Nitrogen auction with emission rights solution for nitrogen problems

The Netherlands is a small, densely populated country with an extensive livestock population. That does not go well together. Naturally low-nitrogen nature reserves are increasingly dying. Is a nitrogen auction the solution?

Why is nitrogen a problem?
Just under eighty percent of the Earth's atmosphere consists of nitrogen gas (N2). Nitrogen is an indispensable element for life. We consist of proteins and proteins from amino acids, a nitrogen compound. The Netherlands contains millions of nitrogen sources, ranging from pets to pig fattening, and of course you, dear reader. Car traffic and construction activities also emit nitrogen, albeit much less than people and especially fattening farms. In the nitrogen discussion, we mean all nitrogen sources, other than atmospheric nitrogen and nitrogen bound in proteins. These are mainly ammonia (NH3) and nitrogen oxides (NO, NO2 and the controversial laughing gas N2O). Nitrate (NO3-) that washes out of fertilized fields is an environmental problem.

Nitrogen emissions in the Netherlands have already fallen enormously, but unfortunately insufficient for the new strict EU standard. Source: [2] [3]
Brutal construction freeze due to an administrative emergency
The EU has enacted strict rules for nitrogen emissions. Rules that are easy to enforce in a sparsely populated country such as France or Bulgaria, but very difficult in the Netherlands. The problem is not that nitrogen emissions in the Netherlands are increasing. On the contrary. This has fallen considerably, partly due to strict laws and regulations such as the mineral accounting for farmers [2] [3]. The problem is that partly due to the appalling lack of foresight by the Rutte cabinet, emissions did not fall quickly enough. As a result, a building freeze was declared with significant economic damage - and a continuation of the housing crisis.

Nitrogen Auction: Pros and Cons
The free market is very good at finding the economic optimum. This can be an advantage, at least if the scope of the free market is limited in such a way that no externalities occur. Creating externalities happens quite quickly. For example, clever entrepreneurs started breeding muskrats themselves, when the government put a premium of ten guilders on each rodent killed. In principle, the government can sell the right to emit nitrogen, for example, through a nitrogen auction. If a pig farmer quits, he can sell his emission rights through the auction to another farmer, to a builder or a nature organization (which then does not use them). At a certain point, the entrepreneurs who can earn the most euros per kilo of nitrogen emissions hold the emission rights, creating an economic optimum. According to the school booklet economics.

Any system of laws and regulations involving money has the potential for fraud. Nitrogen emissions take place in the form of gaseous compounds. Gases are notoriously difficult to trace from a single source. For example, a farmer can report that he has installed an expensive capture installation that he does not actually have, or a much worse cheaper model, which means that his emissions are much higher than official figures show. It is therefore necessary to check thoroughly here, preferably also with regular field measurements in the vicinity of major nitrogen pollutants. On balance, this system is therefore feasible.

1. Emissions authority: give nitrogen rights trading a second chance, FD, 2019
2. Acidification and large-scale air pollution: emissions, 1990 - 2017, Center for the Living Environment, 2017
3. O. Oenema, Fact sheet nitrogen sources, Wageningen University, 2019

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