Pension funds ABP and PME have signed a letter calling on the Dutch government to stop giving tax breaks to the fossil fuel industry.
The letter is an initiative of Fossil Free Netherlands and was signed by more than a hundred organisations. Besides civil service scheme ABP and metals and technology industry fund PME, signatories also include trade union FNV and third-pillar pension provider Bright Pensioen.
According to figures from the Dutch government, annual Dutch fossil fuel subsidies amounted to some €4.5bn in 2020. This includes tax rebates for large energy consumers such as Tata Steel and exemptions from excise taxes on diesel and fuel oil for the inland shipping sector.
Dutch climate minister Rob Jetten has previously promised to “phase out” fossil fuel subsidies, but he is yet to formulate a concrete plan for its implementation.
The signatories of the letter expect that abolishing fossil fuel subsidies in the Netherlands could reduce CO2 emissions by 7.5%, provided the money saved is reinvested in the energy transition.
Responding to questions from IPE, ABP noted that its support for abolishing fossil fuel subsidies in the Netherlands is in line with its earlier decision in 2021 to divest from fossil fuels. “If we want to limit global warming to 1.5°C, this is simply necessary,” a spokesperson said.
According to PME chair Eric Uijen, fossil fuel subsidies distort the market, hinder innovation and as such accelerate climate change. “These effects come at the expense of long-term returns, which ultimately harms our members. It’s high time to stop these subsidies,” said Uijen.
Mandatory participation “up for discussion”
However, member of parliament and pension spokesman for the largest coalition party VVD Bart Smals believes that the “activist stance” of ABP and PME goes at the expense of returns, he said in a tweet. Why he expects this is not clear though. Smals did not respond to a request for comment on his tweet.
The MP went on to question the need for mandatory participation in pension funds “if they continue like this.” Smals added: “In that case, there must be room for members who choose return over activism.”