Updated Dutch Mining Act Accelerates the Deployment of Geothermal Energy

The Dutch Mining Act will be amended in 2023. In addition to a streamlined permitting system for geothermal energy, the amendments introduced mandatory participation by Energy Beheer Nederland (EBN) in new geothermal projects from 1 July onwards. This is intended to lead to a greater number of higher-quality projects and to strengthen knowledge development and knowledge sharing within the sector. Participation in geothermal projects is one of the ways in which EBN contributes to the implementation of Dutch climate and energy policy on the path towards a climate-neutral Netherlands by 2050. In this background article, Herman Exalto, Director of the Heat Transition Business Unit, answers a number of frequently asked questions about EBN’s upcoming mandatory participation in geothermal energy projects.

Why is the Mining Act being amended for geothermal energy?

Herman: “The Netherlands is in the midst of the heat transition. A successful and sustainable heat transition is in everyone’s interest. Geothermal energy has the potential to become a major sustainable heat source for collective heat networks. To accelerate the deployment of geothermal energy, knowledge sharing across the sector must be strengthened. Following the amendment to the Mining Act, EBN will play an even greater role in this regard.In addition, the amendments streamline the permitting process for geothermal projects. Together, these measures should help increase geothermal energy production in the Netherlands to at least 15 PJ by 2030.”

What impact is EBN’s mandatory participation expected to have?

Herman: “EBN has more than fifty years of experience with mining projects and public-private partnerships. We will bring the knowledge gained through this experience to all new geothermal projects. Because knowledge development is one of our core activities, our participation will help the relatively young Dutch geothermal sector professionalise even faster. In addition, EBN is a public organisation and a financially strong project partner. Our financial capacity can help accelerate investment decisions relating to geothermal projects. As a public company, we also provide municipalities and provinces with additional confidence in the robustness, safety and continuity of geothermal developments.”

What does EBN’s mandatory participation entail?

Herman: “As a participant in a geothermal project, EBN will act as a non-operating partner. We will hold a financial and risk-bearing interest of at least 20% in all activities related to the exploration and production of geothermal energy. In consultation with project partners, this share may increase to a maximum of 40%. These percentages are laid down in the Mining Decree. As a public organisation with extensive experience in subsurface projects, we actively contribute to matters such as sustainability, project quality, project management, applied technologies and safety. This model of participation will be mandatory for the next five years, after which it will be evaluated.”

At what stage does EBN become involved, and are there any exceptions?

Herman: “From 1 July onwards, EBN joins a geothermal project once an exploration area has been awarded to the licence holder. From the date of award, the parties have one year to formalise EBN’s participation through a participation agreement. In exceptional cases, a project may request that the Ministry of Economic Affairs and Climate Policy waive the requirement for EBN participation. Such a request must be substantiated and should explain, for example, how knowledge sharing within the sector will be ensured without EBN’s involvement.”

Can EBN refuse to participate in a project?

Herman: “Yes, although I expect this to happen only rarely. Accelerating geothermal development and delivering more projects is in the interest of the heat transition. If EBN wishes to refrain from participating, we must submit a request to the Minister of Economic Affairs and Climate Policy. The Minister then decides whether our request will be granted. The geothermal project itself is also asked for its views, because under the legislation project developers are entitled to benefit from EBN’s expertise and financial strength through our participation.”

What level of decision-making authority will EBN have?

Herman: “EBN has a decisive vote on a number of key decisions. This means that EBN must vote in favour for those decisions to proceed. I recognise that some stakeholders consider this a sensitive issue. However, this decisive vote functions as a safeguard. Our objective is not to delay projects but to support and accelerate them. The licence holder remains fully responsible for matters such as permit applications, subsidy applications, construction activities and maintenance. Like the other investing partners, we approve work programmes, budgets and material contracts. Through our experience in oil and gas projects, we possess substantial expertise in these areas and use it to provide guidance and constructive feedback. EBN will therefore not play an operational role in the day-to-day development or exploration activities of a geothermal project.”

Will EBN participation also become mandatory in existing geothermal projects?

Herman: “No. Existing geothermal projects will not be affected by the mandatory participation requirement. The new rules do not apply retrospectively.
However, existing projects and municipalities may notice changes resulting from the revised permitting framework. If existing projects are interested in EBN participation, for example to benefit from our expertise or to attract a knowledgeable public investor, we would of course be pleased to discuss the possibilities.”

Is mandatory EBN participation the only way to accelerate geothermal energy?

Herman: “No. The streamlining of geothermal permitting procedures will also help. In addition, we need to increasingly think in terms of integrated heat systems that combine multiple sustainable heat sources through collective heat networks. EBN wants to contribute to this development as well, because without collective heat networks there is no effective outlet for the heat produced by geothermal projects. This requires close cooperation between public and private stakeholders. A public majority interest in heat networks, as advocated by Minister Jetten, is important for financing new networks and increasing the pace of deployment. The time has come for us to tackle this collective action problem together. In short, it is time to roll up our sleeves and get to work.”

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