Dutch plan to cut carbon emissions in half

Can long-term economic effects be accurately assessed?

On June 5th, representatives from CE Delft presented the Green4sure plan to the Dutch environment minister Jacqueline Cramer. CE Delft is an independent research and consultancy organisation. It has put together the plan at the request of a coalition of six major Dutch trade unions and environmental NGOs.

All emission allowances auctioned

Green4sure targets an emission reduction of 50% by 2030. The main concept is to extend the system of emission allowances. They will be attributed to individual companies (industry, electrical power generation, and aviation), or to a sector as a whole (built environment and transport sector). All allowances will be auctioned. Given the need for urgent action, the plan also includes a few temporary measures, for instance a cap of 375 gCO₂/kWh for all new generating plants.

Cost offset by benefits

CE Delft also focused on the social and economic consequences. It calculated that the overall execution cost of the plan would be 4 billion euro. This would be offset by benefits totalling approximately 3 billion a year. The plan projects a slight growth in employment. The annual energy cost for the average household in 2030 may increase by about 600 euro. However, the study also points out that the average annual income is expected to have increased by 50% in 2030 as well.

Such economic predictions are necessary and indispensable if the plan is to have any chance at gaining political support, but given the extreme complexity of the whole environmental issue, one can be excused for having doubts about the accuracy of the long-term projections (See recent blog post 'Studies can prove anything you want'). Will a radical carbon emission reduction plan benefit the economy in the long run or not? It is difficult to answer this question with hard figures, so we will have to rely mainly on intuition for the time being. My personal intuition says that anything that forces us to conserve and innovate will benefit the economy in the end.