Netherlands cuts environmental tax benefits for hydrogen-powered equipment and H2 fuel supply

The Netherlands Enterprise Agency (RVO), the executive body of the Dutch Ministry of Economic Affairs and Climate Policy which is responsible for adjusting the so-called “Environmental List” of green assets eligible for investment tax credits, has cut 108 and substantially changed 112 different categories, in part due to stricter EU rules for state aid.

An amendment to the EU’s General Block Exemption Regulation for state aid, published in June last year, tightened the scope of support for investments into equipment, machinery and infrastructure using or transporting hydrogen only if it qualifies as renewable, or otherwise produced from electrolysis with a 70% reduction in greenhouse gas emissions compared to fossil fuels.

Meanwhile, the tightened EU state aid rules do not require investments into hydrogen-powered vehicles to prove that they are only running on renewable hydrogen—likely because the restriction does apply to refuelling stations.

Companies will also be able to claim MIA and Vamil on hydrogen propulsion systems for ships other than fishing vessels, as well as retrofitting projects replacing diesel engines in existing trains with battery packs with or without a fuel cell.

However, given the RVO expects claims for the MIA tax credit to exceed the budget set in 2023, it has reduced this year’s available benefit for electric or hydrogen-powered trucks.

While electric taxis have been cut from the list — the RVO says “the additional cost of these taxis compared to non-electric taxis is too small to continue to encourage them with tax benefits” — hydrogen-powered options will still be eligible for the tax benefit as they have remained expensive.

But given companies cannot also claim MIA or Vamil on refuelling stations — of which the Netherlands only has 17 compared to more than 170,000 electric charging points — this could result in disruption of supply, as has been seen in Denmark and South Korea.