Belgium ‘fully prepared’ for Russian gas cut, government says

Created date

08 06 2022

The Belgian government drew attention to measures already in place to reduce gas consumption as more EU states were being cut off from Russian supplies earlier this week.

Gazprom’s decision to stop supplying Dutch utility GasTerra and Danish utility Ørsted has triggered concerns in other EU countries.

But neighbouring Belgium appears calm for now.

“There are currently no elements to announce the first ‘Early Warning’ phase of the national Emergency Plan for Natural Gas in Belgium,” said a statement from the cabinet of Energy Minister Tinne Van der Straeten, published on Tuesday (31 May).

While early warning mechanisms have long been in place in Germany, Italy and other EU countries, Russian imports represent only 6% of gas consumption in Belgium, the government said. 

And the port of Zeebrugge has “more than sufficient capacity” to import LNG from the US and other places, it added.

“There is no impact on the Belgian supply of natural gas and Belgium is fully prepared,” Van der Straeten said.

The government’s approach is that “prevention is better than cure”, the minister continued, adding: “We can already protect ourselves better by organising the joint purchase of gas at a European level, accelerating the energy transition and focusing on energy savings”.

Energy conservation

In March this year, the Belgian government adopted new measures to make energy savings cheaper.

Those include reduced VAT rates on construction products and services like demolition and renovation, as well as solar panels, heat pumps and solar water heaters.

“Insulate your homes, isolate Putin,” the minister’s statement said, borrowing a slogan coined by the Greens. 

“An energy-efficient house yields a lot: you consume up to 30% less energy, you save on your energy bill and reduce dependence on fossil imports,” Van der Straeten explained.

Instead of the usual 21%, the new rules will lower the VAT rate in these categories to 6%.

But the situation is not so clear for market participants who have complained about a lack of clarity on whether the reduced VAT rates apply to construction products, including insulation, or just services related to it.

The ministry in charge mentions “insulation work” among the activities eligible for the 6% VAT rate, but does not say whether this includes insulation materials, as the European Commission had asked EU states to do in May. 

“Belgium misses a clear regulatory framework for low VAT rate for increasing the energy efficiency of the building envelope. As energy security has never been so critical, this is a missed opportunity,” said Quentin Galland, public affairs director at Knauf Insulation.

Critics also said the lower VAT rates will benefit all households and were not sufficiently targeted at the poorest families which need it the most.

“Buildings in Belgium urgently need better insulation, renewable heating with heat pumps or solar thermal, and more solar PV on the roofs,” said Bram Claeys, senior advisor at the Regulatory Assistance Project (RAP), a non-profit group.

“Lowering their investment cost is helpful. But spreading support across all income brackets is not efficient, as it also helps those that don’t need help. It would be better to focus support on the families at risk of energy poverty,” he added.

Finally, as these measures were accompanied by VAT cuts on electricity and gas, the impacts on energy conservation may be limited. The European Commission has criticised the VAT reduction for energy as a “waste of money” as Flemish daily De Staandard reported.

“The investment cost reduction doesn’t overcome the handicap electricity has compared to the much cheaper gas or oil heating. We urgently need an energy tax reform based on CO2-intensity of fuels to fix this,” Claeys highlighted.