Dutch court carbon capture project ruling alarms building sector

A container terminal is seen in the port of Rotterdam, the Netherlands, March 21, 2016. REUTERS/Michael Kooren/File Photo
  • Dutch high court says permits for large carbon capture project uncertain
  • Court scraps exemption for building activities from nitrogen emission rules
  • Builders say ruling could lead to big delays on new construction projects

AMSTERDAM, Nov 2 (Reuters) - The Netherlands' highest court on Wednesday ruled that a major carbon capture project might have to be halted because it did not meet European environmental guidelines, dealing a potential blow to construction projects throughout the country.

The planned "Porthos" project in the Rotterdam port area would be Europe's largest carbon capture and storage facility, expected to reduce the country's annual CO2 emissions by about 2%.

But the court ruled that the project's environmental impact had to include nitrogen emissions, which was left out of its assessment based on an exemption granted by the Dutch government for all building activities, and the court said violated European law.

The court said it would need more time to decide whether to allow the project, developed by a consortium of Royal Dutch Shell (SHEL.L), Exxon Mobil , Air Liquide and Air Products (APD.N).

Its ruling on the nitrogen exemption could have far-reaching consequences for scores of major construction projects across the country that have taken advantage of it.

"It now seems that this ruling will delay projects necessary for the energy transition by about six months to two years," Climate Minister Rob Jetten said in a statement. "That's a bitter pill because many sustainable projects – after they have been built – actually reduce nitrogen emissions."

The Dutch builders' association called the ruling "dramatic" and said, "All projects that have not yet been licensed will have to reapply for an individual environmental permit. This will cause enormous delays, with harmful consequences for house seekers, the energy transition and the Dutch economy."

The ruling is the result of a drawn-out legal fight to reduce emissions of nitrogen oxides, which in large quantities can threaten specific types of plants and the animals that feed on them.

Environmental groups, which brought the case, chose to challenge the exemption through the "Porthos" project, questioning its environmental merits and arguing that it was a subsidized way of letting companies keep emitting greenhouse gases.

Netherlands has struggled for years with high nitrogen emissions due to relatively large numbers of livestock and heavy use of fertilizers by farmer, as well as traffic and construction in the densely populated country.

The nitrogen exemption was introduced after the Council of State ruled in 2019 that emissions by Dutch builders and farmers were in breach of European laws, crippling construction.

The Dutch government aims to cut nitrogen emissions in half by 2030, but it has so far failed to determine exactly how it will do that.

Environmental NGOs will now get six weeks to comment on a report on the nitrogen emissions caused by construction of Porthos, after which the court will decide on the permits for the project.

The project was awarded up to 2.1 billion euros ($2.08 billion)in subsidies last year, nearly half of the Dutch annual budget for sustainable projects.

($1 = 1.0104 euros)

Reporting by Bart Meijer, Anthony Deutsch and Stephanie van den Berg; Editing by Louise Heavens, Tomasz Janowski and Mark Porter

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