Harry Geels: Why my earlier warnings about inflation and energy policy still hold true
This column was originally written in Dutch. This is an English translation.
3.5 years ago, I wrote a column about the three main causes of the relatively high inflation in the Netherlands: high energy taxes, a disproportionate reliance on natural gas, and the weak euro, which makes energy imports expensive. We haven’t made any progress. Unfortunately, my proposal to fully reopen the Groningen gas field was also ignored.
By Harry Geels
In September 2022, I wrote a column about high inflation in the Netherlands. It was threatening to exceed 13%. Dutch inflation was thus more than four percentage points higher than the eurozone average. The exceptionally high inflation in the Netherlands at the time was mainly due to extremely high energy and fuel taxes, which meant that gas, petrol and diesel prices were structurally among the highest in Europe, combined with the country’s relatively high dependence on natural gas.
That high dependence stemmed (and stems) from a historical legacy: for decades we ‘lived off’ Groningen gas and we have been relatively slow to set the energy transition in motion here, meaning that dependence on gas has remained high. As a result, the rise in gas prices has had (and continues to have) an especially severe impact in the Netherlands. On top of that, the weakened euro – due to structural flaws in the euro system – is causing additional imported inflation, as energy must be purchased in expensive dollars.
Proposed solutions
In that column, I also proposed two solutions. Firstly, improving people’s purchasing power through lower taxes, for example by (temporarily) reducing excise duties and/or VAT (no price caps, as these do not work). Secondly, I proposed reopening the Groningen gas field, subject to three conditions. At the time, the advice was seen as politically unfeasible, even provocative. However, it remains a logical argument.
Three conditions
It is undeniable that the Groningen gas is a sensitive issue for many Dutch people, and certainly for the people of Groningen. But under certain conditions, fully reopening the Groningen gas field would be perfectly acceptable. Firstly, the gas revenues must be used to make all homes in Groningen earthquake-proof. Secondly, we can use the extra revenues to reduce the aforementioned taxes and restore purchasing power. Thirdly, we could use the revenues to accelerate the financing of the energy transition. We could even use them to fund a transition investment fund.
The war in Iran has once again pushed energy prices to great heights. Our dependence on LNG is more evident than ever, and Europe’s call for strategic energy autonomy is growing. It is precisely this scenario – an environment in which the Netherlands feels the pain of external energy dependence, price volatility and a vulnerable energy infrastructure – that I outlined 3.5 years ago. Not as a doomsday scenario, but as an analysis to help us move forward.
The taboo surrounding Groningen is now the Achilles’ heel of our energy policy
What seemed impossible at the time is now being discussed once again: keeping the gas field open or even reopening it on a limited basis as a strategic reserve. Not because the underlying risks have completely disappeared – they must continue to be taken extremely seriously – but because geopolitical reality forces us to ask the question: can we afford to permanently shut down one of Europe’s largest energy reserves without having a mature alternative ready?
The Groningen gas field is a concrete policy option. Currently, several parties — JA21, the PVV and the Markuszower Group — are arguing for keeping some of the wells available as a strategic gas reserve, with JA21 even working on a private member’s bill to prevent wells from being filled with concrete, so that they remain usable in an emergency. This political camp has the backing of experts: TNO has been warning for years that the Netherlands is “ill-prepared for gas supply problems” and advises against closing all the wells.
Time for mature realism
The Netherlands is caught between moral obligations towards the people of Groningen and strategic obligations towards its own economy and energy security. But that contradiction need not be a contradiction. Three years ago, I outlined an approach whereby the revenues from Groningen would first and foremost be used to strengthen the region completely and irreversibly. The question is not whether we should reopen Groningen; the question is whether we can afford not to.
3.5 years ago, I wrote that necessity knows no law. That may have been premature at the time. But by 2026, it will no longer be mere rhetoric: the war in and around Iran has demonstrated that energy independence is vital. For years, the Netherlands has been weighed down by a lack of energy realism. Relying on external sources, whilst we have politically marginalised our domestic options. We have bowed to political symbolism. But the future does not call for dogma, but for courage.
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