The Netherlands

(1) Introduction

This report highlights five topical developments in Dutch environmental law. It begins by setting out the state of affairs in regard to the Dutch Environment and Planning Act (Omgevingswet), which completely restructured Dutch environmental law in an effort to facilitate a legal pathway towards a sustainable environment (Parliamentary Papers II 2013/14, 33962, no. 3). Subsequently, two developments regarding Dutch climate change litigation are outlined. The first is the ING-case, which revolves around a non-governmental organization (NGO) that essentially argues that a financial institution like the Dutch ING bank—in addition to the Dutch State (Urgenda ruling) and an oil and gas company (Shell ruling)—should limit its contribution to climate change (Supreme Court of the Netherlands (Hoge Raad), ECLI:NL:2019:2006, 20 December 2019; Hague District Court (rechtbank Den Haag), ECLI:NL:RBDHA:2021:5337, 26 May 2021 and ECLI:NL:RBDHA:2021:5339—note that Shell has appealed this judgment). The second includes cases that clarify the extent to which owners of existing coal-fired power plants need to be financially compensated by the Dutch state, as these power plants are phased out in the coming years through the Coal Ban Act for Electricity Production (Wet verbod op kolen bij elektriciteitsproductie) to meet climate obligations. Then, an update is provided on the Dutch nitrogen crisis saga. The report concludes with a brief summary and an outlook.

(2) Dutch Environment and Planning Act (Omgevingswet)

On 1 January 2024, the Dutch Environment and Planning Act entered into force (Government Gazette 2023, 89). The act completely restructured Dutch environmental law by combining nearly all legislative acts and regulations governing the environment (fysieke leefomgeving) into one single act. Past country reports about the Netherlands already referred to this act (see YIEL reports on the Netherlands published in 2015 and 2019) as its initial commencement was planned on 1 January 2018 (Letter of the Minister of Interior and Kingdom Relations of 26 January 2023, 2023-0000055553 <http://www.iplo.nl>). Two reasons for the postponement were the not yet fully functioning online interface (software programme) underlying the act—the so-called DSO (Digitale Stelsel Omgevingswet)—and the extra time administrative authorities needed to prepare for the implementation of the act (see, for example, the Letter of the Minister of Interior and Kingdom Relations of 27 May 2021, 2021-0000276677). Nevertheless, significant developments were made in 2022 and 2023, which led the Dutch Minister of Housing and Spatial Planning—in agreement with the other relevant administrative authorities and other parties—to ‘unanimously’ agree on the new date of 1 January 2024 (Parliamentary Papers II 2022/23, 33118, no 246).

The Environment and Planning Act—and its four executing Orders in Council and Regulation—aims to improve Dutch environmental law in four respects. First, the act aims to improve the clarity, predictability, and convenience for the users—which are the citizens, businesses and governments. To this end, one (digital) counter is established where users can check which rules apply and whether an authorization is necessary for an activity. The second aim is to achieve a coherent approach to the environment in policies, decision making, and regulations. This is particularly important as a significant number of norms follow from international and European Union (EU) law. Third, the discretion of public authorities is increased to allow for an active and flexible approach to achieve the objectives for the living environment. Finally, the Act aims to speed up and improve decision-making processes regarding projects and activities with potential effects for the physical environment.

The Environment and Planning Act is being monitored by a commission (evaluatiecommissie Omgevingswet), which will publish a yearly report on the functioning of the act until 2027 (<http://www.rijksoverheid.nl/onderwerpen/omgevingswet/evaluatie-omgevingswet>). In 2028, a comprehensive assessment will be made, in which it will be determined whether the four aims of the act have actually been attained in practice. If this is the case, the Environment and Planning Act will become the first successful attempt to comprehensively regulate the environment in a single act and could serve as an example for other countries (FH Kistenkas, MJW Smits and DA Kamphorst, ‘Implementing Sustainable Development into One Integrated Domestic Environmental Legislative Act: A Law Comparison between Two Frontrunners: New Zealand and The Netherlands’ (2020) 29(6) European Energy and Environmental Law Review 240).

(3) Climate Litigation: After Urgenda and Shell, the ING Bank?

On 20 December 2019, the Dutch Supreme Court (Hoge Raad) upheld a judgment that obliged the state to reduce carbon dioxide emissions by at least 25 percent in 2020 compared to 1990 levels to comply with its duty of care laid down in Articles 2 and 8 of the Convention for the Protection of Human Rights and Fundamental Freedoms. After this now world-renowned Urgenda ruling, the Hague District Court ordered Royal Dutch Shell to reduce the carbon dioxide emissions of the Shell group by net 45 percent in 2030, compared to 2019 levels, in its ruling of 26 May 2021.

During the appeal that was issued by Shell against this ruling, one of the environmental NGOS (ENGOs) (Milieudefensie) that started this case indicated that they will not be waiting for The Hague Court of Appeal’s ruling before issuing a new case against a specific financial institution: the ING (<http://www.milieudefensie.nl/actueel/>). According to the ENGO, the bank is the company with the highest (indirect) carbon dioxide emissions of the entire financial sector and has investments worth over €15 billion in oil and coal industries. The idea of this new case is that once it has been ruled that the ING needs to reduce its carbon dioxide emissions, other banks and enterprises will also realize that they might have a similar obligation to do so and will reduce their emissions by themselves. Although the precise legal grounds for this upcoming case are not yet clear, they will most likely resemble the grounds used in the Urgenda and Shell rulings.

(4) No Compensation is Required to Phase Out Coal Plants, for Now

Part of Dutch policy to meet the targets of the Paris Agreement and other climate obligations is the adoption of the act of prohibition of using coal for electricity production (Wet verbod op kolen bij elektriciteitsproductie), established in 2019. The main purpose of this act is to phase out the coal-fired power plants by 2030 at the latest (see YIEL reports on the Netherlands published in 2016 and 2019). Currently, the Netherlands has four of these power plants. The Amer power plant (located in Geertruidenberg) is subject to a ban from 1 January 2025, as it is the most polluting. The ban applies from 1 January 2030 to the other three (hyper)modern power plants, two of which are located in the Maasvlakte and one in the Eemshaven. Two options, essentially, remain for these power plants: they can either close or they can be converted to be completely biomass-powered.

After the entry into force of the act, the owners of the coal-fired power plants RWE and Uniper initiated a total of seven legal proceedings in the Netherlands, the United States, and Germany to claim damages.

Three proceedings started in the Netherlands on the ground that the phasing out of the plants is violating the property rights of the owners as protected in Article 1 of the First Protocol of the European Convention on Human Rights (First Protocol) and Article 17 of the EU Charter of Fundamental Rights (EU Charter). The owners believe the act should not have been introduced without sufficient financial compensation from the state. RWE, for example, claims to have damages of almost €1.5 billion through a decrease in the value of the power plant. The economic life of the power plant is deemed to be forty years, which would have allowed the plant to stay active until 2055—twenty-five years longer compared to the situation without this act.

On 30 November 2022, the district court of The Hague ruled in all three proceedings that the claims of the owners must be rejected and that no compensation is required to phase out the coal plants (District Court of the Hague, ECLI:NL:RBDHA:2022:12628, ECLI:NL:RBDHA:2022:12635, ECLI:NL:RBDHA:2022:12653 (30 November 2022)). The Court considers that no difference exists in the level of protection between Article 1 of the First Protocol and Article 17 of the EU Charter and continues by setting out the assessment framework in this former article and applying it to the case. The five criteria that must be fulfilled to claim damages based on this former article successfully are:

• does it concern ‘possession’ (property) within the meaning of this provision?;

• is there ‘interference’—that is, deprivation or regulation of the property right?;

• is the interference ‘lawful’—that is, provided for by law?;

• if so, does the infringement have a legitimate objective that serves to promote the ‘general interest’?; and

• if so, is there a ‘fair balance’—that is, a reasonable balance between the requirements of the general interest and the protection of the individual’s fundamental rights? This is not the case if there is an individual and excessive burden for the individual.

The Court considered that the first three criteria were met without many difficulties. Deciding on the latter two criteria requires more consideration. Regarding the fourth criterion, the general interest is clear: prevent, or at least reduce, climate change. However, the main argument of RWE and Uniper revolves around the emission ceilings in the EU that lay down the total permissible greenhouse gas emissions per year. The emissions reduction realized by phasing out the coal plants in the Netherlands could thus be extra emitted elsewhere, which would not contribute to lowering greenhouse gas emissions from an EU perspective. This so-called leakage effect and waterbed effect would hamper the ban’s effectiveness and make the ban disproportionate. The Court reasoned that the state has a wide margin of appreciation when deciding on the meaning of the general interest and the measures to serve this interest. Subsequently, the Court considered that the objective of the act can be realized through the act, namely reducing greenhouse gas emissions in the Netherlands. In addition, the Court considered that this leakage and waterbed effect will not necessarily arise, as other member states also have a duty to reduce greenhouse gas emissions. The discussion regarding the final criterion mainly revolved around the extent to which the ban was foreseeable. The Court considered that there is no evidence that the owners of the power plants could rely on the idea that no new legal frameworks would be developed to regulate these plants. The included transition period of ten years also sufficiently allows the owners to profit and (further) adapt the power plants to be able to run on other fuels. The ruling in these three proceedings leave RWE and Uniper empty-handed, at least for now. Both parties have already initiated an appeal against the decision of the district court of The Hague (Letter of the Ministry of Economic Affairs and Climate Policy, WJZ / 37801635 (30 October 2023)).

Other proceedings initiated by RWE and Uniper to get compensation were based on the Energy Charter Treaty (ECT)—a multilateral agreement between several countries, as well as the EU and Euratom, that regulates energy investments (these proceedings are partly based on the Energy Charter Treaty, which is covered under investor–state dispute settlement procedure, and is subject to the rules of the International Centre for Settlement of Investor Disputes; see L.S. Braaksma and R. Fleming, ‘Phasing Out Coal-Fired Power Plants in the European Union: Examples from the Netherlands and Germany’ in M.M. Roggenkamp and C. Banet (eds), European Energy Law Report XIII (Intersentia 2020) 261). This treaty provides a binding framework for energy investment, production, supply, and consumption. Article 13(1) of the ECT essentially provides that investments of investors cannot be expropriated or subjected to a measure or measures having effect equivalent to nationalization or expropriation, unless it is in the public interest, is not discriminatory, is carried out under due process of law, and is accompanied by prompt, adequate, and effective compensation. However, both RWE and Uniper withdrew their appeals before the International Centre for Settlement of Investment Disputes, as the ECT was made inapplicable between twenty-two EU member states through another agreement (see Article 26 of the ECT. This agreement can be found at <http://www.ec.europa.eu> and was proposed after the Court of Justice of the European Union’s decision of 6 March 2018. Case C-284/16, Slovak Republic v Achmea, ECLI:EU:C:2018:158 (6 March 2018)).

This year, the European Commission also proposed to withdraw the EU completely from this treaty, as it is no longer compatible with the EU’s climate goals under the European Green Deal and the Paris Agreement (M. Dulian, ‘EU Withdrawal from the Energy Charter,’ briefing for the European Parliament December 2023 <http://wwwleuroparl.europa.eu>). However, for now, it is important to note that investors from Sweden, Hungary, and other member states that did not sign the agreement might still be able to use this basis in the ECT to get compensation when closing a coal-fired power plant. The ECT could also still be relevant for investors from non-EU countries investing in the Netherlands (or countries that are parties to the ECT).

(5) The Saga of the Nitrogen Crisis Carries On

The societal and political problems surrounding the nitrogen-overburdened Natura 2000 sites protected by EEC Directive 92/43 on the Conservation of Natural Habitats of Wild Fauna and Flora (Habitats Directive) have been reported on already in two previous reports on the Netherlands in this yearbook but continue to exist (see YIEL reports on the Netherlands published in 2019 and 2022). Ever since the Dutch Council of State found the Dutch Programmatic Approach to nitrogen to be incompatible with the Habitats Directive in 2019, the realization of new agricultural projects, but also the construction activities to build new homes and other buildings that causes (a little) extra nitrogen-deposition on a nearby Natura 2000-site, have been impeded.

For this latter group, the Dutch legislator adopted a regulation in order to be able to keep building homes, other buildings, infrastructural projects, and sustainability projects: the ‘building exemption’ (officially, it is referred to as the partial building exemption, as it only applies to certain activities). The building exemption exempts the nitrogen emissions associated with construction projects from the assessment that is normally required under the Habitats Directive. The idea is that on a program level, sufficient measures are taken to reduce the nitrogen deposition in all relevant nature conservation sites to allow the construction projects to be exempted from a separate assessment.

This exemption was litigated against by the Cooperation Mobilisation for the Environment (an ENGO) in a case concerning the construction of the Porthos project, which aims to transport and capture the carbon dioxide emissions from the Port of Rotterdam into empty gas fields below the North Sea. Nitrogen will be emitted during the construction of the carbon dioxide infrastructure, which includes the pipelines that transport the carbon dioxide but also a compressor station and a new platform at sea. The ENGO argued that the already nitrogen-overburdened Natura 2000 located nearby could be significantly impacted through this construction and that the competent administrative authority had to conduct an appropriate assessment (closely related to an environment and impact assessment) to ascertain that such an effect is ruled out. Their main point is that it is insufficiently clear whether the positive measures that underlie the building exemption necessarily cover the emissions this project causes on every nearby Natura 2000 site.

The Council of State ruled that the decision based on the building exemption to authorize the Porthos project indeed falls short of providing sufficient clarity that no significant detrimental effect on the Natura 2000 site is likely to occur (Council of State (Afdeling Bestuursrechtspraak van de Raad van State), ECLI:NL:RVS:2022:3159 (2 November 2022)). The main way to authorize such a project now is when the administrative authority can provide sufficient evidence that these effects would not arise or whether the path laid down in (the Dutch implementation of) Article 6(4) of the Habitats Directive must be followed—namely, to search for alternative solutions for the project, and if these cannot be found, determine whether imperative reasons of overriding public interests are involved with the project and, if this is the case, take sufficient compensatory measures to negate the detrimental effects of the project. The effects of this ruling do not stop at the Porthos project. The entire building exemption is off the table, which means that all other construction projects that are likely to have a significant detrimental effect on Natura 2000 sites must be appropriately assessed again on an individual bases. In a subsequent case, the competent authorities did successfully substantiate why a significant detrimental effect is not to be expected in this particular case (Council of State, ECLI:NL:RVS:2023:3129 (16 August 2023)). The project may now go forward.

The government will present its solution to this problem—and other intertwined problems, such as legalizing the farmers that operate without a nature conservation permit— with upcoming area-based programs. Although the outlines of these programs are known by now, it is still uncertain whether the choices made in these programs will result in a situation where the obligations under the Habitats Directive are met while also leaving sufficient room for (new) social economic activities to take place. The nitrogen crisis saga will almost certainly continue to exist for a while.

(6) Conclusion

This report highlighted some of the topical developments in Dutch environmental law, including several developments regarding rulings by Dutch courts that have played a pivotal role in enforcing climate and nature conservation obligations. While the appeal is still pending in the Shell ruling, another case is being prepared against the financial institution ING to enforce a reduction of its carbon dioxide emissions. Appeal is also pending in the case issued by the RWE and Uniper to be compensated for phasing out their coal-fired power plants. Finally, the Dutch government still needs to come up with an approach to meet the nature conservation obligations put forward by the Habitats Directive that simultaneously can meet (most) social economic demands of farmers, industries, and others. The Environment and Planning Act, which entered into force on 1 January 2024, should allow most of these challenges to be approached in an easier, faster, more convenient and coherent manner. The future—in the form of a comprehensive assessment by the Evaluatiecommissie Omgevingswet—will tell.

Author notes