In a rare sanction for the state, a court in The Hague said the Dutch government had not made enough effort to halt the progressive decline of several EU protected nature reserves needed to absorb nitrogen.
Excess quantities of nitrogen can have harmful consequences on water, soil and air quality.
The court said nitrogen deposits measured in these protected areas, part of the European Natura 2000 programme, are much higher than what they can absorb, contravening both Dutch and European law.
It added that it was already too late for the Netherlands to reach its 2025 targets, but ordered the nation to do everything it could to meet those it had set for the end of 2030.
In their ruling, judges stressed that the current far-right led coalition had gotten rid of several projects implemented by the previous government, also shrinking a climate transition fund from 24 billion to 5 billion euros.
There has been a "clear step back," the court said, adding that "drastic and unavoidable reductions" were necessary.
Greenpeace, the environmental group, said it was "relieved" after the ruling.
"The government violates its own laws and must get to work now, nitrogen emission must be reduced," said the director of Greenpeace Netherlands, Andy Palmen, cited by Dutch news agency ANP.
The country's main farming union, LTO, said the ruling will have "a huge impact" on farmers and on the economy as a whole.
"We call for the state to appeal this decision," said LTO president Ger Koopmans in a statement. Nitrogen is a common ingredient in fertilizers.
Farming, transport and construction are the sectors which most need to reduce their nitrogen pollution, according to the government's website.
The Dutch state can appeal, but in the meantime will have to take measures to get closer to its 2030 targets.
The most vulnerable areas facing excessive concentrations of ammonia and nitrogen oxides must be given the highest priority, the court said.
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