The federal government granted more than €13 billion in direct and indirect subsidies to fossil fuels in 2019, according to the first inventory drawn up by the FPS Finance and the FPS Environment’s Climate Change Department as part of the requirements of the National Energy and Climate Plan.
According to this inventory, which is to be used as a basis for discussions on the reform of these subsidies under Belgium’s climate objectives, direct federal subsidies to fossil fuels alone reached €11.2 billion in 2019.
Between 2015 and 2019, they decreased from 3.2% to 2.4% of GDP.
The financial support mainly takes the form of tax exemptions or reduced rates of excise duty or VAT, the report noted.
The exemption from excise duty on heating oil (€2.1 billion), the reimbursement of professional diesel (€981 million) and the low taxation of natural gas for industry (€964 million) represent some of the biggest subsidies.
There are also fuel cards (€480 million, generally linked to the company car scheme) which have increased over the last five years, aid granted to households through social tariffs for gas and electricity, and the fuel oil fund (€182 million), which have also increased.
In addition to these direct subsidies, indirect subsidies – in the sense that they encourage the consumption of a good or service involving the use of fossil energy – amounted to €2.2 billion in 2019.
They were mainly granted through the company car tax regime (€1.8 billion) and the VAT exemption on airline tickets (€228 million), the report noted, although the authors point out that the latter category is not exhaustive due to a lack of available data.
“These subsidies, which are generally put in place to meet social or competitiveness objectives, in their current form run counter to efforts to decarbonise society and improve air quality,” the authors point out.
While Belgium is committed to developing an action plan to phase out fossil fuel subsidies, dismantling them will present a dual challenge, according to the report: “to reconcile the removal of environmentally damaging effects with the achievement of specific identified objectives, including social objectives, by other, non-environmentally damaging means.”