Type: Country Review (Book)
Subject: Energy policies
Belgium continues to make measured progress in its energy policy, particularly with respect to electricity market liberalisation. The country has acted to improve the independent functioning of the electricity market and harmonise it with that of its neighbouring countries. Furthermore, an electricity exchange will begin operation shortly. However, to enable Belgian customers to fully benefit from energy market liberalisation, more work needs to be done.
In 2003, Belgium decided to phase out nuclear power between 2015 and 2025. As nuclear energy supplies about 55% of the country’s electricity, this will be a significant challenge. This huge supply gap will need to be covered by a combination of energy savings, electricity imports or additional electricity generating capacity. The federal government should conduct more comprehensive long-term studies on the nuclear energy phase-out and its effects on energy security, environmental protection and economic growth. Such studies should be made public.
While Belgium is making efforts to better integrate itself with its European neighbours, the country’s internal integration needs improvement. As Belgium is a federalist country, the three regions determine the bulk of energy policy. This has led to fragmented policies across the country – inhibiting efficiency and competition by segmenting the market and raising transactions costs. Though the federalist structure makes it more challenging to integrate markets, it does not preclude harmonisation. Belgium needs to better tie together its regional markets; in so doing, the country will also make progress towards the development of a wider, more efficient European market.
Belgium’s natural gas and electricity markets are highly concentrated. Companies owned by the international power group Suez SA dominate at all levels. Belgium has made some efforts to unbundle these industries and reduce their market dominance, but much more must be done to encourage new entry, increase competition and bring real economic benefits to Belgian customers.