One of the hot issues in Dutch discussions on climate policy is about how the financial burden should be shared. Especially, the concern that low-income households will bear a substantial part of the burden. In a contribution to a hearing for Dutch Parliament, I made the following observations.

The costs of a stringent climate policy will probably be much lower than what the energy models currently suggest.
This is due to “technological learning” that occurs as soon as a technology is applied on a large scale. This phenomenon is best known in the sustainable energy world, where the worldwide upscaling of wind and solar energy has resulted in the availability of electricity from these sources at cost prices of 2 – 5 cents per kilowatt hour, often lower than the cost of conventional generation, in many places around the world . The same effect also occurs for all kinds of energy-saving applications, such as high-efficiency boilers, energy-saving lamps and efficient household appliances [1].
We see this, for example, in the price of double glazing: although the current high-efficiency glazing is almost a factor of 3 better than conventional double glazing, the price is hardly higher. There is often no cost difference anymore and the most used product turns out to be the cheapest. All this probably means that the costs of energy and climate policy will be much lower than currently calculated with the energy models.

Photo by Riccardo Annandale

The best way to limit the costs of energy and climate policy for low-income households is to let them fully participate in energy saving and the application of sustainable energy.
Many measures, such as the usual insulation measures, the use of efficient household appliances, the use of LED lamps and nowadays also the installation of solar panels, lead to lower costs for households. A substantial number of households still do not make sufficient use of these options, for various reasons. These include, lack of knowledge, lack of investment capital or simply the fact that they live in a rented house. This may apply most often to low-income households. The best thing to do for this group is to ensure that they benefit from the cost benefits associated with the application of energy saving and renewable energy, e.g. through an ambitious insulation program for social housing, stringent energy efficiency standards for household appliances and support with the financing of, for example, insulation and solar energy.

This is a slightly adapted text of my contribution to the round table discussion on the costs of climate policy at the House of Representatives (Tweede Kamer der Staten-Generaal), Permanent Commission for Infrastructure and Environment, 27 September 2017.

[1] M. Weiss, M. Junginger, M.K. Patel, K. Blok: A Review of Experience Curve Analysis for Energy Demand Technologies, Technological Forecasting and Social Change 77(2010) pp. 411-428.