Dutch construction boom set to end as EU nitrogen rules bite

AMSTERDAM (Reuters) - A six-year construction boom in the Netherlands is set to end next year, a research firm said on Thursday, as uncertainty over European Union rules on nitrogen emissions delays thousands of building projects across the country.

Construction output in the euro zone’s fifth-largest economy is set to fall by 6 billion euros ($6.7 billion) in the 2019-2021 period, or some 8% of its 2018 level, the research institute EIB said on Thursday.

Around 18,000 building projects in the Netherlands, worth billions of euros, are being delayed after the country’s highest court ruled in May that the way Dutch builders and farmers dealt with nitrogen emissions breached EU law.

That has already caused delays in work on new highways, housing blocks, airports, wind farms and other infrastructure, as the government tries to figure out a way to break the deadlock.

Output is expected to drop by almost 1 billion euros next year, ending growth that began in 2014, when building first started to recover from two successive periods of recession.

“It may be a modest decrease compared to the total value of construction, but it is a clear change from the robust growth we were expecting before”, the researchers said.

The nitrogen crisis puts around 40,000 jobs at building companies and their suppliers at risk, the EIB calculated. Production and employment are expected to rebound after 2021, however, as the backlog starts to disappear.

Nitrogen emissions, which in large quantities threaten specific types of plants and the animals that feed on them, are four times the EU average per capita in the small and densely populated Netherlands, with 61% coming from agriculture.

In recent years, permits were granted to builders and farmers based on their promises to mitigate nitrogen in nature reserves after projects were finished.

But the court put an end to this. EU rules state that compensation must be guaranteed before building near nature reserves - which in the tiny Netherlands is almost everywhere.

Angry construction workers drove hundreds of cranes, trucks and shovels to The Hague on Wednesday to protest what they see as the government’s mishandling of the nitrogen issue.

Their protest was the fifth in a series that began with large protests from farmers in September.

Reporting by Bart Meijer, editing by Larry King