The Netherlands of the future probably has no room for energy-intensive sectors such as the metal industry and fertilizer production. The refining sector will also be much smaller, because fossil fuels will disappear. Researchers from research agency CE Delft write this in a recent report about the future of Dutch industry, which was commissioned by environmental organization Natuur & Milieu.
The researchers write that current Dutch industry has largely been shaped by the availability of cheap gas from Groningen. As a result, the Netherlands has large plastic and fertilizer factories, among other things. But as the energy transition progresses, energy costs will become lower in countries with a lot of sun, such as in Spain. The competitive position of the Netherlands for making basic products will then deteriorate.
According to CE Delft, the result is a form of ‘creative destruction’, as it is called in economic terms: the disappearance of companies, or even entire sectors that cannot keep up in a new phase. The fertilizer and metal sectors (steel, zinc) are the most vulnerable to this, the researchers think: these sectors need a lot of electricity or hydrogen for their greening plans. Production in these sectors can take place cheaper elsewhere, but imports are expensive due to high transport costs.
According to CE Delft, the Netherlands can import basic products for further processing. This involves, for example, aluminum, but also ammonia for further processing into fertilizer.
Two fertilizer factories
The Netherlands currently has two large fertilizer factories, Yara in Zeeland and OCI in Limburg. Zinc is produced at Nyrstar in Budel and steel at Tata Steel in IJmuiden. Altogether, these factories employ around 10,000 people.
The question of what future Dutch industry will look like has occupied economists and politicians for some time now. Minister of Economic Affairs Micky Adriaansens (VVD) would like to make agreements with the twenty largest polluters in the Netherlands about possible support for sustainability: from Tata Steel, Yara and OCI to plastic producer Dow Chemicals in Terneuzen.
However, according to the researchers, there are quite a few industrial sectors for which there will certainly be room in the Netherlands
The opposition in the House of Representatives regularly criticizes this: according to left-wing parties in particular, no choice is made about what is smart to support and what not, because of the future competitive position of various sectors.
Also read this report: A new, green steel industry is sprouting in northern Sweden
The researchers at CE Delft also conclude that there will certainly be room in the Netherlands for quite a few industrial sectors. This concerns industries that use relatively little energy, such as the food industry, or sectors that do use a lot of energy but have high transport costs: for example, for brick factories and glass factories. New plastics may also be produced on a small scale, using electric ‘crackers’ (instead of natural gas) and based on organic materials such as biomass.
And then, according to the researchers, there are also new sectors that can grow in the Netherlands: for example, recycling factories (for plastic, for example), or factories that make plant-based food. Furthermore, the Netherlands still has good accessibility and infrastructure, which means it has a good competitive position compared to many other countries in Western Europe.
Sluiskil
Some of the effects described by the researchers have been visible in the economy for some time. Last year, for example, fertilizer factory Yara in Sluiskil imported large quantities of ammonia for further processing, instead of producing it itself: this was not profitable due to the high gas prices. Aluminum manufacturer Aldel in Delfzijl even went completely bankrupt.
Furthermore, there are already several entrepreneurs who think they can capitalize on the lower energy costs in some European regions. In Sweden, H2 Green Steel is building a completely new steel plant, which it wants to run on hydrogen that is cheaply made with the surplus of green electricity in the country.