The Netherlands has adopted a variety of legislation to combat climate change and will adopt more in the foreseeable future. Such legislation can be enforced under administrative and criminal law. In the future, it is likely that authorities will more often prefer criminal enforcement over administrative enforcement.

The Netherlands is subject to ambitious greenhouse gas emission targets for the coming decades. The Netherlands will pursue these objectives by various means, including a variety of legislation to cut greenhouse gas emissions. Much of such current legislation can be enforced through both administrative and criminal law, and the same can be expected for future legislation. The paragraphs below outline a number of examples of current and coming climate legislation. We also set out why more criminal enforcement of such climate legislation may be expected in the future.

The EU emissions trading system operates on the basis of a ‘cap and trade’ principle. If a company wants to emit CO₂, it can buy emission rights on the emission rights trading market. The EU Emissions Trading Directive was implemented in the Netherlands in the Environmental Management Act, of which violations may lead to criminal prosecution. Next to this, the Netherlands has climate legislation in place for cars. EU law requires the manufacturer of a new vehicle model to ensure that it has passed the type approval process, including a test for greenhouse gases. This EU law is implemented in the Dutch Approval Vehicle Models and Air Pollution Decree, of which violations are punishable in criminal law. The two aforementioned sets of rules have already gained criminal law attention through respectively EU emission fraud and the diesel emissions scandal.

Another example of legislation to reduce CO₂ emissions is legislation that obliges companies to invest in energy efficiency. These rules have their origins in the EU Energy Efficiency Directive and have been implemented in Dutch law in the Activities Decree. Section 2.15 of this Decree obliges certain companies to realize all energy saving measures with a payback period of five years or less. Violation of this obligation is also an economic offence, but as yet we have not heard of any actual criminal prosecutions.

In the coming years, we expect to see more fiscal and financial legislation to combat climate change. The Dutch House of Representatives is currently discussing the Act on a minimum CO₂ price for electricity generation. The purpose of this bill is to have companies that fall within the scope of the EU emissions trading system pay an additional CO₂ tax. Other proposals for fiscal climate legislation are also under discussion. The House of Representatives is considering a proposal for a Flight Tax Act. Tax law violations may, under certain circumstances, lead to criminal liability. Financial climate legislation may include regulations requiring financial institutions to charge a higher margin for customers who contribute to climate change. Furthermore, the EU has recently already adopted the Taxonomy Regulation, which formulates legal requirements that financial products must meet to qualify as green or sustainable. Violations of such regulations may be made punishable under criminal law, as has been done for other financial regulations.

We have already mentioned that climate legislation can be enforced under both administrative and criminal law. The starting point is that criminal law is only used as an ultimum remedium. In practice, the choice between administrative or criminal law depends on various factors, including the nature and seriousness of the offence and whether a prison sentence is considered appropriate. In serious cases the Public Prosecution Service is more likely to deploy investigative capacity. As the effects of climate change become more noticeable and intervention in greenhouse gas emissions becomes more urgent, it is likely that climate regulation breaches will be viewed as more serious offences. Therefore, it is likely that, in the future, criminal enforcement of climate legislation violations will more often be preferable to administrative enforcement.

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Sjoerd Lopik and Seppe Stax

Sjoerd.Lopik@AllenOvery.comSeppe.Stax@AllenOvery.com | +31 20 674 1000

Sjoerd Lopik is an associate at Allen & Overy LLP in Amsterdam. He specializes in criminal law and compliance, with an emphasis on domestic and cross-border internal investigations and criminal law litigation. Next to his work at Allen & Overy, Sjoerd is a PhD candidate at Leiden University. His research regards the role of criminal law in the legal response to climate change.

Seppe Stax is a senior associate at Allen & Overy LLP in the Amsterdam Projects and Real Estate Team and focuses on renewable energy project finance and development.