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Dutch coal tax could change but not increase - ministry

03 Jul 2013 17:23:40 | csd

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The Dutch government says it is not considering increasing the €13.73/tonne coal tax in 2015 as traders had feared, but is preparing an energy agreement that could include tax reform.

Dutch advisory body, the Social and Economic Council, is negotiating an energy policy reform package, which includes the coal tax, to present to the ministry council on 12 July.

One of the reforms under negotiation may be to change the fixed tax to a price related to plant emissions, according to an anonymous source. In this scenario, new plants with higher efficiency and fewer emissions through burning coal and biomass would pay less.

The council declined to release information about the contents of the negotiations.

A spokesman from the Ministry of Economic Affairs said there were no further plans to increase the coal tax to €25/tonne in 2015.

Dutch electricity market participants agree that while the lifting of a tax exemption for coal-fired power plant producers in January 2013 has hurt profit margins for producers, it has not shifted the merit order from coal- to gas-fired power plants. It is still cheaper to run coal-fired plants than gas-fired plants.

According to Martijn Broekhof, associate at the European Climate Foundation, the government introduced the tax as an austerity measure to raise its revenues, rather than as an environmental move to reduce emissions.

Some traders estimated the tax has added €1.50-2.00/MWh to power prices (see EDEM 19 June 2013).

"A higher coal tax would impact the price of electricity, and nobody wants the price of electricity to increase," Broekhof said.

But the economic affairs ministry does not estimate that the tax will increase wholesale electricity prices, which will be set on the larger northwest European market, the spokesman said.

Results from the ministry council debate on the energy agreement will be discussed in parliament in September or October. Sonja Caymaz

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