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Major multinational companies in the Netherlands are threatening to
transfer investment abroad if the Dutch government persists with plans to
impose environmental and energy levies ahead of the European Commission’s
proposed carbon tax. A new set of ‘eco-energy’ levies came into force last
month and other environmental taxes are scheduled for next January. Proposals
for a national carbon tax, which could double the price of fossil fuels,
are proving too much for industry.

The row has split the ruling centre-left cabinet, a Christian Democrat
and Labour coalition, and could bring the government down. The previous
centre-right coalition collapsed in May 1989 over a national environmental
plan.

Energy-intensive companies, such as petrochemicals giant Shell, steel
producer Hoogovens and Dow Chemicals, claim that the ‘profit-crunching’
levies will severely damage their ability to compete internationally.
In addition, they say it will not be worth investing in new plant in the
Netherlands.

Shell has already postponed plans for a £1.6 billion modernisation
of a refinery at Rotterdam-Pernis. And Hoescht Holland, a division of the
German chemicals producer, told Prime Minister Ruud Lubbers that it may
consider closing down its Dutch plant and moving to ‘Kazakhstan . . .
where pollution really is a problem’.

The Netherlands’ carbon tax would be identical in form to the Commission’s
proposed tax – which was put on hold in December largely because of opposition
from industry. To encourage energy efficiency, half the levy is based on
the amount of energy produced by a fuel. The rest is calculated according
to how much carbon dioxide the fuel generates. This is designed to deter
firms from using fossil fuels and so reduce emissions, of CO sub 2 , the
most important greenhouse gas. The Commission’s proposed tax was set at
$3 on a barrel of oil or its equivalent for coal or gas.

Dutch environment minister Hans Alders, supported by his Labour colleagues,
is promoting the new tax. But the Christian Democrat economics minister
Koos Andriessen, has sided with industry.

If the Dutch were to ‘go it alone’ with such levies, the consequences
for the economy would be ‘so disastrous that I don’t even want to talk about
them’, Andriessen told parliament in The Hague last week.

Andriessen calculates that recently – agreed increases in Dutch environmental
levies already amount to the equivalent of the Brussels $3 tax. And his
sums exclude the national carbon tax. ‘The Netherlands could argue to be
excluded from a Commission carbon tax, when and if it is approved,’ he says.

Additional enviromental levies, planned for next year, include heavy
taxes on the use of ground water, pesticides and artificial fertilisers,
on cattle fields containing phosphorous and nitrogen, and on waste incineration
or dumping.