The European Commission is calling on the Belgian government to thoroughly cut subsidies for fossil fuels. It states this in its annual socio-economic recommendations to Belgium. The Commission also regrets that there are no plans to phase out the subsidies before 2030.
Such a measure could both boost the greening of transportation and buildings, as well as improve the country’s fiscal position.
€667 million subsidies to fuel cards for companies
The federal government spends 12 billion euros or 2,4% of gross domestic product (GDP) annually on direct subsidies for fossil fuels. These include reduced excise taxes on fuel oil and professional diesel, fuel cards for companies (accounting for around € 667.1 million), and reduced VAT on gas.
On the latter point, according to a report published last year by Greenpeace, the gas consumption of the largest industrial consumers in Belgium, for example, in the highest consumption bracket, is taxed 54 times less than that of households.
Phasing out is good for the treasury
According to the Commission, the support is not only economically inefficient but also perpetuates dependence on fossil fuels and does not contribute to Belgium’s climate commitments. For example, the subsidies hinder the energy renovation of buildings.
The gradual phasing out of these subsidies, including by shifting excise taxes from electricity to fossil fuels, would not only help the climate transition but also the treasury. “This is a significant amount of money,” says the Commission. “If you see what needs to be done to consolidate public finances in Belgium, this will really help solve the problems.”
Such reforms are also important in view of the disbursement of the remaining funds from de COVID-19 recovery fund. Belgium is entitled to a total of 5,3 billion euros in subsidies and loans. Some 2,7 billion euros have been disbursed in the meantime, but time is ticking. To receive money, Belgium must meet predetermined milestones and targets. Currently, only 28% of these have been positively evaluated.
Not leading by example in the EU
Belgium is no exception among EU member states when it comes to fossil fuel support, but only three other European Union members are even more generous in this regard: notably, Germany, Poland, and France. In 2023, the amount of ecologically harmful energy subsidies in the EU was estimated at € 136 billion, or 38% of total energy subsidies.
Most of the harmful subsidies, amounting to 93 billion euros or 68%, are related to fossil fuels. However, in the national phase-out plans, less than half, 43% or 48 billion euros, of fossil fuel subsidies were scheduled to end before 2025, while 9% or 10 billion euros are set to expire between 2026 and 2030. For the remaining 48%, accounting for 53 billion euros, either no end date or a date beyond 2030 has been set.
The production and use of energy account for approximately 75% of greenhouse gas emissions in the European Union. The EU’s goal is to achieve climate neutrality by 2050.
