Netherlands

NL-2:Long-Term Agreements on Energy Efficiency

Policy Description

The Long Term Agreements (LTAs) are negotiated agreements aimed at promoting energy savings in industry that have been part of Dutch energy policy since the early 1990s. The current LTA3 is the third generation agreement, running until 2020.

Description

 

The Long Term Agreements (LTAs) are negotiated agreements aimed at promoting energy savings in industry that have been part of Dutch energy policy since the early 1990s [1]. The current LTA3 is the third generation agreement, running until 2020 [2].

The first agreements (LTA1) ended in 2000 and focused primarily on the efficiency of the production process for energy-intensive sectors. As of 2000, energy-intensive companies (energy consumption > 0.5 PJ/yr) are covered by the Benchmarking covenant (see Policy NL-1) while less energy-intensive companies (<0.5 PJ), medium-sized and small industrial companies fall under the 2nd generation LTA (both run till 2012).

In 2007, the 3rd generation agreements were launched, LTA3, which presents an expansion, intensification and broadening of LTA2 and runs till 2020. LTA2 and LTA3 added energy savings throughout the entire product chain. LTA2 and LTA3’s target of improving energy efficiency by 30% between 2005-2020 consists of an improvement by 20% within plant borders and 10% outside (e.g. by less material  use or
 recycling, waste heat or renewables use/generation, or by making efficient products) (*1).

Each participant is required to make an Energy Efficiency Plan and to implement all profitable measures (with payback periods of 5 years or less) from a technology list developed at the sector level.

In return, the government agrees not to impose additional specific national measures aimed at energy conservation or CO2 emission reductions on the participating companies. Also, companies acting under the covenants are largely exempt from the generic (economy-wide) energy/carbon tax and are automatically granted compliance with the energy-related provisions of their permits under the Environmental Management Act.

 

Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.

Policy Categorisation

Policy Instrument Type: Administrative, Negotiated Agreement

Position in the Pyramid

About Us

Participation: Mandatory

Period

Start Date: 1992

End Date: 2020

Policy Linkages

Complements Long-term Agreement on Energy Efficiency for EU ETS enterprises (LEE) Effort Defining
Complements Permits under the Environmental Management Act Supporting Measure

Agencies Responsible

Ministry of Economic Affairs
AgentschapNL

Primary Objective: Energy

Objective

To improve energy efficiency without a negative impact on economic growth or competitiveness of Dutch trade and industry.

Target Group

Enterprises, Trade Associations and Product Boards and Municipalities LTA 1: All industry sectors; LTA 2-3: Companies with energy consumption < 0.5PJ/yr.

Driver of energy consumption or emissions affected by policy: • Energy efficiency within the industry companies in the broad sense (all efficiency measures that can be taken on-site, but also including to a certain extent also material efficiency, efficient products and renewable energy); • Energy efficiency and emissions of refrigerating equipment industry (air-conditioning systems and water pumps).

Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.

Coverage

22.5% of total industrial energy consumption in the Netherlands [3] (*2)

Quantitative Target? yes

Target: 30% energy efficiency over the time period, split into 20% within plant borders and 10% outside plan borders

Time Period: 2005-2020

Progress Monitored? yes

Verification Required? yes

Enforced? yes

Sanctions: Termination of the LTA in for the company, resulting in coverage by the Environmental Management Act (see NL-4).

Requirements on the Target Group

Participants must:

  • Have systematic energy management in place within two years of signing or joining a Long-Term Agreement, i.e. a structural and constant attention for energy management. This may be apparent from an ISO 14001 certification in which energy management has been integrated or from compliance with the Energy Management Checklist that is based on the Energy Conservation Reference provided as an annex to the LTA [4] (although participants are automatically granted compliance with the energy-related requirements of the permit);
  • Submit an energy efficiency plan (EEP) once every four years;
  • Implement all measures identified as profitable;
  • Obtain an environmental permit from the Environmental Management Act (see NL-4);
  • Perform an annual monitoring and reporting of progress on energy efficiency improvements.

Support by Government

In return for participating companies achieving the defined energy efficiency targets, the Dutch government agrees to make a reciprocal effort, ensuring that (*1):

  • No supplementary national policy governing CO2 reduction or energy conservation is imposed on these companies;
  • No specific national energy tax ( i.e. specifically on the target group, in contrast to generic taxes or EU-imposed taxes) will be levied on these companies (in contrast to generic energy taxes which the government can still implement according to the Agreement). Currently though, agreement participants are largely excluded from the generic energy/carbon tax.
  • The costs of buying carbon credits arising  from the national obligations of the Dutch government in the field of the Joint Implementation, the CDM or international emissions trading (to meet its Kyoto target) will not be charged directly to the participating companies.

Implementation Toolbox

The following tools are provided to support implementation of the Long-Term Agreements and the Benchmarking Covenant on Energy Efficiency:

Complexity of Implementation

Government

Evaluating energy efficiency plan (EEP) and payback period of measures (SenterNovem). Large number of smaller and diverse energy consumers included, as well as different levels of government (national, provicincial, municipal), broader scope of types of measures (including off-site measures) in LTA2/3

Target Group

Developing technology lists with payback periods (sector organisation), developing energy efficiency plan, implementing measures within payback criteria and annual reporting on progress (company), broader scope of types of measures (LTA2/3)

Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.

Impact Quantitative Estimate Qualitative Estimate
Estimated effect on energy consumption or emissions 30% energy efficiency over 2005-2020 (LTA2/3) -
Estimated costs/benefits for industry Not Available Part of the energy efficiency plan is the requirement to introduce all appropriate production process efficiency measures with a payback period of five years, i.e. measures are profitable.
Estimated cost for government Not Available Not Available
Other Benefits
General Benefits Industry increases its energy efficiency and reduces its CO2 emissions, which provides benefits for the environment and economy, improving competitiveness
Specific Benefits Industry increases its energy efficiency and reduces its CO2 emissions, which provides benefits for the environment and economy, improving competitiveness. Allows industry sector to grow because it is based on a specific energy efficiency measure instead of an absolute emission cap. Looks at efficiency of the entire chain, including also material efficiency.

References & Footnotes

References

[1] Meerjarenafspraken (MJA) http://www.senternovem.nl/mja/index.asp

[2] SenterNovem (2009). Energy Management within Long Term Agreements, http://www.seai.ie/Your_Business/Large_Industry_Energy_Network/LIEN_Events/Ronald_Vermeeren.pdf

[3] Coverage reference, LT3 Energy Efficiency results (2009) http://www.rijksoverheid.nl/documenten-en-publicaties/rapporten/2010/10/13/meerjarenafspraak-energie-efficientie-mja3-resultaten-2009.html)

[4] SenterNovem (2008). LTA3 LONG-TERM AGREEMENT ON ENERGY EFFICIENCY 2001 – 2020, http://www.senternovem.nl/

[5] Rietbergen M., J.C.M. Farla, K. Blok (2002). Do agreements enhance energy efficiency improvement? Analysing the actual outcome of long-term agreements on industrial energy efficiency improvement in the Netherlands., Journal of Cleaner Production 10 (2002) 153-163

Footnotes

(*1) The participating sectors within LTA3 have started a pre-study to a ‘road-map’ devoted to obtain an energy efficiency improvement of 50% in 2030, which has already started. Based on these pre-studies it will be decided for which sectors the roadmap will be developed.

(*2) 105.9 PJ of which is used by seventeen industry sectors in the cluster, 45.6 PJ by eight sectors cluster in the food and beverage, and by 13.0 PJ three sectors in the cluster services

(*3) the national energy agency has undergone various mergers and name changes in the last decade, from Novem (the Dutch agency for Energy and Environment), to SenterNovem to currently AgenctschapNL (AgencyNL), see: http://www.agentschapnl.nl/

Other Useful Resources

Energy Management Programme in the Netherlands

Information sheet prepared by Ronald Vermeeren as part of the IEA-IIP Policy Pathway Workshop on Energy Management Programmes (September, 2011).