The Coalition Agreement of the new Flemish Government (Vlaams Regeerakkoord), as concluded on 30 September 2019 by the Flemish Nationalist, Christian-Democrat and Liberal Parties, sets out the plans of the Flemish Government in the field of climate and energy for the legislature 2019-2024. This Coalition Agreement follows the coalition agreements reached in the last weeks for the governments of the Walloon and Brussels Capital Regions. The federal Government in Belgium has not yet been formed, leaving uncertainty on the National Energy and Climate Plan 2021-2030 that needs to be submitted for the whole of Belgium to the European Commission by the end of this year.

The following topics, on which the Coalition Agreement presents plans, will be discussed in this briefing:

  1. reduction of greenhouse gas emissions and the transition to a climate-neutral society;
  2. sector-specific measures (other than on renewable energy and combined heat-and-power plants);
  3. measures in respect of renewable energy and combined heat-and-power plants;
  4. plans with respect to the energy prices; and
  5. plans with respect to the electricity market design.

Reduction of greenhouse gas emissions and the transition to a climate-neutral society

Whereas the Coalition Agreement states that the Flemish Government "subscribes to the European climate ambition by 2050", it stops short of committing to being climate-neutral by 2050. The Government does indicate it will strive for a reduction of at least 80% of greenhouse gas emissions by 2050, with the ambition to evolve towards full climate neutrality.

In respect of the greenhouse gas reduction target for 2030, the Government keeps the cards close to its chest, stating that it could, also dependent on the actions taken by the other great trade blocs, "support a feasible, payable and bottom-up increase of the European GHG target for 2030 that is allocated in a cost-efficient manner to the Member States, allows for international flexibility and where this does not increase the energy bill for consumers and undertakings".

An export model to allow Flanders to also combat global emissions is put forward. Meeting the region's renewable energy targets will require the use of the flexible mechanisms under the new Renewable Energy Directive for financing projects elsewhere in the EU. Climate change financing to third countries would be preferably granted to projects in which Flemish companies are involved. More concrete implementation thereof can be expected into the Flemish climate and energy plan that will be finalised at the end of 2019, and will be integrated into the Belgian one. Some vague support for carbon tax adjustments, within the boundaries of the WTO, is also floated.

Sector-specific measures (other than related to renewable energy and CHP)

  • Residential buildings: For new buildings and after major energy-inclusive renovations, no oil-fired boilers (stookolieketels) can be installed starting from 2021. As from the same date, no existing oil-fired boilers can be replaced where the building has a natural gas grid connection.

    Also as from 2021 no natural gas grid connections may be realised for new large parcelling projects (verkavelingen) and large apartment buildings unless in combination with a heat & power-based collective heating system or a renewable energy system as main source for heating.

  • Offices and public buildings: Different from what was eventually decided for residential buildings (where the hard obligation is replaced by an incentive policy in the form of attractive lending schemes), office buildings that are not yet energy-efficient will, starting from 2021, need to undergo a substantial energy-inclusive renovation within five years after their acquisition by notarial deed.

    Local authorities will be required to reduce the GHG emissions from their buildings by 40% and they have to realise an annual saving of 2,09% in respect of the energy use of their buildings starting from 2020. The Flemish Government will also commit to this, with the annual energy savings percentage increased to even 2,5%.

  • Industry: The existing Energy Policy Agreements (energiebeleidsovereenkomsten - EBO) providing certain advantages for energy-intensive industry in return for benchmarked emissions-reducing actions will be further extended in 2023. For their SME counterparts, the current system of mini-energy policy agreements (mini-EBO) will be expanded.

    A special mention is made, in the framework of the existing research programme "Moonshot Flanders CO2-neutral", of targeted support by the Government for research on carbon capture & storage (CCS).

    Hydrogen is singled out as a sector where the Flemish Region can excel within Europe and is hence an area for which R&D investment will be made available.

  • Transport: In respect of transport emissions a goal is set for 2030 of all newly sold cars being "low emissions" and at least half of those "zero emissions". By that year, the Flemish administration should have reduced the fuel use of its service vehicles by 40% (compared to base year 2005). A review of (semi-)public charging and refuelling infrastructure is envisaged, whereby the Government aims to focus on semi-public fast-charging infrastructure. The Flemish Government will cooperate with the federal government and the other Regions for accelerating the greening of the corporate vehicle sector.

    As was already announced, no mention is made of any Flemish road congestion charge.

    The path of greening the fleet of public transport company De Lijn is maintained whereby for new public procurement procedures only zero emissions buses will be eligible.

    All public lighting shall have to be LED-based by 2030.

  • Agriculture: Among a host of other policy directions announced in the Coalition Agreement, the plan to reform the nutrient emission rights system is noteworthy, particularly in the light of the current developments in the Netherlands in this area.

  • Waste and the circular economy: The future Flemish economy is projected as a fully circular economy, whereby "products-as-a-service" models will be supported. In public procurement procedures of the Flemish Region offers with circular economy features will receive a scoring premium. Regulatory barriers to circular models and the use of recycled items will be removed.

    The recycling percentage is to increase from 70% through 75%.

    A gradual phase-out of waste incineration is also "under preparation" whereby it is stated that any remaining waste incineration activities will need to be as energetically effective and as low-emitting as possible.

    The Government would also explore the creation of a "CO2 backbone" for storage, transport and the use of CO2 for the promotion of a circular carbon economy.

Measures in respect of renewable energy and combined heat-and-power plants (CHP)

  • General support for renewable electricity: The Government announces a reform of the green certificate system. A gradual phase-out of support in the form of such certificates is foreseen by 2030, via a gradual reduction of the maximum support given in the coming years (including the introduction of maximum support caps for wind & power projects in the mold of what currently is already in place for biomass and biogas projects). As soon as possible no certificates will be awarded anymore, at least for new projects, for periods of excess electricity production (negative prices).

    The reference to new and substantially modified projects makes clear that these reforms should not impact the existing certificate support system for installations that are already operating.

  • (On-shore) wind energy: The Flemish Government aims at a doubling of the capacity for wind power by 2030 so that the total capacity at that moment would amount to 2.5 GW (which is a step-up from its previous draft energy & climate plan where this goal was only set at 2 GW). Even where this target is generally perceived as feasible and not overly ambitious, one can wonder whether the fact that the Agreement also provides that the local authorities are to become solely competent for permitting such wind turbines will not actually slow down the growth trajectory of this technology in Flanders.

    A pilot project will be set up where support for large wind turbines to be installed on terrains of the Flemish administration will be tendered.

  • Solar power: For solar power the Flemish Government also aims at a doubling of capacity by 2030 so that the capacity would then amount to 6.7 GW (which was exactly what it had already had foreseen in its previous energy & climate plan).

    The tender system for investment support based on fixed annual budgets will be expanded from small- and medium-sized wind project to include medium-size PV projects as from 2021.

    Support will only be provided for PV projects exceeding 10 kW where the panels are placed on buildings or on "periphery" terrain (marginale terrein) and at least 50% of the power is locally consumed.

    As from 1 January 2021 the system of "backward-counting meters" (terugdraaiende teller) for new small PV installations will be abolished.

  • Support for CHP and green heating: For the CHP certificates support the phase-out trajectory devised by the Government is more gradual, with a phase-out only foreseen by 2029 taking into account other intermediate developments such as any introduction of capacity or flexibility remuneration systems. However, CHP installations based on biomass or biogas are said to get to obtain "improved" support so as to increase their share in the (renewable) energy mix. It is however stated - unfortunately not in very clear terms - that new or substantially modified biomass or biogas installations need to "mainly serve to accommodate heating needs".

    Green heating is identified as a very important pillar for renewable energy production. The Government will elaborate an advanced support framework for the use of biomass and biogas where it is injected into the natural gas grid or in industrial or collective heating systems.

    District heating systems play a key role in greening the heating sector and the recently introduced regulatory framework will be reviewed so as to additionally incentivise district heating networks supplied with green or residual heat.

    The existing two geothermal projects will be evaluated on their cost-efficiency and the results will inform any decision to support new geothermal projects.

Plans with respect to the energy prices

As expected, the Coalition Agreement expresses concern for the financing of climate policy measures through surcharges on the electricity bills for off-takers. Therefore the aim is stated that such charges on the electricity bill will not increase due to the Flemish Government policy. However, the only actual removal of an existing Flemish surcharge (as a public service obligation) to the electricity bill that it envisages in the Agreement relates to the costs for public lighting, which are currently financed as an element of the distribution network charges payable by electricity off-takers (these costs will henceforth be financed from the general budget).

Specifically for the energy costs for industry, the Government will seek to transpose the so-called energy norm (principle that an amount of energy costs to the industry should be at similar levels then in the neighbour countries) into concrete cost-reducing measures. In this light, the maximum allowed (by the EU) compensation arrangement for indirect carbon leakage (i.e. the additional costs incurred by the industry concerned as a result of EU ETS obligations) will be extended.

Plans with respect to the energy market design

The digitalisation of the energy system and the cost-effective market-realisation of energy storage are seen as enablers for the capacity to integrate a large share of renewables into the energy mix. In that light of the clear need for innovation, trial projects for power-to-x will be set up, as well as pilot projects for production of CO2-low hydrogen and the use of canals for electricity storage.

In the context of the intended maximum roll-out of digital meters in 2019-2024 it is incumbent upon the distribution system operators (DSOs) to operationalise as soon as possible a cost-effective software platform that will maximise the meters' benefits. The DSO's activities in data management will then be evaluated in 2024.

The Flemish Government is intent upon the swift implementation in the Flemish regulations of the new flexible and decentralised market design as warranted under the EU's Clean Energy Package, particularly in respect of local energy communities. On the other hand the Government keeps stressing that the solidarity between all grid users needs to be maintained (foreseeing that also decentralised market players may be asked to contribute to financing of the climate policy measures and the grid's efforts to maintain security of supply).

The Ventilus-project for the upgrading of the electricity network will be prioritised and facilitated within the existing procedures.

The DSOs and Fluvius are called upon to focus more closely on their task of operating futureproof distribution networks. They will have to use separate accounts for their regulated and non-regulated activities. They will not be allowed to own, develop or operate energy storage facilities.

Finally, one overarching regulator will be created in Flanders that will be responsible for all grid-connected infrastructure (electricity, gas, heating, cable, water, sewer system, etc.) and media.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.