House has incomplete picture of climate expenditure

Inconsistent amounts and definitions

How much money does the government spend on climate policy? The ministers concerned do not provide parliament with clear and comprehensive information. Furthermore, there is no clear definition of ‘climate policy’ and the amounts reportedly spent on climate measures are inconsistent.

The House of Representatives and the Senate were informed of these findings in an audit report published by the Netherlands Court of Audit on 25 January 2023. Under the government’s Climate Memorandum, nearly €6.8 billion will be spent on climate-related measures this year. This amount can double if the House agrees to the establishment of a new climate fund of about €35 billion. But these figures do not tell the whole story.

Expenditure can differ by hundreds of millions

Three ministers report on climate expenditure every year: the Minister of Economic Affairs and Climate Policy (EZK) does so in her budget, which the Minister of Finance summarises in the Budget Memorandum, and the Minister for Climate and Energy Policy (KE) issues an annual Climate Memorandum. The information in these documents, however, is sometimes inconsistent. The ministers’ records and checks of climate expenditure are not transparent and the amounts in their documents differ from those in the line ministers’ budgets. In some cases, the difference can be as much as €200 million per annum. In addition, there is no clear definition of climate policy or climate expenditure.

The Minister for KE has a statutory duty to provide information on climate expenditure. However, he presents only a summary of the measures that the Minister of EZK requests from the line ministries. The Minister of EZK does not verify the information she receives.

Examples of differences

The House of Representatives has asked the government to improve the information it provides on several occasions in recent years. Various ministers submit budgets, annual reports and other documents, such as the Climate Memorandum, to parliament. But the information is not always consistent and verifiable, according to the Court.

The Minister of Finance stated in the 2022 Budget Memorandum, for instance, that connecting offshore wind parks would cost €150 million less than the amount stated in the Minister of EZK’s budget. Another example: the Minister of Agriculture’s budget included €259 million to clean up pig farms between 2020 and 2027, but a report on the climate-related remediation measures put the cost over the same period at €44 million (the minister did not classify all the remediation measures as ‘climate expenditure’). A third example: the Minister of the Interior reserved €40 million to improve the sustainability and maintenance of rented housing. The relevant grant scheme, however, was not recognised as climate expenditure. The government’s reports also do not include expenditure incurred by funds and state-owned enterprises such as Gasunie and TenneT, or expenditure on climate policy outside the Netherlands.
 

Fossil subsidies

The Climate Memorandum does not contain information on government policies that use tax schemes that are at odds with the government’s climate goals. According to the Budget Memorandum, at least 5 tax schemes concerning fossil fuels will reduce tax revenue by €4.6 billion this year. The Court of Audit had found in a previous audit that ministers provided parliament with only limited information on the effectiveness of tax schemes, despite the substantial loss of revenue.

House does not know how much money is being spent

Owing to the lack of clear definitions, it is uncertain whether ministries classify the measures they take as climate policy or not. The Minister for KE does not check this when preparing the Climate Memorandum. This makes it difficult for the House to determine how much money the government spends on climate measures.