Dutch climate policy has seen frequent changes in recent years. Regulations introduced one year are sometimes reversed the next. While some policy shifts are inevitable due to new insights and changing political priorities, This unpredictability of climate policy creates uncertainty. That uncertainty drives up the cost of investments, as businesses and financial institutions hesitate to commit without long-term certainty. A balance must be struck and retained between flexibility and predictability.
Sustainable homes
Making homes more energy-efficient is a key part of the transition to a climate-neutral economy. It also helps reduce energy bills for homeowners. Recent years have seen progress, with fewer homes carrying poor energy labels. This shift was partly driven by the spike in energy prices in 2022, which incentivised energy-saving measures Dutch households have also built up savings since the COVID-19 pandemic, and government grants and favourable loan schemes have expanded.
A DNB analysis shows that nearly all homeowners now have the financial means to invest in sustainability. However, uptake remains low. Many homeowners are unsure whether they’ll recoup the costs, and few take advantage of available financial support. Better government communication and more accessible advice could help accelerate home sustainability efforts.
Subsidies vs pricing – a smarter mix
Current Dutch climate policy relies heavily on subsidies aimed at countering climate change. Such subsidies are relatively high in the Netherlands. While generous, this approach has drawbacks: it strains public finances, requires the government to pick technological winners, and can lead to windfall profits for projects that would have been profitable anyway.
Why emissions pricing works
One major reason green investments lag is the lack of financial incentives. Low carbon taxes mean that sustainable investments often do not yield sufficient returns. Raising carbon prices would make the green solutions needed to meet climate goals more attractive and profitable. Pricing mechanisms encourage sustainable behaviour and discourage polluting activities. Clear standards also help businesses and citizens understand what is expected of them. In sum, pricing and standardisation can help make the energy transition more efficient and cost-effective. The spring 2023 Interdepartmental Policy Study (IBO) on Climate outlines effective pricing and regulatory measures for sustainable mobility, industry, buildings, and agriculture.
Bottlenecks to green finance
Beyond low carbon pricing, green finance faces other challenges. Long payback periods expose banks and investors to liquidity risks. Inconsistent sustainability metrics make it hard to assess the true impact of investments. Uncertainty around returns from innovation makes it harder to secure bank loans, pushing innovative entrepreneurs toward venture capital, which is scarce in Europe Small-scale projects also struggle to attract investment due to high due diligence costs on the part of lenders.
Recommendations for green finance
Multiple actors can support the transition: institutional investors like pension funds and insurers, private equity, and government-backed investment funds. However, scale remains a challenge. Read more about our research and recommendations: