The Liberalized Dutch Green Electricity Market: Lessons from a Policy Experiment

In order to meet the Kyoto targets, in the Netherlands in 2010 9% of electricity consumption should be generated from renewable resources. In this paper, we discuss and comment on the green energy policy that the Dutch government has adopted in 2001 and 2002 in order to reach this goal, and the new subsidy system that will be in place as of 2003. On the one hand, the policies from the past were successful since they led to 10% of electricity consumption being green in 2001, with a further increase to 13% in 2002. On the other hand, the government argued that the policy was too costly and inefficient. We analyze whether the arguments that the Dutch government used to get the new law accepted hold water and we show that mainly the Dutch supply companies benefited from the generous subsidies that the government provided.