Emerging Climate and Energy Transition Issues: Kingdom of the Netherlands - The Netherlands

This chapter examines two key challenges for the Netherlands: distributional impacts of EU ETS reforms and the fiscal, environmental and power sector effects of road transport electrification. Expanded carbon pricing through ETS2 and CBAM affects households via multiple channels, with broadly even consumption impacts but shifting incidence from pass-through and free-allowance changes. The current vehicle electrification rate, while essential for emissions goals, erodes transport tax revenues, increases grid demand, and yet still leaves road emissions above targets. Policy options—road-user charging, fuel tax adjustments, congestion pricing, and targeted support—can address equity concerns, stabilize revenues, and manage non-climate externalities while sustaining progress toward climate targets.