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Blog / 29 January 2019

Make the climate debate a part of our foreign policy

By Danielle Hirsch

The climate debate in the Netherlands is bogged down in what we can change at home and does not touch on our actions abroad. And that is a missed opportunity. Precisely because our international trade model is both so influential and, at the same time, such a widespread cause of pollution, changes in that policy can have an immediate effect.

It's an image I can't shake off: Dutch prime minister Mark Rutte at the World Economic Forum, smiling with that well-known twinkle in his eye as he shakes the hand of Jair Bolsonaro, the new president of Brazil. It sums up the double agenda of the Netherlands' trade policy. We are full of talk about human rights, environment and climate but, in the end, economic interests are the determining factor of our foreign policy on all fronts.

The tension between the Netherlands' economic interests and our duty to respect human rights is attracting more and more attention, and rightly so. But the tone of the climate debate is different: it is bogged down in what we can change in the Netherlands and does not touch on our actions abroad. As an open and export-oriented economy founded on a neo-liberal trade model, we are causing exceptional harm to the environment.

The Netherlands is one of Brazil's major trade partners in the agricultural sector. As brand-new president, Bolsonaro makes no secret of the fact that the interests of large-scale agrobusinesses weigh more heavily than those of the Amazon and its indigenous inhabitants. His is not concerned that the Amazon is essential in preventing further climate change. And yet Rutte sees the new president as mainly offering opportunities for Dutch businesses.

Keeping climate well away from foreign policy

Foreign trade and development minister Sigrid Kaag's policy document confirms that this government wishes to keep climate well away from her foreign policy. The document, Investing in Global Prospects, says nothing at all about reducing greenhouse gas emissions, while it is now abundantly clear that the Netherlands' export model is harmful for the environment. Not only through the large-scale import of soya for the production of meat, for which forests have to be cleared, but of course also through our worldwide activities relating to the extraction, processing and transport of fossil fuels.

It is not easy to find an estimate of the importance of the broad fossil sector for our economy, but there is little doubt that it plays an enormous role. According to Commodity, for example, 'refined petroleum' is our most important export product, accounting for 7.8% of our annual exports. That makes us the fourth largest exporter of refined petroleum in the world, with a share of 8.3% of the global market. In addition our 'maritime sector', with the Port of Rotterdam and Shell taking the lead, earns enormous amounts of money from oil extraction and building ships and ports for the transport and processing of fossil fuels.

Immediate effect

Our foreign policy determines the way in which we do business. Precisely because our international trade model is both so influential and, at the same time, such a widespread cause of pollution, changes in that policy can have an immediate effect. Here are a few examples:

  • According to a conservative estimate, the Dutch state supports the fossil sector with 7.6 billion euros a year. For example, Atradius DSB, which provides export credit insurance on behalf of the Ministries of Finance and Foreign Affairs, covered the financial risks of fossil-related export activities worth a total of 7.3 billion euros between 2012 and 2015. Such public instruments can also be used to help sustainable Dutch entrepreneurs gain a foothold in emerging markets. That is not only in the interests of the businesses involved but also helps make the global energy infrastructure more sustainable.
  • On 18 January, the government submitted a proposal to the House of Representatives for legislation to set up Invest-NL. This fund will manage 2.5 billion euros of public funds, a third of which is intended to support economic activities abroad. A quick scan of the text shows that the word 'climate' comes up only twice, both times in the name of the Ministry of Economic Affairs and Climate Policy. How is it possible that our legislature allocates funds in 2019 for a process of social transition without clearly stating that the money may not be invested in fossil-related activities? Or, in other words, how excellent would it be if Invest-NL were to be fossil-free, so that we could guarantee that sustainable businesses could benefit from this public capital?
  • The Netherlands fiercely defends the system of investment protection, yet research shows that the system has an restrictive effect on the energy transition. Under this system, which enable investors to object if they are likely to lose out on future profits due to changes in policy, more and more cases are being brought against countries that wish to impose restrictions on the fossil sector in line with the Paris Agreement. What would happen if we were to abolish investment protection so that countries could act in line with the developing insights around climate change without being punished for it?

The good news is that there is growing interest in sustainability in the financial sector. APG, which invests the funds of our largest pension fund ABP, claims that it has already invested 60 billion euros in sustainable projects. Changes in the policy of the Dutch government and the areas in which it invests public funds would provide a fantastic lever for all investors who are ready to invest their money elsewhere than the fossil sector.

The government controls the market

The government, driven by the political system, controls the market whether it wants to or not. Policy, and especially international policy, determines the lines within which the market must operate. As long as there is no tax on climate pollution and we continue to give fossil activities our broad support, the price of oil, coal and gas will stay artificially low. If the government continues to support and protect twentieth-century fossil-related export activities, the transition that is possible and crucial in the twenty-first century will never get off the ground.

No matter how you look at it, the protection and support for the fossil sector is nothing less than regulation, despite how the government parties, led by Mark Rutte, try and convince us that they are in favour of deregulation. And with that dogma, he shakes the hand of Bolsonaro and leads a government that carelessly looks the other way so as to preserve the status quo. It is time that our politicians, and minister Kaag especially, took a more critical and creative look at our foreign policy. If they don't, we will miss an enormous opportunity as a country to move not only ourselves but also the whole world a step further towards finding an answer to climate change.

 

This article has been written for and published by Vice Versa (in Dutch)

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