State governance capacity to coordinate and deliver heat transitions in the Netherlands and England
Author: Anna Devenish
Russia’s invasion of Ukraine has led to a dramatic increase in natural gas prices and an unprecedented energy crisis in the European Union and the United Kingdom. The longer-term goal of reducing dependence on natural gas for domestic heating has become more urgent.
England and the Netherlands have committed to the goal of heat decarbonisation and natural gas phase-out in the residential sector by 2050. Both countries are looking at the same range of technologies, including heat pumps, heat networks, biogas, and potentially green hydrogen. However, the two countries have chosen different governance approaches to achieve this goal[1]. Both countries are relying on a mix of both market mechanisms and state intervention to decarbonise heat, but our research suggests that the Dutch governance approach has involved a larger role for state coordination and delivery than in England. The Dutch approach to heat transitions can also be characterised as a planning-led (learning-by-doing) approach supported by the state’s governance capacity. England, in contrast, has prioritised a market-led (waiting-and-seeing) approach that focuses on cost reductions.
One example is the mandate and funding given to local government for heat planning. According to the Climate Agreement, each Dutch municipality is required to develop and subsequently implement a heat transition vision specifying the timeframe and sustainable heating solutions for each neighbourhood in the municipality. The Dutch government has made €2.6bn available over the period 2022-2026 for local authorities and other government agencies for planning and implementation activities (across all climate sectors). In England, there is a considerable amount of activity by local authorities in local energy planning and piloting, but there is a lack of formal powers or statutory responsibilities for local authorities for heat transition planning and implementation.
The Dutch national government has also funded and managed a Programma Aardgasvrije Wijken, or natural gas-free neighbourhoods programme, that provided grants to municipalities to pilot heat transitions at the neighbourhood level. The pilots tested the overall approach to heat decarbonisation in a particular locality. The pilots explored a number of issues, including management and administration challenges, cost reduction, selection of technologies, the impact of existing laws and regulations, effective citizen engagement strategies, and the use of heat transitions to improve neighbourhoods’ overall wellbeing.
In contrast, the approach to heat transition piloting in England has been to link innovation and piloting support to the development of specific technologies and fuels rather than localities. For example, the UK Department for Business, Energy & Industrial Strategy funded an Electrification of Heat Decarbonisation Project to install and monitor the performance of heat pumps in a representative range of UK homes (about 750 in total). A consortium led by the not-for-profit organisation Energy Systems Catapult with Delta Energy and Environment and Oxford Computer Consultants are managing the project.
Other examples include a knowledge sharing framework for municipalities created by the Dutch government, and the provision of consistent technical guidance to the local actors. These efforts relied on the national government agencies’ in-house capacity. In contrast, in England we found evidence of a tendency to use external consultants at the national level as opposed to programmes run by government agencies.
Differences in the wider institutional context in these countries can account for the divergence in governance choices. One such contrast concerns how far the UK and the Netherlands have respectively embraced privatisation and contracting out in solving public policy problems. The UK took a decisive turn to market liberalisation in the 1980s. Privatisation, liberalisation, and deregulation became key focal points of this paradigm change. The goals of public spending reduction and improvement of government efficiency led to the rise of New Public Management (NPM) ideas for the provision of public services in the 1980s, which prioritised contractual relationships and outsourcing. Thoroughgoing adoption of neoliberalism and NPM eroded the capacity of and belief in the efficacy of state action in markets and provision.
Although many countries adopted neoliberal and NPM reforms, the degree to which these ideas spread varied. Countries with majoritarian political systems became more committed to marketising the public sector, while in continental Europe this shift did not radically transform the role of the state in facilitating solutions to public problems. The shift to the neoliberal paradigm and NPM ideas was swift in the Netherlands in the 1980s but was ‘relatively superficial and non-committal’ and was partially reversed in the 1990s.
However, we found evidence of low local governance capacity for heat and, more broadly, energy planning and delivery in both the Netherlands and England (for example, consultants have been quite widely used at the local government level in both countries). Local government capacity in both countries was strained in the 2010s as a result of cuts in grant funding from the central government as part of austerity policies and a decrease in the amount of local taxes. Because local authorities have statutory duties in areas other than energy (such as social care), this has meant that resources for energy planning have been scarce.
Overall, the Netherlands has exhibited higher state capacity in heat transition planning and implementation than England. This is in line with the general nature of political economy institutions in the two countries, with (local) government actors in the Netherlands having more powers and responsibilities for developing, funding, and implementing measures to help solve public problems than their English counterparts.
[1] In our research, we make a further distinction between Scotland and the rest of the UK.
