2.4 OESO policypaper Zuid-Holland.pdf

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Affordable housing construction and renovation Liverpool (UK) developed a GBP 1.4 billion recovery plan, which includes the development of more than 200 new modular homes and community centres, and the renovation of 4,000 homes for vulnerable households in the most deprived neighbourhoods, which are also most at risk from COVID-19. The plan is estimated to provide an additional 12,000 construction jobs and 25,600 jobs in total.

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Support to vulnerable people Vienna (Austria) seeks to help young people who were severely affected by COVID-19 due to its impact on the labour market. Vienna invests EUR 17 million to help out the more than 16,000 young people currently without a job. The package includes intra-company vocational training, qualification passports, assistance for catching up the missed time and offers to enter into professions in health, care and IT, dedicated to the young generation.

Green recovery 

Sustainable urban mobility Seoul (Korea) will continue to pioneer smart green mobility options by implementing driverless vehicles, delivery of goods via robots and smart parking lots. These measures come in addition to fast tracking a bike lane system with express way, with an objective of attaining a modal share of 15% for bikes in 2030.

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Energy Efficiency

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Lille (France) is injecting about EUR 32 million, in the form of different business support systems, into its local economy. The “Rebound Fund” will allocate EUR 20 million to small businesses, such as shopkeepers, craftsmen, and farmers, who will have to pledge in favour of an ecological or energy transition to benefit from the fund. A new facility dedicated to small companies or associations with less than ten employees has been created, which will provide loans up to EUR 6.6 million that can be paid back over a 3-to 5-year period

Smart recovery The adaptation strategy 2020 of Milan (Italy) includes a section on digital services, planning for expansion, simplification and acceleration of the provision of these digital services for citizens, and the strengthening of the ICT network to support it. Digital tools are leveraged to support and complement

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 31 public initiatives and sectors. For instance, the plan aims to develop a contagion monitoring system. In an effort to increase access to culture, the plan also expands online library catalogues, and promotes online cultural initiatives, alongside “traditional” live events. Finally it will develop a digital platform for the city of Milan to rethink delivery logistics and encourage local consumption Source: (OECD, Cities policy responses to COVID-19, 2020)

In light of the tremendous impact of the crisis on subnational government finance, both the Dutch national government and subnational governments agreed on the need to compensate for the additional costs and the loss of income resulting from the COVID-19 crisis. A special working group was established, bringing together experts from ministries and umbrella organisations of local governments including VNG, to discuss the amount of the compensation. The result of this work will feed into the Administrative Consultation on Financial Relations (BOFv) (OECD, The territorial impact of COVID-19: Managing the crisis across levels of government , 2020). Municipalities, provinces and water boards have received a second stimulus package of EUR 777 million to compensate for lost income and extra costs due to COVID19. Additionally, a support package for national and regional public transport companies has been agreed upon, earmarking approximately EUR 1.5 billion in 2020 and EUR 750 million in 2021. Like in Zuid-Holland, subnational governments across OECD countries are currently rethinking how to deliver services, plan their space and reactivate economic growth. Many recovery plans take a broader view than “returning to normal” and seizing the momentum to create more equitable and sustainable cities.

Post-crisis efforts can be turned into an opportunity to accelerate efforts to tackle pre-existing challenges and inequalities, improve people’s lives and stimulate innovation, with measures ranging from extensive uptake of digital solutions to decentralised production and restructuring of supply chains to respond to shortages of goods (Box 1.4 and Box 1.5). The post COVID-19 recovery has the potential to build a “new normal” in cities through an inclusive, green and smart recovery (OECD, Cities policy responses to COVID19, 2020).

Box 1.4. Example from the UK Core Cities: leveraging regional partnerships to weather the crisis Core Cities, an association of eleven large cities in the United Kingdom (Belfast, Birmingham, Bristol, Cardiff, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield), leveraged their partnership as a platform to reinforce each other on the path towards regional recovery and elevate their collective priorities with the UK civil service. Confronted with a second wave of COVID-19 Core Cities are focusing on supporting employment, reducing inequalities and deprivation, and better targeting policies to local contexts. The recovery plans of the cities aim to restart the economy while ensuring that recovery benefits all residents and businesses.

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32 

Box 1.5. Recovery and renewal in Aix-Marseille-Provence (France) The metropolitan region of Aix-Marseille-Provence was not spared from the social and economic impact of COVID-19, and has had to contend with a second wave of the outbreak. The region was particularly vulnerable to detrimental effects from the crisis due to factors such as a relatively low-skilled workforce, poor quality of the housing stock, significant flows of goods linked to the port, and strong tourism activity. Aix-Marseille-Provence is seizing the crisis as an opportunity to rethink the internal organization, priorities and development model of the region. Eight themes were selected as priorities to revive the economy, promote social inclusion and advance the ecological transition, including: 1. Massively support hard-hit economic sectors, which can generate jobs and local benefits 2. Invest heavily in sectors that are essential to the economy that "we want" and quality of life: health and low carbon activities that cannot be relocated 3. Engage in a “relocation pact” for productive activities 4. Rebuild the social bond, reduce fractures (social, territorial, digital), and act through education and integration to give everyone a chance 5. Aim for EUR 350 million in investments each year in transport alternatives to individual automobiles 6.

Engage in transformative urban projects promoting short urban distances and resourceefficiency, and strengthen the cores of cities and villages 7. Strictly protect and enhance agricultural and natural spaces… even in cities 8. Develop food autonomy and encourage local food systems The Dutch national long-term recovery strategy was released in September 2020. The national investment fund that aimed initially to support regions in pursing their strategic vision and for which the JGA was developed will now be used to finance projects that will primarily boost national growth while also promoting green, smart and inclusive strategies. As a consequence, the stakeholders in Zuid-Holland have refined the JGA to address the challenges that pre-existed and were magnified by the COVID-19 crisis. In particular, a new pillar was added on local manufacturing in response to the COVID-19 crisis (see below). At the same time, cities such as Rotterdam and The Hague are preparing their own local long-term recovery strategy. The city of The Hague will finalise its recovery plan in the autumn of 2020, with a focus on innovation, investment and human capital.

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2 Leveraging the Joint Growth

Agenda to advance COVID-19 recovery and greater resilience

A flexible and iterative process to develop the Joint Growth Agenda The Joint Growth Agenda has followed a participative, multi-stakeholder process since its inception. Following the announcement from the Ministry of Economic Affairs (EZK) in September 2019 on the creation of a national investment fund to support projects that are expected to boost the economy and accelerate the transition to a low carbon economy, a set of different stakeholders in Zuid-Holland joined forces to develop the Joint Growth Agenda (JGA). The JGA was built around five pillars: i) Ecosystems of knowledge and innovation, ii) Human capital and education, iii) Transition to a low carbon economy, iv) Accessibility and, v) Smart manufacturing (added after the outbreak of the COVID-19 crisis). The development of those pillars was designed to match the objectives of the national fund and its six thematic areas (Figure 2.1).

Figure 2.1. Links between the JGA and the six thematic areas of the national investment fund Pillars of the JGA

Thematic areas of the investment fund

Source: Author’s elaboration based on the JGA and letter of the Ministry of Economic Affairs and Climate Policy to the Dutch Parliament

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34  While a “light” version of the JGA was adopted by the different stakeholders in July 2020, the JGA is a “living document” and was further refined in light of the COVID-19 crisis, for example by incorporating a new pillar on smart manufacturing. For each pillar, task forces were established to lead the work. Different projects were submitted for each pillar and the selection was made based on an assessment of their return on investment, their contribution to the economy and their alignment with national or regional strategies. This assessment was performed by consultancy studies contracted for this purpose. Selected projects are expected to have a strong multiplier effect. While some projects were developed specifically for the JGA, others were developed before the announcement of the Ministry of Economy but required additional funding to be implemented. Overall, the process of defining the Joint Growth Agenda is a very positive initiative that has enabled stakeholders to come together, set a shared vision for the future of the Province and define concrete key areas for progress.

Although the JGA was initially not designed as a COVID-19 recovery strategy per se, but rather as an economic and industrial growth agenda in response to the call from the national government to finance projects that have a promising potential to boost the economy within the new national investment fund, the “living” and agile nature of the document allows it to adjust quickly in the face of the ongoing COVID-19 pandemic and become a critical tool to weather the crisis. The Joint Growth Agenda could therefore do more to contribute to an equitable, resilient and sustainable future growth in Zuid-Holland. This section explores each of the five key pillars of the JGA before discussing the potential to strengthen its contribution to recovery and the next steps for an effective implementation.

Spotlight on the key pillars of the Joint Growth Agenda Human capital and education Human capital and education is a key pillar of the JGA, with important implications for the other pillars. This pillar is based on the observation that Zuid-Holland registers the largest labour shortage in the Netherlands. A relatively large part of the population (20%) is not participating in the labour market (OECD). Zuid-Holland ranks 10 out of the 12 provinces in terms of the activation of untapped labour potential, meaning that it has the third lowest labour participation rate of the country. Around 20% of companies in ICT, agriculture, horticulture, trade, transport and storage and industry sectors report that they do not have enough qualified workforce. The pillar has been built around five axes: 

i) human capital (which is part of all the pillars of the JGA),

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ii) the acceleration of campus development for research and innovation in Zuid-Holland (strengthening existing campuses and stimulating cooperation between them),

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iii) the deployment of vocational education and business campuses (MBO-HBO),

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iv) ‘’lifelong learning’’, and

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v) attracting and retaining international talents.

The 2016 OECD review had highlighted human capital as one of the most important determinants of the economic performance of a region and called for strengthening the education and training of the workforce in the MRDH area (OECD, 2016). The OECD Principles on Urban Policy also underline the need to promote equitable access to quality education, especially for low-income youth, and to foster collaboration between higher education institutions, businesses, local and regional governments, and civil society, to foster inclusive labour markets for all segments of the skills spectrum (Principle 6) (OECD, OECD Principles on Urban Policy, 2019). The pillar of the JGA on Human capital and education is also supporting the targets of the “Human Capital Agreement”, which was signed in June 2019 by various stakeholders within the region -- including TOWARDS COVID-19 RECOVERY AND GREATER RESILIENCE IN ZUID-HOLLAND © OECD 2021

 35 companies, knowledge institutions and governments – to strengthen the regional labour market. The agreement foresees concrete targets built around eight projects for employed people (who constitute 76% of targeted people), unemployed people and employers. For example, one measure for those targeted who are already employed consists in helping them move jobs across sectors or move between boundaries (targeting 12% of all employed people). Data also shows that 18% of targeted people are flex workers and only 2% of them are unemployed, which suggests that projects within this pillar are primarily aiming at ensuring smooth sectoral shifts.

Table 2.1. Projects under the Human Capital Agreement Targets Project SMITZH-3- People to work (High-tech manufacturing) Project form work to work Greenport West-Holland (Horticulture)

Project We IT South-Holland

Project Cybersecurity Orientation

Project Joint Training life sciences sector

Project International Talent (sectors such as cyber security, maritime) Project from the financial sector to the construction sector

Regional deal Drechtsteden/Gorinchem

-Offer 2000 employed people a development perspective -Support 100 employers to make better use of their labour - Offer 3750 employed people a development perspective - Support 500 employers to make better use of their labour - Offer 2000 flex workers a development perspective - Get 500 job seekers to work - Offer 4750 employed people a development perspective - Support 100 employers to make better use of their labour - Offer 1500 flex workers a development perspective - 1500 transitions across sector and regional boundaries - Offer 2500 employed people a development perspective - Support 50 employers to make better use of their labour - Offer 500 flex workers a development perspective 500 transitions across sector and regional boundaries - Offer 2500 employed people a development perspective - Support 20 employers to make better use of their labour - Offer 250 flex workers a development perspective - 150 transitions across sector and regional boundaries - Increasing the amount of work of 250 underutilized part-time workers. -Attracting 75 international employees. -Attract 1000 international employees - Support 10 employers to make better use of their labour - Offer 250 employed people a development perspective - Support 100 employers to make better use of their labour - 250 transitions across sector and regional boundaries - Offer 750 employed people a development perspective

Source: data provided by MRDH

The choice of human capital as a key pillar is spot-on to secure future growth in Zuid-Holland. The pillar targets major policy issues such as lifelong learning, which will play an important role to help the economy of Zuid-Holland shift to a low-carbon economy. However, many of the goals within the pillar rely on buy-in and funding from the national government that has not been guaranteed yet. The next steps of the JGA may hinge on a larger reform of the primary and secondary education system by the national government, in which more focus is to be put on competencies rather than specific knowledge. Previous OECD reports regarding skills in the Netherlands have recommended fostering more equitable skills outcomes and promoting a culture of learning (OECD, 2017). Long-term goals also include creating space for regional interpretation of educational frameworks. These goals do not only require funding from the national government for specific projects, but also substantial policy changes without which the effectiveness of these policy goals is likely to be undermined.

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36  This pillar of the JGA also has the potential to support more specifically those impacted the most by the COVID-19 crisis. In many cities across OECD countries, the economic fallout of the pandemic has frozen the labour market and hit young people particularly hard. Some cities, such as Vienna (Austria), have offered targeted support to young people, with a package including intra-company vocational training, qualification passports, assistance for catching up the missed time and offers to enter into professions in health, care and IT, dedicated to the young generation (OECD, Cities Policy Responses to COVID-19, 2020). While similar initiatives were developed in Zuid-Holland, these could be scaled up further. For example, in the early days of the COVID-19 crisis, Zuid-Holland developed a “market place” to match the temporary labour supply and demand in the region. Such a marketplace could be made permanent and help strengthen programmes to support youth and the long-term unemployed. Information on growing sectors could be systematically provided to students to guide their educational choices. In light of the focus on cybersecurity and IT in several projects of the JGA, the agenda could address more specifically the effect of digitalisation on the skills needed in the population by helping expand digital literacy and the potential to provide e-government services.

Knowledge and innovation ecosystems Innovation plays a major role in improving labour productivity and quality of life. The 2016 OECD review recommended the MRDH to foster close dialogue with the private sector to accompany the economic transition of the region towards innovative and sustainable types of activity. The OECD Principles of Urban Policy also call for strengthening the capacity of actors in cities to innovate and fulfil their duties efficiently and inclusively (Principle 10). In line with these recommendations, the JGA dedicates a specific pillar to knowledge and innovation ecosystems. It aims at leveraging the position of Zuid-Holland as i) the economic engine of the country, ii) the most knowledge-intensive region in the Netherlands, and iii) a region with world-class sectors in international value chains. This pillar focuses on artificial intelligence (AI), quantum, biotechnology and medtech. The region plans to further develop and strengthen knowledge and innovation ecosystems together with the national government through proposals for national action agendas. 

Artificial intelligence (AI) projects mentioned in the JGA have four aims: (i) strengthening the knowledge cluster (Hub) around Leiden, Delft and Rotterdam; (ii) launching a large-scale education programme for talent development, investing in the ecosystem for start-ups and scale-ups; (iii) taking a leading role in Europe in securing social acceptance, frameworks and inclusion in close connection with the headquarters of the European network CLAIRE (Confederation of Laboratories for Artificial Intelligence Research in Europe) in The Hague; and (iv) achieving strong innovation chains within the key fields of application at the international level (i.e. port industrial complex, logistics and maritime, security, peace, justice, horticulture aerospace, energy & sustainability.). AI is transforming every aspect of people’s lives. It promises to help solve global challenges such as climate change and access to quality medical care. The OECD Principles on Artificial Intelligence promote artificial intelligence that is innovative and trustworthy and that respects human rights and democratic values (OECD, OECD Principles on Artificial Intelligence ).

The Ministry of Economic Affairs of the Netherlands has asked the AI Coalition (NL AIC), a Dutch public-private partnership between the government, the business community, educational and research institutions and civil society organisations that connects AI initiatives and accelerates AI developments, to develop a national agenda on AI. In February 2020, on behalf of different stakeholders in the region, ZuidHolland submitted the AI propositions for the region. The projects foreseen in the JGA are in line with the proposition of Zuid-Holland. The contribution requested from the national investment fund has been estimated to be EUR 1 billion, out of a total of approximately EUR 2 billion.

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Quantum technology is regarded as a key technology with the potential to become a game-changer in many social and economic sectors. Examples include healthcare, agriculture, water and food, climate and safety. The Netherlands is a vibrant international hotspot for quantum technology, with

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 37 leading science, technology and talent. Universities and knowledge institutes are leaders in the development of qubits, quantum networks, quantum algorithms and post-quantum cryptography and act as a magnet for global business investment and talent. In the region there are two major quantum research hubs and affiliated universities and research centres, out of a total of five in the Netherlands. Quantum Delft is a vibrant ecosystem and can be seen as the physical heart of the national Quantum Delta. The projects mentioned in the JGA area aim to implement the National Agenda Quantum Technology and the renewal of the national cleanroom infrastructure (NanoLabNL). The projects focus on forging strong bonds between the five major quantum research hubs and affiliated universities and research centres and the applications in three catalysts (CAT) programmes. Other aims are to strengthen large-scale facilities across the country in five locations for nano-technological research in a National Cleanroom Infrastructure programme and kicking off four action programmes to facilitate research and co-operation that will boost social readiness levels. The contributions requested from the national investment fund have been determined to be EUR 635 million for a period of 7 years. The Dutch government is already investing EUR 23.5 million in quantum technology over a 5-year programme.

This initial investment will be used to fund the high priority actions identified in September 2019 by the National Agenda on Quantum Technology. 

The biotechnology sector has been growing fast in the last decade. The projects foreseen in the JGA have a total cost of approximately EUR 280 million. The contribution requested from the national investment fund is about EUR 125 million. The interest group of biotech companies in the Netherlands, HollandBIO, contacted South Holland to submit joint propositions for a national biotech R&D programme within the national investment fund. This co-operation resulted in a LSH kick start proposal, which has two main national biotech proposition lines (one on REGMEDXB production lines, and another on health research infrastructure).

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Medtech is particularly relevant in light of demographic ageing in South Holland. While the Dutch healthcare system is robust, it must contend with rising healthcare costs in addition to understaffing challenges and administrative inefficiencies. The projects foreseen in the JGA include investments in developing or strengthening campuses, investment in five R&D flagships (Health Data science, Biomedical imaging, Molecular medicine, Smart instruments and interventions and innovative medicine research and development.) As the most knowledge-intensive region in the Netherlands, it is in the interest of South Holland to strengthen knowledge and innovation in the region. To this end, the scaling up of existing initiatives with funding from the national government, while also establishing ambitious new initiatives, is a welcome step forward. However, the ripple effects from the largest projects should also be carefully considered in light of the other pillars. For example, one of the main projects within the medtech focal point is the creation of a “Smart Tech campus” (working title) in co-operation between the Technical University of Delft and the Erasmus Medical Centre. This large-scale infrastructure project will have implications on the urban environment and transport infrastructure in the region, which should be carefully assessed and monitored.

Furthermore, while the JGA enumerates the number of jobs that could be created by investing in AI and other innovative technologies, there is also a risk of jobs being lost to automation. For example, the port of Rotterdam and its surroundings (which provides 20% of the added value and 13% of the jobs in the South Holland economy) may certainly benefit from AI, including through predictive planning of freight transport (TUD, RSM, harbour, Prorail and business partners), automated docking, optimizing port call (SwarmPort), and agent-based decentral planning of inland shipping. However, there is also a share of jobs potentially at risk, which is not mentioned in the JGA but should be taken into account and given support to reskill in light of digital technologies.

As the most knowledge-intensive region in the Netherlands, it is in the interest of Zuid-Holland to strengthen knowledge and innovation in the region. The projects set forth in the Joint Growth Agenda have the potential to cement Zuid-Holland’s position as an innovation leader while preparing the region for the future. To this end, the scaling up of existing initiatives with funding from the national government, while also TOWARDS COVID-19 RECOVERY AND GREATER RESILIENCE IN ZUID-HOLLAND © OECD 2021

38  establishing ambitious new initiatives, is a welcome step forward. However, the ripple effects from the largest projects should also be carefully considered in light of the other pillars. For example, one of the main projects within the medtech focal point is the creation of a “Smart Tech campus” (working title) in cooperation between the Technical University of Delft and the Erasmus Medical Centre. This large-scale infrastructure project will have implications on the urban environment and transport infrastructure in the region, including new public transport infrastructure needs, which should be carefully assessed and monitored. Furthermore, while the JGA enumerates the number of jobs that could be created by investing in AI and other innovative technologies, there is also a risk of jobs being lost to automation. For example, the port of Rotterdam and its surroundings (which provide 20% of the added value and 13% of the jobs in the Zuid-Holland economy) may certainly benefit from AI, including through predictive planning of freight transport (TUD, RSM, harbour, Prorail and business partners), automated docking, optimizing port call (SwarmPort), and agent-based decentral planning2 of inland shipping.

However, there is also a share of jobs potentially at risk, which is not mentioned in the JGA but should be taken into account and given support to reskill in light of digital technologies. This is especially relevant in the wake of the COVID-19 crisis, when urban residents are increasingly relying on digital solutions at a time of social distancing. The COVID adaptation strategy 2020 of Milan (Italy), for example, includes a section on digital services, planning for expansion, simplification and acceleration of the provision of these digital services for citizens, and the strengthening of the ICT network to support it. The plan also aims to increase access to cultural services by expanding online library catalogues and promoting online cultural initiatives alongside “traditional” live events. Milan’s adaptation strategy will develop a digital platform for the city to rethink delivery logistics and encourage local consumption (OECD, Cities Policy Responses to COVID-19, 2020). Considering Zuid-Holland’s extensive innovation infrastructure and experience, the JGA pillar on innovation could therefore also help expand access to digital services and advance a more inclusive recovery.

Accessibility and housing Accessibility is key to support the economic integration of Zuid-Holland and balanced development of the region. Improving accessibility by investing in public transport infrastructure has benefits beyond the infrastructure in itself, including improving further functional integration and increasing agglomeration benefits, supporting a modal shift toward more sustainable modes of transportation and accommodating population growth through the development of compact and sustainable cities. The 2016 OECD review underlined the key role of transport in achieving greater functional integration within the MRDH. For instance, around half of the people working in Rotterdam live in another municipality. The OECD Principles on Urban Policy also called for designing and planning transport policies that increase the accessibility of urban residents and users to economic, social and cultural opportunities; improving multimodality; encouraging and harnessing soft mobility and new forms of clean urban mobility; combining supply-side and demand-side transport management policies (Principle 7) (OECD, OECD Principles on Urban Policy, 2019). Accessibility and the development of new public transport infrastructure are also critical for the development of compact and sustainable cities.

As demand for housing in Zuid-Holland grows, the region aims to preserve green space, improve agglomeration economies and advance the mobility transition by supporting housing development in already built-up areas. Development along public transportation routes can support these aims. Such recommendations take even more relevance in a context in which the COVID-19 has triggered a shift in mobility patterns and provided cities with a momentum to rethink their approach towards urban space and suggest alternative options. For example, numerous cities across OECD countries, ranging from Bogota to Paris, have promoted clean forms of mobility such as cycling in the post-confinement period as 2

Agent based planning models are a class of computational models for simulating the actions and interactions of autonomous agents

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 39 part of the tactical urbanism movement. Shifting towards more long-term and permanent strategies, cities are investing in active mobility infrastructure, improved public transport safety and accessibility, and low emission transport options, such as electric vehicles and scooters (OECD, Cities policy responses to COVID-19, 2020). Transport investments will be critical to continue to strengthen regional integration within Zuid-Holland. The MoVe programme (Mobiliteit en Verstedelijking, or Mobility and Urbanisation), a collaborative programme of ministries, the Province of Zuid-Holland, the MRDH and the municipalities of Rotterdam and The Hague, aims to address these issues and challenges related to transport and urbanisation. In this regard, the MoVe Program Council approved the Adaptive Development Strategy for Metropolitan Public Transport and Urbanisation. The main goals of MoVe are “i) scale leap in public transport in conjunction with urbanization along the main axes of public transport; ii) improving logistics efficiency and accessibility in the region, iii) development of smart networks, in which public transport, bicycles and cars form integral chains (MoVe, Mobiliteit en Verstedelijking ).

Given the central role of accessibility to advance further economic integration, support a modal shift and build more sustainable cities, the JGA rightfully dedicates a specific pillar to this horizontal topic. Looking further ahead, a key sector that needs to be planned in close co-ordination with transport is housing. These two sectors have a major impact on the cost of living and quality of life for residents, while also shaping broader economic and environmental outcomes. Integrating housing and transport policies is essential to avoid inefficient management of land that can lead to urban sprawl, dispersed and discontinuous urban growth, and more expensive and inefficient infrastructures. Integrating housing and transport can also help increase labour mobility, as spatial mismatches on the labour market may inhibit productivity. In this respect, the 2016 OECD assessment of the MRDH had recommended increasing labour mobility through targeted housing policies. In order to leverage the potential of the Joint Growth Agenda at its fullest, effective co-ordination between transport and housing policies in Zuid-Holland can also help address tradeoffs between competing land uses such as housing, transport, industry and commerce.

Improving the flexibility of the land market could give firms greater flexibility in developing land that is already zoned for commercial use or in renovating or re-purposing existing sites. Considering the competition between different land uses within the region, some form of joint regional spatial planning would be beneficial to allocate space throughout the region more effectively for all different needs: housing, transport, manufacturing, green industries, etc. Within the Province, discussions have started in order to update laws and instruments to ensure more integrated planning, but progress on this front has remained slow. The JGA concedes that “land requires efficient, multifunctional usability, which includes the commitment of governments to an integrated area development approach to further develop cities efficiently and at the same time increase their quality and appeal.” Additionally, awareness of Transit-Oriented Development (ToD) has spread in Zuid-Holland, for example with a study finding that 61 of the 67 NS stations in ZuidHolland do not take surroundings of the station spatially into account, serving cars without providing housing or facilities (Staat van Zuid-Holland). However, a concerted effort to change the regulatory framework to provide more flexibility must be made in order to reduce inefficiencies and create a more attractive and sustainable region.

Specific issues related to construction costs should also be closely monitored. EU laws on nitrogen emissions had halted construction projects in the Netherlands, and especially in The Hague, even prior to the COVID-19 crisis. While the COVID-19 crisis has caused construction around the world to slow down, recovery plans for Zuid-Holland will need to ensure enough housing construction, especially given the increase in housing costs in the region. The challenge of supporting construction in order to bolster housing affordability has been addressed in recovery plans in many OECD cities such as Liverpool (UK). The city has developed a GBP 1.4 billion recovery plan that includes the development of more than 200 new modular homes and community centres and the renovation of 4,000 homes for vulnerable households in the most deprived neighbourhoods. This plan is estimated to provide an additional 12,000 construction jobs and 25,600 jobs in total (OECD, Cities Policy Responses to COVID-19, 2020), and thus addresses housing affordability TOWARDS COVID-19 RECOVERY AND GREATER RESILIENCE IN ZUID-HOLLAND © OECD 2021

40  and the labour market at the same time. Zuid-Holland’s JGA addresses housing and accessibility jointly through the MOVV project, which is integrated with regional plans to construct 170,000 new housing units along new or upgraded public transportation lines. Policies on local and regional levels have been aligned in regional networks such as the “Verstedelijkingsalliantie”, in which eight municipalities, the province of Zuid-Holland and the MRDH co-operate on joint ambitions in mobility and housing.

Transition to a low carbon economy Environmental sustainability is a major challenge for Zuid-Holland, particularly in relation to three sectors: the port industrial complex, the Greenport and the logistics sector. The OECD Principles on Urban Policy call for advancing environmental quality and the transition to a low-carbon economy (Principle 5) (OECD, OECD Principles on Urban Policy, 2019). In line with international commitments and agendas such as the Paris Agreement and the United Nations Sustainable Development Goals, many countries around the globe are setting ambitious environmental agendas with clear CO2 reduction targets. In September 2019, the Netherlands adopted the Climate Act with the target to reduce greenhouse gas emissions by 95% by 2050, compared to their level in 1990. The ambition is to reach this target gradually with a 49% reduction by 2030. From the information provided by MRDH, more than 20% of national CO2 emissions come from Rotterdam, with the port area responsible for approximately 90% of these emissions. Although progress has been made through CCS (Carbon Capture Utilisation and Storage) projects such as PORTHOS in Rotterdam, which aims to transport CO₂ from industry in the Port of Rotterdam and store it for future use, further work is needed to reach emission targets and ensure a sustainable future.

The port of Rotterdam contributes directly and indirectly to the Dutch economy with 6.2% of GDP and 4.2% employment. The transport and logistic sector is the largest employer in Zuid-Holland, with 95,000 jobs and an added value of more than EUR 9 billion. The export value of Dutch vegetables and floriculture amounted to approximately EUR 17 billion in 2019. Around half of the Dutch greenhouse horticulture is located in Zuid-Holland, with 80% located in Greenport West-Holland. At the national level, horticulture accounts for approximately EUR 7.6 billion of annual exports and employs more than 125,000 people. Greenport is not only about the cultivation of vegetables; it is a cluster including agrological functions, suppliers, research and educational institutions. Home to the largest port in Europe, the province also serves as a logistical hub for Europe, which requires sustainable infrastructure, including for transporting energy. Within the port industrial complex, three ecosystems have been identified in the proposition for the growth fund: Hydrogen, Electrification and Circularity. While those ecosystems are interlinked, the Hydrogen ecosystem is predominant. To operate this transition, significant investments are required to decrease the cost of production through economies of scale.

This would be achieved by upscaling the application and production of electrolysers and the applications of green hydrogen and green electrons within energyintensive sectors. On 8 July 2020, the European Commission released a communication on a hydrogen strategy for a climate neutral Europe (Box 2.1). In the framework of this strategy, the European Clean Hydrogen Alliance will help build up a robust pipeline of investments. As part of the Commission’s recovery plan, funding instruments of Next Generation EU, including the Strategic European Investment Window of the InvestEU programme and the ETS Innovation Fund, will enhance financial support and help bridge the investment gap for renewables generated by the COVID-19 crisis (European Commission, Hydrogen strategy for a climate-neutral Europe, 2020). Rotterdam is developing several hydrogen terminals that will allow the city to import hydrogen in addition to producing it, preparing the city for a role in the low-carbon economy that closely mirrors its current role in the oil economy (Figure 2.2). Considering the increasing demand for hydrogen projected both in the Netherlands and in neighbouring countries, especially Germany, this plan puts the region in a good position to secure its future in the hydrogen field.

The plan also attempts to consider uses of hydrogen for other sectors, including as a heat source for the horticulture sector and households and companies in the region. Concerning the Greenport, the transition to a low carbon economy relies on investments in energy and related infrastructures. Investing in logistics, including shipping and freight transport, will be necessary to ensure more sustainable transport infrastructures. TOWARDS COVID-19 RECOVERY AND GREATER RESILIENCE IN ZUID-HOLLAND © OECD 2021

 41

Box 2.1. Hydrogen strategy for a climate neutral Europe Hydrogen is enjoying a renewed and rapidly growing attention in Europe and around the world. Hydrogen can be used as a feedstock, a fuel or an energy carrier and storage, and has many possible applications across industry, transport, power and buildings sectors. Most importantly, it does not emit CO2 and almost no air pollution when used. It thus offers a solution to decarbonise industrial processes and economic sectors where reducing carbon emissions is both urgent and hard to achieve. All this makes hydrogen essential to support the EU’s commitment to reach carbon neutrality by 2050 and for the global effort to implement the Paris Agreement while working towards zero pollution. Yet, today, hydrogen represents a modest fraction of the global and EU energy mix, and is still largely produced from fossil fuels, notably from natural gas or from coal, resulting in the release of 70 to 100 million tonnes CO2 annually in the EU. For hydrogen to contribute to climate neutrality, it needs to achieve a far larger scale across Europe and its production must become fully decarbonised. The priority for the EU is to develop renewable hydrogen. In the short and medium term, however, other forms of low-carbon hydrogen are needed.

The hydrogen ecosystem in Europe is likely to develop through a gradual trajectory, at different speeds across sectors and possibly across regions and requiring different policy solutions. The strategy will be implemented in three phases: 

In the first phase, from 2020 up to 2024, the strategic objective is to install at least 6 GW of renewable hydrogen electrolysers in the EU and the production of up to 1 million tonnes of renewable hydrogen.



In a second phase, from 2025 to 2030, hydrogen needs to become an intrinsic part of an integrated energy system with a strategic objective to install at least 40 GW of renewable hydrogen electrolysers by 2030 and the production of up to 10 million tonnes of renewable hydrogen in the EU.



In a third phase, from 2030 onwards and towards 2050, renewable hydrogen technologies should reach maturity and be deployed at large scale to reach all hard-to-decarbonise sectors where other alternatives might not be feasible or have higher costs.

Source: (European Commission, Hydrogen strategy for a climate-neutral Europe, 2020)

Figure 2.2. Hydrogen economy in Rotterdam

Source: (Port of Rotterdam)

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42  To support the implementation of the National Climate Act, different strategies and actions at the level of the province and cities such as Rotterdam have been developed, including the Rotterdam Climate Agreement. However, significant investments are needed to transition to a low carbon economy. This pillar will require a total investment of EUR 2 billion with a contribution of EUR 710 million expected to come from the central government. Based on the calculations of Zuid-Holland, those investments will reinforce crucial sectors in the Netherlands that currently generate an added value of around EUR 17 billion annually and will provide around 100 000 jobs in the future. While the private sector can lead some investments, the national funds currently available are insufficient to cover the further investment that would be needed. The different projects planned in the pillar on the transition to low carbon economy are described in Table 2.2.

Table 2.2. Projects to support the transition to a low carbon economy in the framework of the JGA Investment amount ( by 2030) in EUR Port Industrial Complex Greenport

Logistics

Infrastructure Knowledge, R&D, Innovation Energy transition Westland Energy transition Oostland Campus development Programmatic approach to Freight transport corridors East and Southeast Freight transport by water - infrastructure Freight transport by rail - infrastructure Robust connections Corridor Rotterdam Antwerp Greening inland shipping

€ 1.2 billion. - € 1.4 billion. . € 5.4 billion - € 9.7 billion per year X X X € 5 billion. € 0.5 billion. € 200 million. € 3.5 billion. - € 5 billion. € 200 million.

Source: author’s elaboration based on information provided by MRDH and Zuid-Holland

Given the urgent need for climate action to reduce CO2 emissions and shift to alternative energy models, this is a very welcome proposition. Transitioning Zuid-Holland to a low-carbon economy is an essential goal, which could be broadened even further. Cities are using this time to invest in urban upgrading, which can allow their buildings to operate at maximum energy efficiency after COVID-19, and save on energy bills. Lessons learned from past green stimulus packages have shown that certain fields, such as investing in energy efficiency and retrofitting, contribute significantly to job creation and economic activity in the construction sector while reducing emissions (OECD, Cities Policy Responses to COVID-19, 2020). Targeting households and municipal buildings for energy efficient upgrading could help Zuid-Holland reduce its greenhouse gas emissions while also reducing energy bills for households who might be overwhelmed by increased energy costs in the wake of the COVID-19 crisis (from teleworking, home schooling, using household appliances more often than before, etc). Zuid-Holland could also use the JGA in order to support SMEs in their transition. For example, Lille (France) is injecting EUR 32 million into its local economy, in the form of different business support systems.

The “Rebound Fund” will allocate EUR 20 million to small businesses, such as shopkeepers, craftsmen, and farmers, who will have to pledge in favour of an ecological or energy transition to benefit from the fund. A new facility dedicated to small companies or associations with less than ten employees has been created, which will provide loans up to EUR 6.6 million that can be paid back over a 3-to 5-year period (OECD, Cities Policy Responses to COVID19, 2020)

Smart manufacturing Smart manufacturing was added as a new pillar into the JGA in response to the COVID-19 crisis, with the objective to strengthen regional value chains and boost the manufacturing industry. In addition, smart TOWARDS COVID-19 RECOVERY AND GREATER RESILIENCE IN ZUID-HOLLAND © OECD 2021

 43 manufacturing can contribute to the green transition towards a sustainable system of energy production, conversion and storage. The assumption is that it costs less to produce outside the country to enhance production sovereignty in regional production chains. This pillar aims to produce those products locally that have a high level of complexity and are produced in low quantities, while importing products that have low complexity and are needed in high quantities. New value chains are needed to achieve that. The smart manufacturing pillar also aims at tackling the challenge of job insecurity for low-educated people who rely on flexible or part-time jobs. This will require a thorough analysis of the sectors that are most relevant for the national and European economy. The COVID-19 crisis has re-ignited an old debate about the supply chain risks associated with international production. It also highlighted both the strengths and weaknesses of global value chains, including for the supply of essential products. Experiences from the past suggest that international production networks can be disrupted and play a role in the propagation of economic shocks across countries and industries. However, they also help firms and countries to recover faster (OECD, COVID-19 and global value chains: Policy options to build more resilient production networks, 2020).

The region aims at 4 different value chains: energy production, conversion and storage, robotisation of agriculture and food, secure data exchange, and flexible manufacturing. A digital supply system operating between companies, in company and between individual machines is needed to have tactically and strategic control and product sovereignty. In the context of the COVID-19 crisis, the restructuring of supply chains to respond to goods shortages has been a key topic for several cities. The city of Barcelona (Spain), for example, has established an economic recovery project, called "Barcelona Never Stops", with the implementation of a series of measures aimed at the regeneration of the economic and social tissue of the city. One component of the plan is to encourage local consumption by supporting new and innovative business models (OECD, Cities Policy Responses to COVID-19, 2020). The JGA’s smart manufacturing pillar could therefore be broadened to support vulnerable populations who may not have ready access to the labour market, and stimulate local consumption patterns.

Potential to strengthen the Joint Growth Agenda While the Joint Growth Agenda offers an actionable plan to advance the province of Zuid-Holland, some areas could still be strengthened. In particular, the COVID-19 crisis has exposed inequalities in cities while also providing an opportunity to change behaviours. The JGA has more potential to advance overarching goals, including inclusive growth, broadening the pillar on the transition to a low carbon economy, and leveraging urban-rural linkages to improve quality of life in the region more generally.

Reducing inequalities In many cities, the COVID-19 crisis has highlighted the importance of addressing already existing, deeply entrenched social inequality. Although the crisis affected all segments of society, it had a disproportionate impact on vulnerable populations such as the elderly, the homeless, minorities, women and children (OECD, Cities Policy Responses to COVID-19, 2020). The JGA is facing an opportunity to close the social gaps created by this crisis and address structural inequalities that were already present and have been exposed through the COVID-19 crisis. Cities that have taken measures to address inequalities by including inclusive growth in their recovery plans have focused on several topics, including local business support and employment, affordable housing construction and renovation and support to vulnerable households. The JGA could advance its agenda for inclusive growth in most of its pillars by mainstreaming inclusiveness in its strategy. For example, the pillar on human capital could directly address the needs of those who have difficulties entering the labour market by scaling up immediate responses to the crisis. Similarly, the

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44  transition agenda and the smart manufacturing pillar could do more to clarify which jobs will be created and for whom. The Joint Growth Agenda seeks to improve the material conditions of all residents in ZuidHolland by boosting economic growth, but addressing inequalities and mainstreaming inclusive growth throughout the agenda can ensure that everyone benefits from the region’s recovery and help make growth more sustainable.

Broadening the transition agenda There is a clear momentum to make bold decisions and change behavioural patterns in the wake of COVID-19, which can help accelerate the just transition agenda. The JGA includes many projects aiming at improving the environment – the “what’’. However, there is also a need to integrate environmental aspects in processes, for example those related to procurement and investment: the “how’’. Those processes may include award criteria, technical specifications and contract performance clauses. Public procurement accounts for a substantial proportion of taxpayers' money in OECD Member and Partner countries. It represents on average 12% of GDP and 29% of government expenditure, with almost two thirds of expenditure occurring at the sub-national levels including states, regions and cities (OECD, 2019). As highlighted in the OECD Recommendation on Public Procurement, public procurement is a critical pillar of services delivery for governments and has become a strategic tool for achieving a variety of key policy objectives, including the development of SMEs, environmental growth, social inclusion, innovation and the and promoting socially responsible supply chains (OECD, OECD Recommendation of the Council on Public Procurement, 2015).

Zuid-Holland’s JGA could therefore broaden its transition pillar to acknowledge and address the role of citizens, SMEs, and public procurement in the transition to a low-carbon economy.

Harnessing the urban-rural continuum OECD analysis shows that economic growth increases with proximity to large cities (OECD, 2015). For example, rural regions close to a city have narrowed their productivity gap vis-à-vis urban regions by 3 percentage points since 2010. The OECD Principles on Urban Policy also call for supporting “interdependencies and co-operation between urban and rural areas by i) leveraging the spatial continuity and functional relationships between urban and rural areas to inform public investment and programme design; and ii) carrying out joint strategies and fostering win-win urban-rural partnerships, as appropriate, to promote an integrated development approach” (Principle 3) (OECD, OECD Principles on Urban Policy, 2019). The Joint Growth Agenda could further harness the link between urban planning and the environmental transition by building on the MOVV project and other policies against urban sprawl in order to exploit the potential advantages of urban density and urban form (compact or sprawl),. Changes stemming from COVID-19 can inspire lasting behavioural shifts to make cities more resilient and more efficiently connected with rural areas, in terms of the way goods are produced, energy consumed and transport organised (OECD, Cities Policy Responses to COVID-19, 2020).

Building compact cities by prioritising Transit-Oriented Development instead of sprawling developments can reduce the pressure on land, a limited resource in a fairly urbanised region. Given the increasing competition between land uses, higher urban density can free up space to implement green and nature-based solutions, including green buildings, sustainable public transport, and renewable energy. Zuid-Holland is a leading province in agriculture and horticulture. As highlighted earlier, around half of the Dutch greenhouse horticulture is located in Zuid-Holland, with 80% generated in Greenport West-Holland. The sector has been hit hard by the COVID-19 crisis. However, the JGA mentions horticulture mainly in the pillar on transition to a low carbon economy and could do more to leverage horticulture to support local consumption. In May 2020, the European Commission approved the funding of a EUR 650 million Dutch scheme that compensates companies in the floriculture, specialty horticulture and potato sectors for the loss of revenue or additional costs related to the collapse in demand for their products to be in line with EU

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 45 State aid rules (Commission, 2020). However, the impact of COVID-19 in the coming months and years is still highly uncertain. Given the economic crisis, the horticulture sector might continue to suffer from a shrinking demand, and a lack of adequate workforce. In this context of uncertainty, the Joint Growth Agenda could offer an opportunity to support local chains of consumption

Towards an effective implementation of the Joint Growth Agenda Prioritising the projects The JGA puts forward a set of projects that require a co-financing scheme with the central government. Not all projects can be implemented without the support of the national government given the fiscal stress at the local level. Some projects could be developed at a smaller scale or in a longer timeframe than planned initially. Local authorities’ tax collection capacities have decreased with the COVID-19 crisis. Given the uncertainties around the recovery phase, it will be essential to prioritise the different projects. For example, one of the criteria for the prioritisation of projects could be the overall assessment of the value for money of each individual project, but taking into account the strong linkages between the projects and the pillars. This assessment could be made based both on quantitative outcomes (such as cost/benefit analysis) and on qualitative outcomes that seek to establish the overall societal return (such as the impact on employment, on well-being and inequalities).

Leveraging synergies between the pillars of the JGA and with EU agendas The OECD Principles on Urban Policy call for a national multi-level urban policy approach that sets incentives to align and integrate sectoral policies to jointly promote development and well-being (Principle 7) (OECD, OECD Principles on Urban Policy, 2019). In line with this approach, the JGA was also developed in a way to foster complements between the five pillars. While the pillars of the JGA are interconnected, synergies could be further developed to take advantage of investments that could advance multiple goals. Implementing sectoral policies without optimising the relationships between these and other issues can lead to initiatives that overlap, or leave gaps that are hard to fill. Mobilising complementary issues is thus in the interest of Zuid-Holland if investments are to leverage their full potential. For example, the link between innovation and accessibility is clear, as knowledge spill-overs are generated by physical proximity. Accessibility also has a major effect on the environment. In 2016, transport accounted for 30% of CO2 emissions in OECD countries and 16% of all CO2 emissions in non-OECD countries.

Unlike in other sectors, emissions from transport have continued to increase in recent years both in OECD and in non-OECD countries, in spite of concurrent technological advances and the implementation of mitigation measures (IEA, 2018[5]) (ITF Outlook 2019). In a current ambition scenario where current and announced mitigation policies are implemented, worldwide transport CO2 emissions are projected to grow by 60% by 2050. (ITF Outlook 2019). Linking all three of these dimensions is the proposed campus development in the innovation and knowledge environments pillar. In addition to being a project improving the innovation environment, it seeks to improve access to public transport through three new public transportation routes, which is also part of the MOVV project. By improving access to and quality of public transport, this project will also improve quality of life for residents and improve the attractiveness of the region, which in turn can attract skilled labour and investment. Boosting the synergies between pillars of the JGA could also contribute to a more holistic strategy for the region. Although the JGA was conceived as an economic strategy before COVID-19 hit, the magnitude of the crisis makes it necessary to address recovery as well.