Electricity prices penalize Belgian industrialists more than their neighbors

For Febeliec, Belgium has a double competitive disadvantage. Taxes and network costs are the main burdens on manufacturers’ bills. The federal government is waiting for the implementation of the energy standard.

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LBelgian industry currently faces a double competitive disadvantage in terms of energy prices. In fact, like the rest of Europe, it is suffering the effects of the war in Ukraine and sanctions on Russia on the price of natural gas – to which the price of electricity is linked. But even large Belgian electricity consumers have to deal with electricity prices that are 19 to 25% above the average in central and western Europe, according to a study by consultancy Deloitte on behalf of Febeliec, which represents industrial electricity consumers and natural gas.

In 2022, Belgian “base load” consumers (i.e. with constant electricity consumption throughout the day, a majority profile among Febeliec members) paid between a fifth and a quarter more for their purchased electricity than the average price paid by consumers in Mittel – and Western Europe was paid. according to the 10th edition of this annual comparative study. The phenomenon is more advanced in Wallonia (where the price is 20-25% higher) than in Flanders (where the price is 19-20% higher). On an annual basis, the handicap can therefore reach 2.94 million euros in Flanders and 3.81 million in Wallonia for a company consuming 100 GWh per year. And come to almost 26 million euros in the north of the country and 28 million euros in the south when it comes to profiles that reach 1,000 GWh annual electricity consumption.

Structural Disability

Prices have also increased exponentially in all European countries over the past year, and even more so since the beginning of the war in Ukraine. Only France performs well thanks to its Arenh mechanism, which allows electricity from nuclear power plants to be reserved at a competitive price for producers. Electricity taxes have continued to rise slightly and transmission grid tariffs have remained significantly higher than in neighboring countries (France, Germany and the Netherlands), notes Febeliec.

Belgium thus has a “huge” competitive disadvantage compared to its competitors in neighboring countries, but also significantly lower energy prices in large parts of the world, such as North and South America, Russia, Africa or even Australia. “Such a structural handicap seriously endangers industrial activity in Europe and Belgium,” warns Febeliec. This could result in the latter missing out on important investments – and jobs – particularly from the big industrial groups operating in Belgium.

lack of actions

The association has been sounding the alarm for several years. And “remains perplexed by the inaction of our various governments”, according to its President Luc Sterckx, while “it is clear that many decisions could be taken immediately” to remedy this situation and respond to “urgent and explicit” requests.

Febeliec welcomes the introduction of the energy standard at the federal level. This concept, which she has been talking about for ten years, requires the country’s four regulatory authorities (Creg, Cwape, Brugel and Vreg) to carry out a comparative study and propose measures to the government to take if there is a handicap for the Belgian industry reference to neighboring countries should be emphasised. However, the association insists on the urgency of implementation. “But this standard will not solve all problems. It’s a start,” commented Peter Claes, director of Febeliec.

“We lift our feet”

For this reason, the organization calls on the European, federal or regional authorities to take measures to restore the competitiveness of European and Belgian industry. According to her, these include a “rapid and drastic” reduction in all taxes and duties on electricity consumption, a “rapid” reduction in transmission tariffs for “base load” consumers and a “comprehensive” diversification of natural gas supply sources. She also recommends reviewing the functioning of the electricity, gas and carbon markets, developing local energy sources in Europe and introducing effective measures to support industry suffering from the impact of high energy prices.

In view of the excessively high energy prices, there is a great risk that manufacturers will reduce or even stop their activities in Europe and even more so in Belgium. Like the German chemical group BASF, which cut back its ammonia production in Antwerp last September because of the high gas price. The same applies to Inovyn, a chemical group, a subsidiary of Ineos, which is mainly active in PVC production and has sites in Jemeppe-sur-Sambre (province of Namur) and in the port of Antwerp. “We already modulate our electricity consumption according to its price. Sometimes we have to slow down. Therefore, we do not use 100% of our production capacity,” explains Philippe Taranti, operations manager for Belgium. “Not being competitive will sooner or later mean the end of the industry,” concludes Luc Sterckx with concern.

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