Assessment and recommendations

Belgium is characterised by strong international and regional interdependence reflecting its geographical location and size. Its economy is tightly integrated with those of neighbouring countries. With few exploitable natural resources other than forests, Belgium depends on external markets for its energy and raw material supplies. Gross domestic product (GDP) per capita is well above the OECD average. Population and road densities are high, and Antwerp has one of the busiest ports in Europe. These characteristics influence levels and patterns of production and consumption (energy, transport, water and space) and housing and infrastructure needs. The resulting pressures on the environment are numerous and strong. Urban sprawl, landscape fragmentation, intensive agricultural practices and road traffic entail major social costs. These relate particularly to greenhouse gas (GHG) emissions, air pollution, traffic congestion and ecosystem degradation. High use of nutrients and pesticides in agriculture has significant impacts on water quality.

Since 2005, Belgium has made progress in decoupling several environmental pressures from economic growth (e.g. GHG and air pollutant emissions; municipal waste generation; energy and material consumption; water abstractions); in improving wastewater treatment; and in expanding the network of protected areas (Figure 1). However, progress remains insufficient to halt biodiversity loss and to alleviate the growing pressures of demographic development, urbanisation and intensive agricultural practices. Although Belgium performs well in many economic and well-being dimensions, it is not on track to achieve the Sustainable Development Goals (SDGs) by 2030.

The COVID-19 crisis had some positive outcomes on the environment. Reduced human activity has reduced air pollution, GHG emissions and pressures on biodiversity and natural habitats. However, these effects will be only temporary if recovery builds on the pre-crisis model. Generation of medical and hazardous waste is increasing (Section 1.5).

Belgium has committed by law to phase out all nuclear plants by 2025. However, the fragmentation of energy and climate competences between the federal and regional governments and lack of an independent co-ordinating body hamper the development of a shared long-term climate vision and implementation of coherent policies (SPF, 2018). The country submitted a National Energy and Climate Plan (NECP) in 2019 and a Long-term Strategy in 2020. These outlined the national contribution to the 2030 and 2050 targets of the European Union (EU) to reach the goals of the Paris Agreement. While both documents list the contributions of the federal authority and the regions, they do not provide an integrated vision of policies. An internal burden-sharing agreement on the 2030 climate objective remains to be adopted. Including the climate emergency in the Constitution and introducing a climate law that provides for a binding co-operation agreement could strengthen climate governance.

The achievement of 2020 climate objectives remains uncertain and further efforts are needed for 2030 and beyond (Figure 1). Fossil fuels, mainly oil and gas, dominate the energy mix, but the share of nuclear power in electricity generation is among the highest in the OECD. Energy supply from renewable sources was about four times higher in 2019 than in 2005. However, it accounted for only 9.4% of gross final energy consumption in 2018, below the 2020 objective of 13% and half the EU average. The NECP sets the objective to reach a 17.5% share by 2030, which is less ambitious than the draft version of the plan (although renewable energy is set to increase in absolute terms due to higher energy consumption) and below the 25% indicative target set for Belgium by the EU Governance Regulation (EC, 2020a). Energy consumption has remained stable since 2005. Thanks to improved energy efficiency of buildings, and due to warmer winters, energy consumption from the residential sector fell. However, energy consumption of all other sectors (particularly in the commercial sector and industries) increased. The country is not on track to achieve its 2020 target for energy efficiency. The NECP expects final energy consumption to be reduced only slightly between 2020 and 2030 (CONCERE-NCC, 2019).

GHG emissions, which decreased between 2005 and 2014, have stabilised. However, due to the high contribution of energy-intensive industries, emission intensity per capita remains higher than the EU average. In addition, Belgium’s carbon footprint is substantially higher than production-based emissions as the country is a net importer of GHG emissions, although recent data are lacking (FPB, 2017). NECP projections with additional measures indicate that 2020 and 2030 targets of reducing emissions not covered by the EU Emissions Trading System (ETS) by 15% and 35% respectively (compared to 2005) are within reach1 (Figure 1). The COVID-19 may affect results for 2020. However, further efforts will be needed to meet the more stringent targets adopted by the EU for 2030 to achieve climate neutrality at EU level by 2050. The NECP expects the most significant reductions to come from the transport and building sectors. However, ETS emissions are projected to increase between 2020 and 2030 due to the nuclear phase-out and increasing dependence on gas.

The mid-term review of the National Adaptation Plan 2017-20 concluded that implementation was still partial (NCC, 2019). The plan addresses issues on biodiversity, crisis management, energy, health, research and international co-operation. By early 2019, of the 11 actions, 4 had not really started, 3 had met budgets and deadlines, and the remaining 4 had not been fully implemented. Two years after the adoption of the plan, one measure achieved the objective set. NCC concluded that support to this plan and its implementation should be reinforced. The final evaluation of the National Adaptation Plan was to take place by the end of 2020.

Emissions from major air pollutants have decreased and 2010 objectives set in the National Emission Ceilings Directive have been achieved. Belgium is on track to meet its 2020 and 2030 emission reduction commitments for sulphur oxides (SOX), nitrogen oxides (NOX), fine particulate matter (PM2.5), non-methane volatile organic compounds (NMVOC) and ammonia (NH3) (with additional measures for the latter) (EC, 2020b). The country has managed to reduce emissions from transport thanks to the introduction of catalytic converters, particulate filters and more stringent emission standards. Reductions of emissions from electricity production and industry were achieved through a fuel switch to renewables, the closing of some coke ovens, blast furnaces and all coal power plants, the use of end-of-pipe techniques and of low solvent products. Emissions from heating were reduced thanks to fuel switching and more stringent product legislation. However, the residential and tertiary sectors remain the primary source of particulate emissions, mainly because of wood burning. Emissions from agriculture were reduced by implementing low emission animal housing and manure spreading.

Air quality has improved over the past decade. However, EU limit values for NO2 continue to be exceeded at some stations exposed to vehicle emissions and in street canyons in cities,2 in particular Brussels and Antwerp (EEA, 2020). Ozone concentrations have continued to exceed the EU target value, especially in warm years such as 2018. In 2019, 93% of Belgians were still exposed to PM2.5 concentration levels above the value recommended by the World Health Organization. The Brussels-Capital Region (BCR) expects the recently introduced low emission zone and planned ban of diesel vehicles by 2030 to help further reduce air pollution. Antwerp and Ghent also introduced low emission zones. Transport pricing and taxation also have potential to address air pollution (Section 1.3).

Belgium generates more economic value per unit of materials used than the OECD Europe average and material productivity improved (Section 1.5). Over the past decade, the country has achieved an absolute decoupling of municipal waste generated from economic and population growth. In 2018, Belgians generated 410 kg of municipal waste per inhabitant, 85 kg less than the OECD Europe average. The country further reduced its already low shares of municipal waste sent to landfill and achieved recycling and composting levels above the OECD Europe average. Extended producer responsibility schemes have largely met their recovery and recycling targets. In coming years, however, Belgium’s regions will need to further increase recycling and composting to meet their own and EU objectives (Section 1.5).

The area of agricultural land in use has remained relatively stable and occupies the largest part of the territory (45%). However, as bigger and more intensive structures replace smaller ones, the number of farms has continued to decline significantly. In recent decades, intensification and specialisation of agriculture, and at the same time marginalisation of land, have resulted in significant biodiversity loss in and around farmland. Nitrogen and phosphorus surpluses decreased between 2005 and 2015, as did sales of pesticides between 2011 and 2018. However, they remain among the highest in OECD member countries per hectare of agricultural land (OECD, 2019).

Consequently, the most frequently identified pressures exerted on species are agricultural intensification (affecting more than three-quarters of species); fragmentation of habitats and the resulting loss of connectivity; the incidence of pollution (especially eutrophication); land take (especially in the Atlantic area); and intensification of forestry in Wallonia. Biological invasions are the second most important cause of the extinction of species (BCHM, 2019). In Flanders, Brussels and the marine area, changes in environmental quality due to eutrophication also impose heavy pressure on fauna and flora.

Belgium has almost met the 2020 Aichi targets to protect at least 17% of land area and far exceeded the 10% target for coastal and marine areas. In 2020, protected areas covered 15% of Belgium’s territory, a share lower than the OECD average (UNEP-WCMC, 2020). In addition, only a limited number of sites at land are strictly protected or managed effectively (BCHM, 2019). The Belgian part of the North Sea, which is a sensitive ecosystem, is one of the most densely used marine areas in the world. It faces major pressures from sea-based activities (e.g. fishing, coastal defence, sand and gravel extraction, shipping, offshore energy, tourism) and land-based activities (agriculture, urbanisation, harbours, industry). The establishment of ecologically significant coastal and marine protected areas in the Belgian marine zone, complemented by the Natura 2000 network (37% of the area of the Belgian part of the North Sea), has been important progress. However, efforts have not been sufficient to improve the conservation status of habitats and species. Only a quarter of species are in good status (Section 1.4).

The country is under moderate to medium-high water stress despite low levels of abstraction per capita. Both 2017 and 2018 were dry years, during which farmers faced water scarcity on an unprecedented scale. Over the past decade, water abstractions decreased. Water abstractions from industry have fallen sharply due to the restructuring of the metallurgy sector and outages of nuclear power plants, which reduced needs for cooling, as well as to efficiency improvements.

Water quality is an issue. Belgium has a long way to go to achieve the targets of good status for water bodies set in the EU Water Framework Directive (WFD) (EC, 2019a). The second River Basin Management Plans (RBMPs adopted over 2016-17) show that only 24% of surface water bodies achieved good ecological status, while only 2% of surface water bodies and 37% of groundwater bodies reached good chemical status. This is a lower performance than the EU average, though this is in part due to Belgium’s high population density (EEA, 2018). High use of nutrients and pesticides in agriculture are the most important sources of surface and groundwater pollution. Despite significant progress in reaching compliance, delays in implementing the Urban Waste Water Treatment Directive also have had impacts on water quality. By 2016, 99% of wastewater collected underwent secondary treatment and 94% more stringent treatment. However, diffuse pollution from non-connected dwellings affects nearly half of surface waters and 10% of groundwaters (EC, 2020c, 2019b).

Enhanced co-ordination is needed between regional, national and international levels to harmonise water status assessment and co-ordinate Programmes of Measures (PoMs) of the RBMPs (EC, 2019a). To this end, a collaboration platform has been set up. Division of responsibilities results in several regional plans for the same river basins. Further work is needed to improve water quality monitoring, characterise pressures on water bodies and clarify the links between water status, individual pressures, impacts and PoMs. The RBMPs are unclear on the extent to which measures implemented will contribute to achieving the WFD objectives and sources of funding are not always identified. The third RBMPs are being developed. The design of Belgium’s Strategic Plan under the post-2020 Common Agricultural Policy is an opportunity to set more ambitious targets on water. Belgium’s share of agricultural land under contract to improve water management is below the EU average.

Belgium employs a wide range of good international practices of environmental governance – from policy evaluation to permitting, compliance monitoring and damage remediation. It has made progress on all relevant recommendations of the 2007 Environmental Performance Review (EPR). However, non-compliance with environmental law, albeit on the decline, remains an important issue.

Belgium’s regions – Flanders, Wallonia and the BCR – are responsible for most environmental policies. The federal government’s environment-related portfolio includes product regulation and marine protection, several energy, transport and fiscal matters, as well as co-ordination of Belgium’s international environmental policy. The regions delegate significant authority to provinces (in the Flemish and Walloon regions) and municipalities, which share responsibilities for land-use planning, permitting and environmental services.

Environmental governance systems in the three regions have many institutional and procedural differences. Planning and implementation in several domains with cross-border issues (e.g. river basin management) happen independently in each region. The dominance of EU directives in the regulatory framework of all jurisdictions partly compensates for the effects of regionalisation of environmental policy. There is evidence that the regions often proactively learn from each other’s policy initiatives. Several co-ordination mechanisms between the federal and regional governments, including committees and co-operation agreements, reduce disparities in the playing field for businesses. However, inter-regional co-ordination is less effective in some policy areas, such as climate change, water resources management, and waste management and circular economy (Sections 1.1 and 1.5).

Strategic environmental assessment (SEA) has been increasingly used over the last decade: it is implemented for all land-use plans, strategic plans and programmes with a potentially significant environmental impact. Many federal and regional strategic plans also undergo ex post evaluation to identify and address unforeseen adverse effects.

However, regulatory impact assessment (RIA) is mandatory only at the federal level. It is required to consider impacts on air quality, biodiversity, climate change mitigation and adaptation, mobility, energy and natural resources (EC, 2017a). The regions do not use RIA and have recently weakened formal mechanisms to evaluate sustainable development implications of draft regulations.

Environmental permitting is fully integrated with urban planning in Flanders and Wallonia and is closely linked to environmental impact assessment (EIA) in every region. Belgium has one of the highest shares of developed land among OECD member countries and land fragmentation has increased. Consequently, a strong connection between environmental and land-use law is important in integrating environmental aspects into spatial planning.

Regulatory requirements are diversified as a function of environmental risk: EIA is conducted on a case-by-case basis for medium-risk facilities; low-impact installations in the Walloon Region and the BCR only need to notify the municipal government and do not require a permit. This diversification helps reduce the administrative burden on regulated businesses.

Flanders and Wallonia have adopted general and sector-specific environmental conditions based on best available techniques – general binding rules – for all classes of installations (the BCR – for most classes), to serve as a foundation for environmental permits. This is a good international practice followed by an increasing number of OECD member countries, particularly for low-impact installations.

Compliance monitoring is increasingly planned based on systematic assessment of risk posed by individual installations. The number of inspections has been stable in the three regions over recent years despite resource constraints. The share of site visits detecting non-compliance declined in Flanders from 37% to 19% over 2013-17, but remains high in Wallonia at 35-40%. This indicates that additional efforts are needed to deter non-compliance. The efficiency of inspection work has increased in recent years due to the digitalisation of many procedures and better performance management. Outcome performance measurement would help the environmental enforcement authorities evaluate the impact of their activities on compliance behaviour.

In all three regions, administrative and criminal fines cannot be imposed for the same offence. Competent authorities can impose an “alternative” administrative fine if the public prosecutor has not opened a criminal case within a certain period after receiving the prosecution report. In the BCR, there are plans to make regulatory changes to allow the offender to pay an administrative fine to avoid prosecution. The vast majority of environmental offences are not prosecuted. Instead, they are punished by alternative administrative fines, whose rates are high by international standards. The Flemish Region also has “exclusive” administrative fines. They are imposed for mild breaches that do not warrant criminal prosecution. These directly applicable fines are a more flexible sanction. The use of administrative fines has recently increased, but their collection requires improvement.

All three regions have made progress in addressing the challenge of contaminated sites, with extensive programmes for registration and risk assessment of contaminated sites. Flanders and the BCR use different innovative tools to finance their remediation. The Flemish Region has among the lowest shares of public burden of environmental remediation in the European Union (van Liedekerke et al., 2014). Wallonia strengthened its legal provisions for soil remediation in 2018. However, it does not recover enough industrial site remediation costs from private responsible parties, which puts an unnecessary burden on the public budget.

Environmental authorities are paying increasing attention to promotion of compliance and green business practices. Various guidance documents have been published on websites of environmental authorities, including inspectorates. Flanders has been at the forefront of developing voluntary agreements between the regional government and other parties, including industry, local governments, non-governmental organisations (NGOs) and universities. The Green Deals initiative, running since 2017, has involved over 1 000 parties. However, governments use few incentives to promote environmental management system certification.

To expand the market for green products and services, the federal government and the regions have developed green public procurement initiatives. Both Flanders and Wallonia have set a target of 100% sustainable public procurement by 2020. However, this target will not be achieved, and progress is not adequately monitored.

Federal and regional authorities implement open government and open data policies, which largely determine the mechanisms for public participation and access to environmental information. Public participation is an integral part of the EIA, SEA and permitting processes. The public is extensively consulted on draft legislation, plans and programmes at all administrative levels. The public also has unfettered access to environmental information: federal and regional governments have established their own environmental information systems, including geoportals. They publish regular environmental and sustainable development reports. Information comparability across regions has improved with regard to spatial environmental data, but remains a challenge in several other areas. Access to justice on environmental matters is guaranteed, but court procedures can be long, and high litigation costs can be inhibitive to citizens (Paquet, Maréchal and Gerritsen, 2019).

The French-, Flemish- and German-speaking communities, which are responsible for education policies, collaborate closely with the regions in the field of environmental education in schools and universities. Regional governments actively support environmental awareness through outreach centres, dedicated events and volunteer activities.

Belgium performs well in many economic and well-being dimensions. However, the high level of public debt and population ageing, rising skill shortages and low productivity growth create vulnerabilities (OECD, 2020a). Economic growth was moderate but steady in the five years preceding the coronavirus outbreak. It was accompanied by strong employment growth. As of December 2020, it was expected that GDP would shrink by 7.5% in 2020, the sharpest contraction since the Second World War (OECD, 2020b). It would then slowly recover (+4.7% in 2021 and 2.7% in 2022). The public debt was anticipated to rise from 98% of GDP in 2019 to 116% in 2020 and the unemployment rate to grow from 5.4% to 5.7%.

Following the generalised lockdown in early 2020, the federal government introduced a fiscal package equal to 3.9% of GDP (OECD, 2020b). It consists mainly of deferrals of tax and social security payments, along with some direct income support measures that were effective in protecting jobs and businesses and in sustaining economic activity. The authorities made it possible to defer the repayment of credits and introduced a guarantee scheme for new credits and credit lines (which amounts to 10.7% of GDP). These measures, along with the European Central Bank’s accommodative monetary policy and prudential policy easing by the National Bank of Belgium, have supported aggregate demand. With the economy on a recovery path, some measures were phased out progressively in early autumn. However, the federal government reintroduced emergency measures following the tightening of containment measures in early November. The recovery will be temporarily disrupted and is expected to continue being hampered by potential restrictions imposed in response to sporadic outbreaks of the pandemic until vaccination against the virus becomes general in late 2021.

Belgium has a long-established, strong institutional set-up for sustainable development. In 2017, it developed a National Sustainable Strategy and presented the voluntary review of the implementation of the 2030 Agenda to the United Nations High-level Political Forum on Sustainable Development. However, inter-governmental co-operation on sustainable development has since stopped. The third federal plan on sustainable development, planned for adoption ten years ago, is still in preparation. There is room to improve policy coherence by improving co-ordination in energy and climate, transport and fiscal policies, and systematic assessment of the impact of regulations on sustainable development.

As the COVID-19 emergency passes, recovery efforts should focus on putting the country back on track to meet the SDGs. Despite progress in decoupling environmental pressures from economic growth, the depletion of natural capital is putting well-being’s sustainability at risk. The new federal government has to co-ordinate with the regions to draw up a recovery plan to benefit from the "Next Generation EU" resources (more than EUR 5 billion allocated to the country). At least 37% of the plan’s expenditure should contribute to climate objectives (EC, 2020d). Investing in low-carbon and natural infrastructure, promoting innovation and circular economy, strengthening carbon prices and phasing out environmentally harmful subsidies should be key components of the package to accelerate the green transition. The federal and regional governments do not have a green growth strategy, but have taken steps to promote a green and inclusive economy through the 2018 National Pact for Strategic Investment and the NECP. Tracking progress in low-carbon investment would be useful for setting priorities of the recovery plan. While the Flemish government announced a EUR 4.3 billion recovery plan focusing on sustainable economy and digitalisation, a co-ordinated plan between the federal and regional governments would have higher economic multiplier effect and climate impact. A wealth of regional initiatives promote investment, innovation and employment in energy efficiency, green chemistry and circular economy. Improving synergies in these fields will be essential in pursuing a green recovery.

There is scope to make the tax system more growth- and environmentally-friendly as recommended in previous EPRs and Economic Surveys. Belgium’s tax-to-GDP ratio remains one of the highest in the OECD. Despite a recent reform, the tax structure is skewed towards labour, which penalises growth and employment. The less distortive environmentally related taxes account for a small part of revenue (equal to 2.2% of GDP in 2018 vs. 2.3% in the OECD Europe average). Belgium aligned diesel and petrol taxes in 2019. This is notable progress as diesel has higher carbon content than petrol and diesel engines generally generate higher local air pollution cost. Only three OECD member countries apply equal tax rates. However, taxes on energy products do not fully reflect environmental costs of energy use. Effective tax rates3 on carbon dioxide (CO2) emissions from energy use are low, especially in non-road sectors (Figure 2).

Support to fossil fuel consumption was equal to 40% of energy tax revenue in 2018, among the highest rates in the OECD.4 It is mostly made up of tax preferences for the use of oil products, in particular lower taxation of heating oil and partial refund of excise duty on diesel for commercial use. These tax preferences narrow the tax base and undermine carbon prices. Support to fossil fuel consumption rose significantly in the past decade as forgone revenue from tax concessions increased with taxes on diesel. Belgium has not reported progress towards phasing out fossil fuel subsidies in its NECP as required by EU regulation. The National Debate on Carbon Pricing has identified options to implement a carbon price in non-ETS sectors and should be followed up. A multi-stakeholders’ mechanism to track and support the reform of environmentally related taxes and subsidies, as recommended in the 2007 EPR, would be helpful.

It is estimated that 14% of Belgian households face challenges in affording energy, although there is no national indicator on energy poverty (KBF, 2020). Belgium has introduced measures to support vulnerable households: reduced tax rates on heating oil, as well as social tariffs for electricity and natural gas. These measures often fail to target the most in need, distort prices, fail to encourage people to save energy, and reduce investment capacity in infrastructure (Court of Audit, 2018; Brugel, 2020). Providing direct support to vulnerable households, decoupled from energy consumption, would better address environmental and equity issues.

GHG emissions from road transport increased over 2013-18 due to the growing number of vehicles and the longer distances travelled (FPB, 2020). High congestion, especially in the Brussels and Antwerp agglomerations at peak periods, is a serious brake to productivity. Moreover, air pollution from vehicles poses significant health risks. Belgium has made some progress in developing transport pricing and taxation to help internalise the environmental costs as recommended in the 2007 EPR. The federal government aligned diesel and petrol taxes, while regions introduced environmental components in vehicle taxes and distance charges for trucks. This has helped reduce the share of diesel in the fleet and the reported average air pollutant emissions of new vehicles. Differentiating the distance charge by space and time for trucks, along with expanding the system to light duty vehicles and cars, would provide substantial gains in time and environmental benefits. Removing the favourable tax treatment of company cars, which is costly and particularly benefits high-income men, would also help internalise environmental and congestion costs of road transport. The new federal government has committed for a full decarbonisation of the company car fleet by 2026. However, favourable company car taxation would continue to contribute to car use, congestion and non-exhaust air emissions (e.g. from tyres and brakes).

In 2018, public expenditures on waste (0.4% of GDP) and wastewater management (0.1% of GDP) were in line with the EU averages, while spending for the protection of biodiversity was lower (less than 0.1%). Public investment in waste and wastewater management is mostly carried out by municipalities. Over the past decade, waste investment has varied with additional incineration capacity in Wallonia and the development of separate collection in the three regions, while investment in wastewater treatment has been stable. Industrial investment for environmental protection, in particular emission abatement and wastewater treatment, has increased significantly since 2011 due to stricter EU emission and effluent standards.

Investment needs in sustainable energy and mobility are estimated at almost 2% of 2018 GDP annually over the next decade. The 2018 National Pact for Strategic Investment that aims at boosting productivity and innovation includes energy and mobility among its six priorities5 (Strategic Committee, 2018a). The commitment to phase out nuclear energy by 2025 requires major investment in power generation, cross-border interconnections, smart grids, storage and demand response. Continuous discussions over the possible extension of a limited number of nuclear power plants and unambitious renewable targets for 2030 is creating uncertainty (EC, 2020e). Belgium has made significant progress in developing renewables thanks to generous green certificate systems and decreasing technology costs. It is a world leader in terms of residential solar photovoltaic (PV) capacity installations per capita (IEA, 2019). However, this came at high costs with significant impact on electricity prices. Support levels have been reduced (subsidies have stopped for small solar PV except in BCR). There is still room to make regional renewable energy policies more cost-effective by gradually integrating renewables into the electricity market (IEA, 2016). The Marine Spatial Plan recently established new zones for offshore windfarms that will be subject to tendering at federal level. Additional efforts are also needed to reduce administrative barriers and promote renewable heat and transport fuels.

Moving towards decarbonisation of buildings by 2050 demands large renovation works. The housing stock is old and among the least efficient in Europe (BPIE, 2017). Regions have developed long-term renovation strategies and implemented a wide range of measures to promote energy-efficient buildings. These include energy performance standards, tax incentives and subsidies for renovation, as well as information tools. Despite positive outcomes, additional measures are needed to raise the renovation rate of public buildings from less than 1% to the required 3% and reach the long-term targets. Governments envisage developing private funding via energy service contracts, crowdfunding and EU funds. The federal government is considering extending the reduced valued-added tax rate applied to old building renovation to demolition and reconstruction (already in place in some cities). In addition to revenue loss and equity concerns, however, such a measure could increase construction waste and energy use from production and transport of construction materials. Making property taxes and rental income tax reductions conditional upon energy efficiency improvement could encourage investment. Low natural gas and oil heating prices do not provide sufficient incentives for renovation projects. Gradual introduction of carbon pricing would be more cost-effective in triggering energy efficiency investment.

Reducing congestion involves developing integrated infrastructures to improve access to Brussels and Antwerp, shifting from roads to rail and active modes. Since 2010, investment in transport has hovered around 0.45% of GDP – a low rate by international standards – and has shifted from rail to road. Despite dense road and rail networks, infrastructure is not sufficient to meet the growing demand for transport. Wallonia and BCR have adopted long-term mobility plans and investment plans focusing on public transport and soft mobility (especially in BCR). However, the Executive Committee of Mobility Ministers has not managed to co-ordinate a consistent vision across the federated entities as recommended in the 2007 EPR. There is a need to strengthen the committee’s role and evaluation capacity as cost-benefit analysis of infrastructure projects is ad hoc; public entities at different levels apply their own practices (Strategic Committee, 2018b). Improving transport demand management will require co-operation on road charges and the removal of incentives for car use. Increased revenue could help fund low-carbon transport infrastructure.

Belgium is a strong innovator. It has a highly skilled workforce, an attractive research system with a strong science base, strong universities and good public-private collaboration. By contrast, the country’s eco-innovation performance is modest. Government R&D budget on environment decreased in the past decade. Public budget on energy-related research, development and demonstration per unit of GDP is among the ten highest in the IEA due to the high share of budget spent on nuclear power and, to a lower extent, on energy efficiency. Renewable energy sources account for a low share of spending, which has decreased in recent years. The decrease in public R&D support is reflected in patent applications for environment-related technology. After a sharp increase over 2005-09, applications decreased more rapidly than in other OECD member countries. Nevertheless, Belgium has developed a specialisation in waste management technology and has maintained a relative advantage in water-related adaptation technologies. The country is not specialised in climate change mitigation technologies despite a relative advantage in specific technology in the production or processing of goods.

At regional level, there is a wealth of initiatives focusing on energy efficiency, green chemistry and circular economy. These include the BCR Innovation Plan 2016-20, Circular Flanders, the Flanders industry innovation Moonshot and the Walloon GreenWin cluster. However, regional best practices are not disseminated at national level, and co-operation in this area is not a priority (EC, 2017b). Other barriers to eco-innovation are low carbon prices, skills shortage, lower than expected uptake of green public procurement, limited control over the design of imported products and insufficient market for recycled products.

The environmental goods and services sector is small, although its share in total value added (1.2%) was on par with the EU average in 2017. Waste and energy resource management (production of renewable energy and energy-saving measures) dominate the sector. Although all regions provide subsidies to develop employment in social enterprises active in the circular economy,6 there seems to be room for development compared with other EU countries.

Belgium has a remarkable diversity of species despite its small size. This biodiversity brings many benefits to society – around EUR 1 billion for the Natura 2000 network in Flanders alone. However, a significant number of species are threatened and the situation has deteriorated over the past decade. The proportion of habitats of Community interest in a favourable state of conservation is low. Land take, landscape fragmentation and intensive agriculture are among the main causes of biodiversity loss.

Nature conservation in Belgium is under the responsibility of the three regions with the exception of two exclusive federal competencies: the import, export and transit of non-native plant species, as well as non-native animal species and their remains, and nature conservation at the North Sea. The Inter-ministerial Conference for the Environment, composed of the competent ministers of the federal government and the three regions, approves the updating of the National Biodiversity Strategy (NBS).

Belgium will have to align its NBS and regional biodiversity policies with the ambitions of the new EU Biodiversity Strategy for 2030. The NBS could usefully provide a framework to assess and highlight the costs and benefits for society of halting biodiversity loss and fostering synergies of biodiversity policy with other environmental, land and sectoral policies.

The status of habitats and species is of concern (Figure 3). More than 33% of freshwater fish species, nearly 30% of bird species and more than 20% of vascular plant and mammal species are threatened. Common farmland bird populations have halved since 2000, the worst trend in the OECD area. Pesticide sales and the nitrogen balance per hectare are among the highest in the OECD. Forest bird populations have declined by almost 20% since 2000, which is also the worst trend in the OECD area. About 30% of the Belgian part of the North Sea does not reach the target of good environmental status set for 2020 by the EU Marine Strategy Framework Directive, especially the coastal waters.

Yet Belgium was among the first countries to implement sea-use planning. Its significant efforts to create new marine protected areas go beyond the target of 30% of the new EU Biodiversity Strategy for 2030. However, their level of protection, as measured by International Union for Conservation of Nature standards, raises questions. Belgium could assess the risk of eutrophication and litter pollution of coastal waters, as it did for pollution by oil and hazardous and noxious substances.

In the regions, the coverage of terrestrial protected areas almost meets the Aichi target of 17% for 2020. However, only 1% of Wallonia and 2% of BCR and Flanders are strictly protected. This is far from the 10% target of the EU Biodiversity Strategy for 2030. Only 74% of the Flemish Ecological Network and 4% of the supplementary network of nesting areas and connecting areas have been demarcated, far behind the initial goal of completion (2003). The Walloon “Main Ecological Structure” includes development zones where nature protection is not the priority; Wallonia is seeking to have a functional ecological network with legal status. There is no quantified target for the extent of the Brussels Ecological Network. Flanders has recently introduced a performance-based incentive system for areas under nature management, which is a step in the right direction.

Belgium has made progress in developing tools to assess nature-based solutions defined as measures that protect, sustainably manage or restore nature, with goal of maintaining or enhancing ecosystem services to address a variety of social, environmental and economic challenges (OECD, 2020c). It should use these tools in the economic valuation of biodiversity. This would pave the way for payments for ecosystem and welfare services to finance biodiversity in a cost-effective manner. To date, the main instruments of biodiversity policy have been direct environmental regulation and public financial support. Belgium has made little use of pricing instruments (taxes, tradable permit systems) and payments for ecosystem services. Its efforts to develop information measures and voluntary schemes are commendable.

The confinement linked to the COVID-19 crisis recalled the importance of access to nature for the well-being of the population. BCR aims to provide all residents with green space within 200 metres of their home by 2020 (an ambitious objective not yet assessed). It also intends to maintain the 50% share of undeveloped land by 2040, a good performance compared to the main cities of the European Union. Wallonia aims to provide its city dwellers with green spaces within a quarter of an hour's walk. Belgium could introduce a tax to finance urban green spaces, imposed either on residents (as in Yokohama, Japan) or on building permits (as in France).

Pressures from urbanisation and land fragmentation have increased. Belgium has one of the highest shares of built-up areas in the OECD. Between 2012 and 2018, the land take rate was higher than in most European countries despite progress in re-cultivation of urban areas to semi-natural land. Each region has its own spatial planning policy. Flanders has adopted a target of no land take by 2040, ahead of the EU target for 2050. The objective of land consolidation has gradually widened from the structural adjustment of agriculture to rural development. A new land development law in 2014 facilitates access to land acquisition and management tools. This includes biodiversity management contracts with the Flemish Land Agency that usefully complement the protection of biodiversity on land outside the network of protected areas. In Wallonia, the artificialisation of land continues, although at a decreasing rate. Since 2005, any new area intended for urbanisation having an impact on nature must be compensated in land-use planning. Municipal nature development plans, currently voluntary, could be an integral part of the development of a functional ecological network with legal status. In BCR, the principle of reasoned densification provides for the creation of new "quality districts" offering housing, public facilities, activities and green spaces. Creating new green spaces in the city centre, as foreseen by the Regional Plan for Sustainable Development, can be extremely expensive and difficult. Consequently, BCR should prioritise management of nature on the undeveloped land for which the Regional Land-Use Plan provides legal protection for biodiversity.

Belgium has adopted a national approach to implement the EU Directive on sustainable use of pesticides. It is one of the few EU countries to have set risk reduction targets for pesticides. Direct regulation, in particular for public spaces, sources of drinking water and home gardens, is the main instrument of the pesticide policy. In 2015, Wallonia introduced a tax on livestock effluents, fertilisers and pesticides for the agricultural sector. Instead of being based on the use of pesticides, the tax should reflect the risks of pesticides to health and the environment, as in Denmark. The principle of risk-based taxation of pesticides could be introduced into the Belgian pollinator strategy under development.

There is a big contrast between Flanders and Wallonia in the implementation of the Rural Development Programme (RDP) of the EU's Common Agricultural Policy (CAP). Wallonia aims to put 20% of the utilised agricultural area under biodiversity management contract, whereas Flanders has a goal of only 2%. The vast majority of the organic farming area in Belgium (92%) is in Wallonia with the remainder in Flanders. The design of the CAP allows a large choice of agricultural practices via a combination of direct regulation and financial support (direct payments). Belgium should carefully identify agricultural practices beneficial for biodiversity, including as co-benefits for practices targeting other environmental objectives such as water quality, air quality, soil quality or mitigation of GHGs.

Flanders and Wallonia are reporting positive steps in applying the risk approach to manure policy. Flanders has gradually strengthened its farm nutrient management policy. First, it introduced a system of tradable nutrient emission rights. Second, it targeted farms with the highest risk of nutrient loss. More recently, it differentiated watersheds according to their difficulty in achieving the objective of the EU Water Framework Directive. Wallonia has chosen to delimit 60% of its farmland as an area vulnerable to nitrates. Flanders plans to regulate ammonia emissions based on the risk of deposits on protected areas.

The RDP supports afforestation and reforestation to promote mixed forests compatible with the Natura 2000 objectives, as well as agroforestry. Exemption from property tax, inheritance and gift tax also encourages the protection of forest biodiversity. Flemish climate policy foresees 10 000 ha of additional forest by 2030 (in addition to Flanders' 140 000 ha) to implement the EU "no debit rule" for the land use, land-use change and forestry (LULUCF) sector. In Flanders, contributions to a Compensatory Afforestation Fund (CAF) implement the principle of no net deforestation. The contribution to CAF should be based on the market value of the land (and not just the quality of the forest) to be deforested so that offset planting can be done on similar land types. Only 37% of private Flemish forests and 4% of private Walloon forests are managed by forest groups whose creation is supported by federal law to create economies of scale and promote sustainable forest management.

A good way to finance biodiversity is to remunerate the service of carbon sequestration by ecosystems. Three levers can increase GHG removals from the LULUCF sector, all of which can have co-benefits for biodiversity: carbon stocks in forests, agricultural practices and sustainably produced biomass. However, LULUCF's GHG removals have been divided by three since 1990. CAP support to agri-environmental and climate measures and organic farming, in addition to the greening and cross-compliance requirements, is expected to reverse the trend by 2030 (Belgian State, 2016). For that, the Belgian NECP should quantify the removals required for each LULUCF component (forests, harvested wood products, grassland, wetlands, cropland, soil carbon stocks), and the measures to achieve it.

Administrative measures and public procurement policy at the federal level have tightened controls on illegal timber imports. However, the lack of co-operation agreement between federal and regional authorities relating to trade in exotic animals and plants hampers the effective implementation of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). This and the lack of transparency on global commodity supply chains increase the risk of deforestation and contact between wildlife and humans in the tropics, which heightens the risk of a pandemic. Convergence between federal and regional policies is necessary on these issues, as is the case for preventing the introduction and managing the spread of invasive alien species which was the subject of a co-operation agreement in 2019 between the federal level, the regions and the communities.

Belgium’s economy is service-oriented, largely dependent on trade; material productivity7 is high. Material consumption8 per capita is below the OECD Europe average (although not in terms of the economy’s “footprint”, taking account of materials extracted and processed abroad to meet final demand). Over the past decade, domestic material consumption has fallen, while GDP has increased (Figure 4). This has resulted in improved material productivity; a decline in consumption of construction materials has been a key factor.

Belgium is one of the few countries to have achieved an absolute decoupling of municipal waste generation from economic and population growth over the past decade. Total waste generation on the other hand, increased by 10% between 2010 and 2018; construction and demolition waste (including excavated soils), the main component of total waste generated, increased by 34%. Municipal waste generation per capita is lower than the OECD Europe average (though Belgium counts a comparatively low share of service sector waste in this category).

Since 2007, the low share of municipal waste sent to landfill has fallen further, due in part to landfill taxes introduced in the Wallonia region. Incineration is the leading method for municipal waste treatment, although Belgium is also close to OECD frontrunners for recycling and composting. Recycling has increased slightly overall, especially in the BCR. Belgium as a whole appears to have met the EU’s 2020 target for recycling household and municipal waste, though recycling levels vary across the regions. Responding to the COVID-19 pandemic, regions have taken measures to minimise potential health impact of increased medical waste. These temporary measures reduced separate collection and recycling and may affect results for 2020.

Belgium’s regions are responsible for waste policies. They have used largely effective mixes of policy instruments, including separate collection for an increasing number of waste streams, landfill bans, landfill and incineration taxes, and public awareness initiatives. In Wallonia, for example, incineration taxes have shifted incineration to energy recovery. Across the three regions, however, incineration taxes have not provided sufficient incentives to further boost recycling. Belgium, and in particular the BCR and Walloon regions, will need to further develop their policy mixes to meet EU and domestic goals beyond 2020.

Recycling is supported by extended producer responsibility schemes: these cover a broad range of waste streams, going beyond those required by the EU to include used tyres and minerals oils. All three regions have take-back schemes for pharmaceuticals. While the producer responsibility organisations are largely national, most of these schemes are managed at regional level: this structure allows regions to adjust schemes to their specific contexts, but it creates a challenge for governance. One exception is packaging, where a co-operation agreement has defined a common approach. Belgium’s extended producer responsibility schemes have largely met their targets, both nationally and within each region; for end-of-life vehicles. However, unauthorised dismantling outside the scheme remains an important challenge. This is an EU-wide issue, although Belgium can look to good practices in other member states to identify opportunities for stronger policy action.

The three regions have set targets to minimise and reuse waste. Flanders met its 2007 target to reduce residual waste and has set more stringent targets for coming years. Wallonia met its 2010 target to reduce household and similar waste (not including inert, bulky and yard waste fractions) but did not achieve an ambitious 2010 target to reduce household and similar waste including these fractions. Wallonia appears on track to meet a less stringent 2025 target for the latter category. Flanders has made good progress towards its post-2020 targets for greater reuse of municipal waste. BCR and Wallonia’s 2018 waste and resources plans calls for setting reuse targets for key waste streams.

Belgian households spend less on waste management than most other OECD Europe countries. On the other hand, public expenditures (specifically, government current and capital transfers for waste management) are high compared to these countries. A large share of investment for waste management comes from specialised producers; among these, most treatment facilities for municipal waste are owned by public, inter-municipal organisations. The Flanders Region has already considered prospects for reducing incineration capacity to match an expected fall in demand as municipal waste generation falls and recycling increases; BCR and Wallonia are studying future incineration needs. Policy goals to reduce waste incineration (thus closing some capacity) will support EU, national and regional goals to cut carbon emissions.

All three regions have established comprehensive approaches to identify, map and investigate potentially contaminated sites and to plan their remediation. They have made good progress in site clean-up. Flanders, moreover, plans to remove all asbestos with a significant impact on human health in buildings by 2040.

While Belgium has strengthened enforcement of waste shipments via road, insufficient inspection of illegal waste exports from Belgium’s ports remains a concern. Most illegal exports that are discovered originate in neighbouring EU member states; in some cases, bilateral co-ordination has been poor.

The BCR and Flanders regions have been pioneers for their initiatives for the transition to a circular economy; Wallonia has undertaken a series of circular economy actions and an ambitious regional strategy was in preparation in 2020. All three regions have combined their waste and resources policies. Moreover, they have linked their circular economy initiatives with economic and industrial strategies. The federal government has promoted circular initiatives in product policy.

Across Belgium, governments have worked with enterprises and civil society to raise awareness, build capacity and build partnerships for the circular economy: these have been central elements, for example, of the Circular Flanders Programme and of the “Be Circular” Programme in the BCR. The regions and the federal government have promoted circular purchasing approaches in both government bodies and private organisations. Belgium recycles a high share of its construction and demolition waste; however, the bulk of recycled material goes to lower value products such as aggregate. Regional initiatives support greater reuse and higher value recycling, although results in terms of overall waste indicators are not yet fully apparent. The regions have tackled food loss and food waste by increasing separate collection and through initiatives such as the Brussels Good Food Strategy and the Walloon REGAL Plan. As part of their waste and circular economy initiatives, the regions have involved social enterprises in key areas. In Wallonia, for example, these groups have helped redistribute unsold food, as well as refurbished used furniture and electronic and electrical equipment.

Belgium nonetheless needs to undertake significant work to turn these initiatives into stronger results in areas from construction waste to food waste, and to ensure material consumption and material and carbon footprints are reduced. Moreover, new initiatives can support the European Commission’s new Circular Economy Action Plan, including in product policy areas such as establishing a right to repair and countering product obsolescence. The federal government that took office in October 2020 has proposed to develop, together with the regions, a national action plan for the circular economy.

Across all three regions, circular economy policies have relied on financing mechanisms and voluntary agreements with industry and other stakeholders. They have given less attention to fiscal instruments. Belgium can also go further in the use of government purchasing to foster circular products and solutions.

The regions and an intra-Belgian platform have explored indicators to measure progress in the transition to the circular economy. Flanders, for example, has developed circularity indicators for final consumption sectors. Belgium has made good progress in implementing the OECD Council’s 2004 Recommendation on Material Flows and Resource Productivity and the 2008 Recommendation on Resource Productivity. Key areas for this progress include the analysis of material flows, as well as policies for the circular economy.

Belgium’s three regions are responsible for waste management policy and also lead on most areas of circular economy policies. Nonetheless, Belgium is a small, open economy, with movements of municipal, hazardous and other waste streams among its regions and across its national borders. The regions have improved their bilateral and national co-ordination in areas including data harmonisation, extended producer responsibility management and waste shipment tracking. Nonetheless, differences persist in regional legislation, in data collection methodologies and in policy results, increasing costs. The federal government and the three regions have strengthened co-ordination and information exchange on circular economy policies in recent years, including via the creation of a joint platform; further efforts in this area can improve the effectiveness of circular economy actions and overall results for Belgium.

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Notes

← 1. If Belgium uses the flexibility mechanisms provided in the Effort Sharing Decision (2013-2020) and the Effort Sharing Regulation (2021-2030). Under the Effort Sharing Decision member states are allowed certain flexibility in meeting their annual emission allocations (AEA): i) overachievement in a given year can be carried over to subsequent years, up to 2020; ii) an emission allocation of up to 5% during 2013-19 may be carried forward from the following year; iii) during 2013-19, member states may transfer (for instance, by selling) part of their AEA for a given year to other member states under certain conditions. The Effort Sharing Regulation allows nine member states the choice to use a limited amount of ETS allowances for offsetting emissions in the effort sharing sectors in 2021 to 2030. This concerns member states that have national reduction targets significantly above both the EU average and their cost-effective reduction potential or that did not allocate any EU ETS allowances for free to industrial installations in 2013. The member states with this option are Austria, Belgium, Denmark, Finland, Ireland, Luxembourg, Malta, the Netherlands and Sweden.

← 2. With more than 50 000 inhabitants. Apart from the measured concentrations, Belgium also reported exceedances of the annual limit value assessed using models.

← 3. Effective tax rates on energy use translate excise and carbon tax rates into rates per tonne of CO2.

← 4. Data need to be interpreted with caution because fossil fuel subsidy data may be partial and because data record tax expenditure as an estimate of revenue that is foregone due to a particular feature of the tax system that reduces or postpones tax relative to a jurisdiction's benchmark tax system, to the benefit of fossil fuels. Hence, tax expenditure estimates could increase due either to greater concessions, relative to the benchmark treatment, or to a raise in the benchmark itself. It is important to note that definitions of tax expenditure, and the benchmarks used to estimate the size of the expenditure, are nationally determined and may hamper international comparisons.

← 5. Along with digital transition, cyber security, education and health.

← 6. Recycling, repair and reuse (including preparation for reuse), rental and leasing.

← 7. Material productivity designates the amount of GDP generated per unit of materials used (GDP/DMC). A rise in material productivity is equivalent to a decline in material intensity (DMC/GDP).

← 8. Domestic material consumption (DMC) refers to the amount of materials directly used in an economy, or the apparent consumption of materials. DMC is computed as domestic extraction used plus imports (i.e. material inputs) minus exports.

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