Belgian government to discuss energy crisis at special meeting tomorrow

The Belgian federal government will hold its first Council of Ministers on Friday after the summer holidays. An event will however mark the return to politics two days earlier: the holding of a consultation committee, convened by Prime Minister Alexander De Croo, on the high energy prices. The meeting wil take place tomorrow, Wednesday 1 September, at 3 pm.

With the energy prices skyrocketing and impacting families and businesses due to the war in Ukraine, the "Vivaldi" government kicks off the working year with the file with which it ended before the summer. (The so-called Belgian "Vivaldi" coalition refers to the "The Four Seasons", with four different political views: the liberals (Open Vld and MR), the socialists (Vooruit and PS), the greens (Groen and Ecolo) and the Christian democrats of CD&V.)

Earlier this month, the Belgian prime minister Alexander De Croo admitted this Summer at a Voka meeting, the Flemish network of enterprises, that the next five to ten winters will be difficult. "Hope for the best, prepare for the worst," he said.

No concrete measures?

Wednesday's Consultation Committee primarily serves to analyze the situation, with no expected concrete measures. "If there was a magic solution, we would have decided it long ago," a government source told Belga News Agency.

The federal government is also looking at Europe. A price ceiling for gas should be decided there, suggested De Croo and Energy Minister Tinne Van der Straeten (Groen) in unison last weekend, in combination with the decoupling of electricity and gas prices. After all, the record prices for natural gas are boosting electricity prices via the gas-fired power stations.

Production at stake

Yet some are also looking emphatically to the federal government for additional support. The social rate for energy was previously extended until the end of this year, but the Gezinsbond is requesting a further expansion of the rate and a reduced VAT rate on gas and electricity. Industrial bulk users are also demanding measures: if gas prices remain at their current level or rise further, certain companies will inevitably have to stop production.

In any case, it remains to be seen whether the government still has budgetary room to support households and industry after the corona pandemic. It promises to be a difficult exercise, with a budget deficit fluctuating around 5 percent of gross domestic product and a debt ratio that. According to the Planning Bureau, it is heading for 114 percent. 

Moreover, the European Commission will have to act sooner or later. The EU Member States may have to make do to get on with the European Stability and Growth Pact, which should keep debt and deficit levels below 60% and 3% of GDP respectively.

Nuclear issue

In view of the difficult budgetary situation, various parties are emphatically looking at the Belgian nuclear park in order to keep energy prices somewhat under control. Two nuclear power stations, Doel 3 and Tihange 2, will irrevocably close their doors in the coming months, but that does not alter the fact that the French-speaking liberals of the MR, led by chairman Georges-Louis Bouchez, continue to insist on extending lifespans. 

The Belgian federal government has already agreed on an extension for the younger reactors of Doel 4 and Tihange 3, but will still have to negotiate this with operator Engie in the coming months. Just before the summer, De Croo and Van der Straeten concluded an agreement in principle on the extension of the two youngest nuclear power stations with Engie, but the crucial elements, such as who will bear which costs for the decommissioning of the power stations, still have to be negotiated.

Tax reform

Another route is that of a tax on the surplus profits of energy producers. In mid-July, Van der Straeten launched a proposal to tackle this via a one-off surplus profit tax, the details of which she would work out together with Finance Minister Vincent Van Peteghem and put it on the table as part of the budget talks. Only the CD&V deputy prime minister himself seemed anything but enthusiastic. According to Van Peteghem, such a tax is almost impossible from a legal point of view and the government should consider whether the existing distribution contribution for the nuclear power plants can be extended to other energy producers.

In addition, Van Peteghem will have his hands full in the coming months with his blueprint for a tax reform that he proposed just before the summer, and which he still needs to negotiate. That threatens to be a difficult delivery: the preparatory memorandum of tax law professor Mark Delanote (UGent), which was drawn up at the request of Van Peteghem, was dismissed from a liberal angle.

(VIV)

#FlandersNewsService

©BELGA PHOTO (JULIETTE BRUYNSEELS) Energy minister Tinne Van der Straeten and Prime Minister Alexander De Croo during a press conference in Brussels