Europe’s largest port hindered by Dutch emissions laws, causing a €10bn decline in green investment

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The implementation of strict nitrogen emission controls in the Netherlands is hindering the European Union’s efforts to combat climate change, according to the outgoing CEO of Europe’s largest port.

Allard Castelein urges Dutch politicians to find solutions to an emissions cap that poses a €10bn risk to green technology investments in Rotterdam. These investments include projects such as green hydrogen and biofuels plants, which could reduce carbon dioxide emissions by 10 million tonnes per year.

However, obtaining permits for developers to emit nitrogen oxides and nitrates during the construction process has become increasingly difficult due to a court ruling that the Netherlands exceeded sustainable emission levels.

Castelein emphasizes the urgency of resolving this issue, as all these manufacturing sites need to be operational within the next few years to meet the 2030 climate target. He also highlights the European Union’s commitment to reduce greenhouse gas emissions by 55% between 1990 and 2030.

With the current caretaker administration led by Prime Minister Mark Rutte, Castelein stresses the need for parliament to find a solution promptly. Plans to reduce nitrogen levels by compensating farmers and closing industrial plants are unlikely to proceed until after the November elections due to previous protests and political challenges.

Castelein emphasizes the importance of swift action, as the ruling, upheld by the supreme court in 2019, requires the Netherlands to reduce excess nitrogen in vulnerable natural areas to protect indigenous plants from invasive species.

To secure permits, some developers have resorted to buying farms to close them or reducing emissions from other operations. Rotterdam port has also implemented renewable electrical hubs to power ships while they are docked, enabling them to switch off their engines and free up permits.

However, the current system of permits and offsets is impeding further investments in Rotterdam, where several major projects, including a €1bn hydrogen production plant by Shell and a €1.9bn biofuels unit by Neste, have already been announced. Rotterdam aims to attract four more hydrogen plants of similar size powered by renewable energy and build pipelines for their transport.

Rotterdam, which contributes €63bn annually to the Dutch economy and handles over 10% of the EU’s freight volume, remains the largest port in the EU. Nevertheless, the nitrogen crisis and the collapse of the coalition government have raised concerns among investors and foreign enterprises about the Netherlands’ investment climate.

Castelein stresses the importance of resolving these issues promptly to maintain the country’s reputation for predictability of government, financial stability, and openness.

He also predicts that the port of Rotterdam will continue to experience growth, with an expected increase in trade and the handling of additional 8 million 20-foot equivalent units by 2035.

However, Castelein notes that there is still little evidence of companies relocating production hubs from China to countries like Vietnam and Malaysia, despite discussions in boardrooms.

He warns that the US and EU’s emphasis on “strategic autonomy” and resilience in green technologies may contribute to inflation and increased costs in the supply chain, which could be passed on to consumers.

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