One of the biggest problems in making a rapid transition away from fossil fuels is because whole industries become dependent on them and infrastructures get built that lock them in. Where the Netherlands is concerned, a whole country became heavily dependent on one fuel in particular: gas. Yet it’s experience and recent choices show that even when this happens, a rapid transition to clean energy is possible. Where some argue for gas as an intermediary fuel, the Dutch have decided it is a bridge to nowhere. But it might not have happened without a mixture of public outrage and ultra-local decision making. What can the Dutch teach other countries about achieving change?
The Netherlands plans to abandon its gas grid and use this monumental shift to drive the decarbonisation of its wider built environment. Natural gas is to the Netherlands what oil is to the Gulf States and it has completely shaped its economic and industrial legacy. In 1959, the ninth largest natural gas field in the world was discovered in the northern province of Groningen and within just five years, nearly all Dutch homes were connected to the gas grid. As of 2018, gas heated nine in every ten homes in the Netherlands and 38% of total energy consumption went towards heating (of which over half goes to residential buildings). The change came following a series of earthquakes caused by fracking, which created a huge public outcry. In 2019, the Dutch decided to go completely gas-free by 2050, and to halt domestic production by 2030 – although this could happen as early as 2022.
In March 2018, the EU called upon its member states to create specific Integrated National Energy and Climate Plans (NECP) to aid continent-wide decarbonisation efforts. This led the Dutch government to bring together a wide range of civil society organisations (labour unions, NGOs, business associations and local authorities) to help draw up its national climate commitments. The final text was published in December 2018.
Key aims include:
Initial progress looked good. In July 2018, six business associations representing distribution system operators (DSOs), construction companies and housing corporations, announced an initiative to disconnect at least 100,000 houses from the gas grid by 2021 and by late 2018, 27 cities presented a plan to each take at least one neighbourhood off gas by 2020.
By the end of 2018, the Dutch subsidiary of German supermarket chain Lidl had disconnected all its 410 supermarkets in the Netherlands from the gas grid, taking just four years to change to heat pumps powered by electricity from renewables. To hit the Netherlands’ ambitious climate targets, they need to disconnect from gas between 30,000 and 50,000 homes every year up to 2022, and 200,000 homes a year thereafter. Time will tell if the whole country can move quickly enough.
This rapid transition is of interest beyond the Netherlands because it shows how even historically locked-in energy systems (and infrastructures) can be overcome if there is sufficient political will and vision. Natural gas has been a dominant and profitable energy source for the Netherlands, generating vast revenues for both the state and domestic energy industry through Royal Dutch Shell, and enabling their agriculture to specialise in glasshouse horticultural growing at scale. Although the incumbent players will likely continue to dominate a gas-less Netherlands, there is now scope for a more diverse energy system that combines new technologies, new ownership models and greater democratisation. Of course, public support played a strong role too. The government’s botched response to fracking-induced earthquakes and tremors in Groningen around 2013, the destruction they caused and the limited amount of money set aside to address the damages, lit a fuse among the public. This, combined with a growing sentiment that the fight against climate breakdown ought to be ramped up, galvanised a substantial portion of the population to demand an end to gas extraction and use.
In the Netherlands, residential heating is still responsible for around 10% of annual carbon emissions – a sizeable chunk relative to other sectors of the economy. The challenge facing the Dutch of decarbonising residential heating (and cooling) also faces other industrialised economies. At a time when we drastically need to reduce both emissions and energy use, the demand for heating and cooling services is increasing globally and the current provision of technologies to meet this demand is carbon-intensive. Many countries with already hot climates are facing dangerous heatwaves and rises in temperatures that make air conditioning a life-changing technology. At the same time, growing middle classes in many economies are bringing air conditioning units within the reach of more people. The Asia Pacific region currently tops the table for growth in air conditioner sales.
On the positive side, retrofitting homes and encouraging micro-generation of renewable power can help to alleviate fuel poverty whereby households have to spend a large portion of their income on energy bills, which still affects just under a million Dutch households and around 10.3% of homes in England, around 2.3 million households. Decarbonising entire heating and cooling systems also offers a unique opportunity to redesign and overhaul the ownership structures of energy generation and distribution. District heating networks, where heat is transmitted from a centralised source through a network of insulated pipes to multiple buildings, present an opportunity to create energy cooperatives and local transition networks that give local people a greater say in their own energy system.
The Dutch example challenges the idea that natural gas can be used as a transition fuel, as it is less polluting than coal or oil in purely carbon terms and can therefore help ‘bridge’ the gap between today’s fossil fuelled energy system and low carbon energy mix of tomorrow. It shows that with the right level of ambition, stringent climate legislation and an engaged public, removing gas completely is possible. Although natural gas is often thought of as a bridge fuel, it’s clearly a bridge to nowhere. As the President of the European Investment Bank, Dr Werner Hoyer, recently put it: “gas is over”.
Of particular interest is the district by district approach, creating decentralised energy solutions to cater for each neighbourhood. This approach is aided by the devolution of local government, which enables communities to tailor heating solutions to their needs and capabilities – for example, a local waste processing facility might provide thermal energy to heat the surrounding homes. The mix of technologies – and accompanying subsidies – needed to move away from gas include electric heat pumps, hybrid (gas-electricity) heat pumps with renewable electricity and green hydrogen, biomass boilers, solar boilers and pellet stoves. In Amsterdam, this is becoming a reality as two new residential districts are already being built without access to gas.
Despite its clean-living legacy of bicycles and windmills, the Netherlands hugely exploited its discovery of gas in 1959. The government and industry strove to use as much gas as possible, driven partly by the belief that cheap nuclear energy was about to sweep the continent. Other sectors of the economy lost investment and their competitive edge in the 1970s in what The Economist called “Dutch disease” and the manufacturing sector faced a steady decline due to gas exports driving up the currency. Meanwhile, the ubiquity of gas and relative affordability enabled farmers to heat kilometres of greenhouses cheaply, making the Netherlands the second largest agricultural exporter in the world after the US on a fraction of the land. In 2013, the oil and gas company, Royal Dutch Shell, topped the Fortune Global 500 list of the world’s largest companies with a revenue equal to 84% of the Netherlands GDP.
However, in the last few years it has been obvious that the Netherlands is running out of gas – output fell to 52 billion cubic meters last year, the lowest level since the early 1970s, from 84 billion in 2013. Staying with gas at any scale would mean importing from Russia – a relationship the Netherlands would be reluctant to depend on. Attempts to remove harder-to-reach reserves using fracking caused underground disruption that damaged thousands of homes. A local survey found that 152,000 homes (and 18,000 other buildings) needed to be reinforced at a cost of many billions of Euros. A group of farmers then launched a legal challenge demanding that the extraction companies pay for damage caused by their activities. By 2018, just over a billion Euros had been earmarked to cover damage claims, with the Dutch state footing the bill for 64% of the costs. The public started to realise that if revenues from the country’s natural gas – €265 billion from 1960-2013 – had been invested like Norway’s sovereign wealth fund, they would be worth almost €350 billion today – a substantial pot to fund the transition to renewables. The UK is another country that failed to use its oil and gas revenue to provision for the future.
In 2017, the extraction company NAM called for the Groningen gas profits to be poured into the deployment and scaling-up of Dutch renewable energy capacity. As low carbon technologies become increasingly affordable, the time is right for fundamental change. The Dutch government banned the installation of gas heaters in new homes from 2017 and the city of Amsterdam declared that it will be gas-free by 2050. These initiatives and targets fit into sweeping decarbonisation plans for the Netherlands, which aims to be powered 100% by renewables by the middle of the century.
Despite the geopolitical shifts, a wholesale move away from gas would have been impossible without the public protest, organising and political contesting of the affected communities. Protest shifted the public debate concerning the claimed necessity of gas and the (increasingly public) costs of continued extraction, while also shedding light on the entanglement between the Dutch state, and oil and gas companies such as ExxonMobil and Royal Dutch Shell. This was supported by a legal ruling; on 20 December 2019 the Dutch Supreme Court upheld previous decisions in a climate case brought by the environmental group Urgenda. It found that the Dutch government has obligations to urgently and significantly reduce emissions in line with its human rights obligations. The Dutch government has accordingly introduced a series of items of legislation at the national and local levels, with targets for the short-term (2021, for example), near-term (2030) and long-term targets (2050). Beyond this, they are a signatory to the Paris Agreement and partner to the EU’s Net-Zero push.
The devolution of local government in the Netherlands is also an enabling factor in the shift away from gas. Having the flexibility of governance and financial support to tailor solutions to each place is crucial to getting community engagement and support, and ensuring the successful longevity of transition. Some provinces are running competitions to galvanise local business and communities in helping to devise efficient alternatives to gas. Gelderland, for instance, launched a €5 million award to the municipality with the most effective plan to get neighbourhoods off gas. Local energy cooperatives are also emerging to provide guidance on ‘gas-free living’ and energy demand reduction.
The Netherlands high population density and widespread use of low-rise apartment blocks makes district heating more feasible – some estimates forecasting that district heating can replace gas for around half of Dutch homes. District heating does not usually require a monumental retrofitting and insulation programme to improve the energy efficiency of each home and residential block, making it perfect for decarbonising older neighbourhoods. These systems could be fuelled by waste thermal energy from heavy industry, waste processing facilities, geothermal plants and even data centres and ice-skating rinks. However, this brings its own risk of an over-reliance on thermal sources: if a district heating network is being powered by the waste thermal energy from local industry, then problems may arise when that industry moves away or innovates.
Fortunately, there is a range of available technologies and solutions to replace Dutch gas dependence and local governance structures allow each neighbourhood and home to have a solution tailored to its needs to ensure performance, efficiency and economy. All of the current solutions being brought to market in the Netherlands are supported too by a range of financial mechanisms, such as grants and subsidies, to accelerate roll-out and consumer uptake.
This case study was originally published on the Nesta website here.
This case study was produced in partnership with Nesta as part of a series looking at energy transitions, some from other countries, and some from the UK’s recent past.