other projects to 12 billion euros ($12.9 billion) in 2017, from 9 billion euros in 2016, as it struggles to reach 2020 targets.

But the "Energy Agenda" published by the Economic Affairs ministry on Wednesday - setting out how greenhouse gas emissions can be cut to 80-95 percent of 1990 levels by 2050 - said subsidies would be phased out as renewables become more viable.

Offshore wind turbines will no longer require subsidies by 2026 and the government intends to designate new areas of the North Sea for wind energy, the paper says.

The Energy Agenda also says there will be a minimum 20 billion euros of investment in the electricity grid and a reduction in vehicle emissions to zero for all new cars by 2035.

The government intends to encourage power companies to make it easier for individuals to invest in renewables, such as wind and solar farms, partly to undermine "not in my backyard" sentiment which hampers such projects at the planning stage.

Because Dutch fossil fuel-based industrial production is relatively efficient, the paper said Europe's "cap and trade" system of reducing carbon emissions is unlikely to be effective in the Netherlands until the 2030s.

As a result, the country is studying what additional measures it can take, perhaps in collaboration with Britain and Germany, to reduce industrial CO2 emissions.

A 100 million-euro fund that provides guarantees or subordinated loans to projects that reduce CO2 will be expanded, and is likely to receive additional funding from the European Investment Bank, the paper said.

The cost of meeting the 2050 goals could be 10 billion euros annually, or about 1.4 percent of GDP, the Energy Agenda says, acknowledging there are large areas of uncertainty.

Reporting by Toby Sterling; Editing by Robin Pomeroy

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