Flemish industry misses out on hundreds of millions in climate funds every year

Every year, Flemish industry misses out on hundreds of millions of euros that could be used in the industrial transition. A new study commissioned by Voka, Port of Antwerp-Bruges and North Sea Port provides strong arguments as to why Flemish industry deserves more.

Belgium currently receives too small a share of the European ETS climate funds. Within Belgium's share, Flanders receives an even smaller share. On top of that, only part of the funds within Flanders is spent on industry. The new study by Ortelius (Econopolis Group) shows that our Flemish industry will lose between 450 and 700 million euros annually in the long term. Our negotiators must now pull out all the stops, because next year the ETS system will be renegotiated at European level. Adjustments are also needed within Belgium and Flanders.

The energy-intensive basic industry in Flanders is no longer competitive, mainly due to high energy costs. As a result, capacity is underutilised, investments are not being made, production is shifting abroad and added value is declining. Added to this are the huge investments in the billions needed to achieve net zero greenhouse gas emissions, which the European Union has imposed by 2050. The considerable pressure on the industrial fabric should be a cause for concern, as the Flemish economy is heavily dependent on basic industry. This industry is at the beginning of a value chain of companies, including hundreds of Flemish SMEs in the manufacturing and service sectors.

The billions invested in the climate transition can be partly financed by a fairer return of ETS1 revenues, i.e. the funds collected at European level from the sale of emission allowances to industry. Today, this is not the case for our Flemish industry, either at European, inter-federal or Flemish level.

ETS1 funds should only be used for the transition of ETS1 sectors. In 2025, Flanders will have 298 million euros in ETS1 funds at its disposal, but in the period 2013-2023, only a third of this flowed back to Flemish industry. The rest is being scattered across climate projects outside industry.

"Industry pays many millions for the purchase of emission rights. It is therefore logical that the proceeds from this should be used entirely to make that same industry climate neutral. If we continue to use the funds in a fragmented way, we will not achieve sufficient results in the fight against global warming. The Flemish government must take responsibility for this," Hans Maertens continues.

First and foremost, Belgium currently receives too small a share of ETS funds. The European distribution key from 2005, on the basis of which the money flows back to the Member States, is outdated. Belgium's share of emissions within the EU was 3.4% in 2024, but Belgium only receives 2.6% of the ETS1 auction proceeds. Furthermore, unlike other European Member States, Belgium no longer had any polluting coal-fired power stations when the ETS distribution key was calculated in 2005. Renegotiating Belgium's ETS share could add an extra 134 million euros to Flanders' ETS1 revenues.

The ETS system will be reviewed next year. In order for renegotiation at European level to be successful, it makes sense for countries facing similar challenges to form alliances. For our country, there is currently more strategic potential in forging closer ties with Member States in northern Europe – countries with a similar industrial structure and the same strategic interests.

Finally, Flanders receives too small a share of Belgian ETS1 funds. Flemish industry accounts for 76% of Belgian ETS emissions, but receives only 53% of the funds. An intra-Belgian renegotiation could yield an additional 206 million euros that could be used for the industrial climate transition. This intra-Belgian “burden sharing” will be reviewed this year.

The European and intra-Belgian fair share renegotiations could therefore double the ETS1 funds for the benefit of the industrial climate transition in Flanders: from 298 million euros to 750 million euros per year. This amount could even rise to more than 1 billion euros per year: due to the phasing out of free emission allowances, ETS1 revenues will soon increase further. These additional funds could also flow back to the Member States.

Because of their location and the clustering of industrial companies, ports are in a good spot to be the driving force behind the climate transition, especially with the cost-competitive technology of carbon capture and storage (CCS). The construction of CCS infrastructure in Flemish ports forms the basis of a network of CO2 pipelines across Belgium. CCS infrastructure starts in Flemish ports, but the business case only becomes interesting if energy-intensive industries in Wallonia and later also in the Netherlands and the Ruhr area can connect to it.

Thanks to the 2,000 companies located there, the ports of Antwerp-Bruges and North Sea Port generate added value of 33.5 billion euros and provide 270,000 jobs. However, the strongly anchored industrial ecosystem, with ETS-regulated activities such as steel, chemicals and energy, is associated with annual CO2 emissions of approximately 35 to 40 million tonnes. These emissions must be reduced in a cost-efficient manner in the coming years in order to remain both sustainable and competitive within a rapidly evolving industrial landscape.

"The ARRRA cluster — the Antwerp-Rotterdam-Rhine-Ruhr industrial axis — is one of Europe's strongest industrial ecosystems. This study clearly shows where structural adjustments are needed to anchor this strategic network and prepare it for a sustainable future. We are providing policymakers with concrete recommendations for further constructive cooperation," says Jacques Vandermeiren, CEO of Port of Antwerp-Bruges.

In addition to focusing on the necessary infrastructure for CO2, timely work must also be done on the infrastructure for hydrogen. CO2 infrastructure does deserve priority today, based on the current advanced CCS projects. As market demand expands, hydrogen networks can be expanded.

"Ports have a good overview of market demand and can signal when public intervention or expansion is needed. Simultaneous research into the roll-out of CO2 and hydrogen networks can even be cost-efficient in this regard," says Maarten den Dekker, Chief Sustainability and Digital Officer at North Sea Port.

The study was conducted by Ortelius, the economic advisory arm of the Econopolis Group. The study was commissioned by Voka National and the Voka Chambers of Commerce of Antwerp-Waasland, East Flanders and West Flanders, Port of Antwerp-Bruges and North Sea Port, in collaboration with BASF Antwerp and Smart Delta Resources Flanders.