The Flemish Government has presented a new climate plan for 2030, which is expected to appease the European Commission and avoid heavy fines. One of the most visible new measures is the intention to push down electricity prices by shifting 362 million euros in taxes to the natural gas invoice by 2028. Families heating with natural gas will pay more, but recuperate it with lower electricity prices.
This should also have a positive effect on electric car uptake, as it reduces the total cost of ownership (TCO) of EVs compared to cars with traditional combustion engines. On the other hand, ICE cars are facing a hefty increase in the price of gasoline and diesel from 2027, when the European ETS2 system becomes active.
The emission allowances that fossil fuel suppliers will have to pay will undoubtedly be passed on to consumers in the form of higher prices. Initial estimates suggest an additional cost of up to € 650 per year at the pump for families when fueling their cars.
Higher EV prices?
One of the main reasons why people hesitate to switch to an electric car is still the higher initial purchase price, which can be 30 to 60% more than a comparable ICE car, especially for small city cars. American research organization BloombergNEF (BNEF) compared prices worldwide, finding that in China only, today, EVs are already, in initial purchase price, cheaper to buy than their ICE counterparts.
However, when it comes to the Total Cost of Ownership – all costs of a car considered – the lower price of electricity compared to gasoline or diesel makes an EV cheaper in the long run than its ICE sibling. That’s something lease companies already say applies to most company cars in Belgium today. For a private buyer, the exceptionally high electricity price, due to taxes and the lack of tax deductibility, still puts a spoke in the wheel.
EV battery test
Meanwhile, the Minister of Mobility, Annick De Ridder, wants to stimulate the uptake of second-hand electric cars by tackling another widely held prejudice: the ‘limited lifespan’ of EV batteries. She wants an official test standard for the technical inspection of second-hand EVs and their battery state. However, studies have proven that EV batteries degrade less than initially anticipated and last far longer than the average eight-year warranty.
In Belgium, the price of electricity per kilowatt-hour is 0.3480 euros, which is 68 percent higher than the European average. Electricity is also four to five times more expensive than gas, as both the federal and regional governments are charging excises on electricity that amount to 30% of the price the consumer pays.
It’s one of the reasons, energy experts point out, why electric heat pumps in Belgium are more expensive than heating systems powered by natural gas, which most households still use and is one of the primary sources of CO2 emissions, next to the transport sector and agriculture.
If Belgium wants to reach the climate goals agreed upon with Europe for 2030 (47% less CO2 emissions), Flanders must achieve at least 40%, compared to the 33% it is currently heading for without extra measures. For Wallonia, this is 55%, compared to 47% for Brussels, which is still lacking a government after more than a year.
Risking a two billion euro green debt
If Flanders misses its climate target in 2030, the next government will have to ‘buy off‘ its green debt abroad. According to research institute VITO, this would cost more than 2 billion euros without the now-proposed additional climate measures.
Flanders aims to reduce the cost of electricity by eliminating almost all regional taxes, instead shifting them to the relatively lower-cost gas invoice. How much that would mean in euros for the average family, Flanders Climate Minister Melissa Depraetere (Vooruit) wouldn’t specify.
But some experts estimate it would make the electricity invoice €100 cheaper and the gas invoice €200 more expensive, due to the additional ETS2 effect. And that’s without counting the expected price rise at the fuel pump.
