The journey to Netzero requires sustainable measures

Both the Dutch Carbon Tax and the Euro Carbon Border Adjustment were subject in the Netherlands-Korea Green Business Seminar. Besides Won Joon Choi (SK Securities), Yoo-kyung Park (APG Asset Management) and Frits de Groot (VNO-NCW) who offered insight in the development of Green Investment and ESG in Korea and the Netherlands respectively, Richard Sterneberg and Arjen de Snoo presented an overview of the state of affairs of the Euro Carbon Border Adjustment and the Dutch Carbon Tax.

It became crystal clear that both industry and the financial sector subscribe to the need and urgency of the development towards Netzero in 2050. The Euro Carbon Border Adjustment is increasingly seen as a key and necessary tool to meet net-zero emissions in 2050. However, the scope and design are still unclear and several major trading partners have already expressed concern. Legislation is expected in the summer of 2021, to enter into force in 2022.

The Dutch Carbon Tax goes through a significantly faster route: announced in the summer of 2020 and in all probability operational as of 1 January 2021. This regime provides for a tax on top of the EU-ETS although it seems that at least during the first years no actual tax will be due. On the other hand, the administrative burden is high from the outset, due to a particularly complex structure of the regulation and its connection with the EU-ETS.

The discussion made it clear that these schemes will only successfully contribute to achieving the goal of Netzero if they are clear, fit into the larger context of European and global developments and can be applied without unnecessary burdens. The Netherlands is brave as a pioneer in Europe with a Carbon Tax, but will likely be overtaken by the EU with more far-reaching measures, like the Euro Carbon Border Adjustment and an adjustment of the EU-ETS, before the national Carbon Tax is actually effective.