Windmills, wind turbines and the Dutch Disease

On a clear day, the white wind turbines turn slowly above the Amsterdam skyline. Looking West from near the Passenger Terminal Amsterdam where the huge cruise ships berth, you may count maybe a dozen wind turbines in the land of windmills. Which had me quizzing a local Dutch colleague in sustainability at KPMG: why isn’t the Netherlands the Saudi Arabia of wind turbine technology?

The Netherlands had a few centuries as a major global power, berthed some of the earliest multi-national companies in the 1500s and added a name to an investment speculation surge (Tulip Bubble) in the 1600s. The Netherlands has histories connected to commerce, the ocean, and of course the dykes that make large parts of the country habitable. After Hurricane Katrina’s storm surge flooded New Orleans in 2005, Dutch engineering companies answered the call. But nearly a decade ago the absence of major Dutch wind industry was already being targeted by the Dutch Friends of the Earth (FOE).

The reality of the environment in daily life may be one reason why The Netherlands ranks with the UK and Sweden as leading countries in sustainability. With a strong pensions sector, the leading role of APG and PGGM – two Dutch pension fund money managers – at the forefront of sustainable finance and responsible investment makes sense. The biggest pension fund (and third largest globally in 2008) is the ABP civil service workers fund with a capital of over 200 billion euros (USD 282bn), while PGGM caters for pensions in the health and welfare sector; it is managing over 90 billion euros (USD 127bn).

Perhaps the problem was the “Dutch Disease", a term coined by The Economist back in 1977. It describes how a country may be negatively impacted by wealth, similar to the “resource curse” spoken of in developing countries in Latin America, Southeast Asia or Africa. In the 1960s, the Netherlands experienced a vast increase in its wealth after discovering large natural gas deposits in the North Sea. The good news turned bad for the rest of the economy: as the Dutch guilder became stronger, making Dutch non-oil exports less competitive. Manufacturing slumped. Bottom line: in countries whose new-found wealth is likely to be permanent, policymakers need to manage the inevitable structural changes in the economy carefully.

In 2009, pension funds are investing in clean energy. For example, in 2007, the Ampère Fund used Evelop to supervise the creation of the ‘Koegorspolder’ wind park in the province of Zeeland, one of the largest wind-power sites in the Netherlands. Some of the wind turbines are offshore, neatly reversing the Dutch Disease. A short train ride from Amsterdam to Utrecht reinforces the flatness of the landscape. Unlike in southern Africa, farmers here are more worried about pumping water away from fields, not to thirsty cows, sheep or goats. The fields in May are postcard green. But there are not a lot windmills to be seen.

The land of windmills is not yet the land of wind turbines. Making the case for climate change impacts on business as usual is sometimes a long debate with skeptical consumers, cynical businesspersons and vote-targeting policy-makers. Like in other major developed countries. Return to the land of 10,000 windmills, or wind turbines, is decades way. But if each energy consumer, like you, asks the question of your provider or politician, we can move things forward a little faster.