20230301-IMF-Fiscal_Policy_Options_to_Accelerate_Emissions_Reductions_in_Belgium_Belgium_Belgium_41页_1mb

Fiscal Policy Options to Accelerate Emissions Reductions in Belgium Analysis

The paper identifies Belgium's current policies as insufficient to meet climate targets at limited economic cost. The key recommendations include:

1. Carbon Pricing: Implement federal carbon pricing (carbon tax or ETS) for non-ETS sectors (transportation, buildings, agriculture, non-ETS industry) as the central pillar of decarbonization. This should progressively increase to €100 per ton by 2030, introduced via the existing excise regime, potentially before the EU-wide ETS for these sectors (due to the current energy crisis and to meet ESRs). Revenues should fund support for vulnerable households and firms/activities.

2. Price Floor for ETS Sectors: Introduce a domestic price floor for ETS sectors (industry, power) to provide price certainty, prevent leakage, and ensure equalized abatement costs.

3. Feebates: Reinforce carbon pricing with sectoral Feeratebate (tax-subsidy) schemes in critical non-ETS sectors, particularly power generation and road transportation. This complements carbon pricing and avoids high energy price increases while reducing emissions cost-effectively. An example given is a 'sliding-scale' scheme for new cars.

4. Improved Electricity Pricing: Reduce inefficient taxes/fees on electricity (like excises) to lower its price relative to fossil fuels, promoting electrification.

5. Reform Social Protection: Transition from energy-based subsidies/carbon to an income-based social tariff system (phased over time), providing support based on need ("phased-out" benefits), to preserve price signals while protecting households.

6. Promote EU Dialogue: Advocate for EU-level harmonization of ETS prices, include all sectors in ETSs, and explore common price floors to minimize cost-effective mitigation success.