Last year, a directive came into force for trading CO2 emission rights. On behalf of the Ministry of Agriculture, Nature and Food Quality (LNV), LEI Wageningen UR studied the financial consequences of this Directive for Dutch greenhouse horticulture. The auctioning of all CO2 emission rights in greenhouse horticulture has a considerable impact on the competitive position of the Dutch sector. It is therefore better not to auction all the rights and to financially settle (balance) the surplus or shortage of CO2 emissions.

The European Commission wants to reduce CO2 emission rights by 20% in 2020 and auction the rights as far as possible. However, the Commission does consider whether the directive puts pressure on the competitive position of sectors with high energy consumption. If it does, this could result in production moving to countries which do not have a strict climate policy, thus moving but not reducing CO2 emissions.

The study compared two policy variants: one where all emission rights are auctioned and one where emission rights are only auctioned for the production of electricity, while they are distributed free for other purposes.
In the last case, Dutch horticulture is faced with a limited cost increase (at a price of 20 euros per ton CO2). The costs then rise by 0.8%. When all emission rights are auctioned, the rise in costs is substantially higher. In that case, at a price of 20 euros per ton, costs rise by 2.6%.

Dutch greenhouse horticulture faces strong competition from countries outside the European Union, particularly with respect to cut flowers and pot plants. This means that Dutch greenhouse horticulture cannot pass cost increases to its customers. Due to climate differences, the directive also has potential consequences for the competitive position of Dutch greenhouse horticulture compared with southern Member States. Depending on the price of CO2 and the sensitivity of import demand to price changes, in the case of full auction, production in the Netherlands will decline by 4.8% to 8.9%.

Report 2009-055 CO2 emission trade in 2020; Significance for Dutch greenhouse horticulture (summary)