Legislation News September 2026

The Flemish and Belgian governments are amending non-commodity costs

Both the Flemish and federal Belgian governments announced new measures over the past quarter aimed at reshaping the non-commodity costs. A preliminary draft of the Flemish Government has set out the broad outlines of a tax shift moving certain costs off electricity tariffs and onto gas. This shift consists of three parts The first shift relocates the WKC quota requirement from electricity to fossil fuel tariffs, with a degressive mechanism built in for large consumers and a distinction between industrial and non-residential users. The second shift concerns the REG-ODV costs, which will be partly transferred from the Flemish Government’s budget to the gas bill (for users consuming less than 1 GWh) and be partly offset by the third shift. The funds freed up within the Flemish Government’s budget will be used to reduce the GSC quota obligation. The contribution to the energy fund will be transferred from electricity to gas in the third shift. This will be replaced by a fixed charge based on the gas connection flow level per grid connection.

At a federal level, CREG is moving to lower the transmission grid tariffs for large-scale consumers with stable or anticyclic consumption profiles, giving them some breathing space on their electricity bills. The resulting loss of revenue for the grid operator Elia will be redistributed across other users, who will see their own grid costs climb in turn. To partially cushion this raise, the federal government is stepping in with a reduction in excise duty on electricity. Of the €944 million earmarked for energy cost cuts on a federal level, 55% will go toward this measure, while the remaining 45% flows to the regions, with Flanders already planning to use its share to extend the compensation for indirect emissions.

Flanders tightens rules on green power subsidies during negative price hours

The Flemish Government has given final approval to a decree sharpening the rules on when green power certificates (GSC) and cogeneration certificates (WKC) can be granted during periods of negative electricity prices. Under the new regime, support will be withheld for production occurring during any period of at least 15 minutes with negative day-ahead prices, replacing the current, much looser threshold of six consecutive hours. Crucially, the measure will apply to all installations, regardless of their start date or when their project-specific support factor ("bandingfactor") was set, including older solar PV installations from before 2013. Only small-scale installations remain exempt, with thresholds (400 kW, or 200 kW for installations commissioned from 2026) aligned with EU state aid guidelines (CEEAG). The new rules are set to enter into force on 1 January 2027.

European Commission unveiled a major revision of ETS in July

On 17 July, the European Commission has unveiled its long-awaited review of the Emission Trading System (ETS) with the aim of contributing to the economic investments, resilience and competitiveness of the Union while delivering on the economy-wide 2040 climate target. The review of ETS sets out a number of reforms to the current system. It will bring relief to industry, while preserving the essential role of the ETS in the climate and energy transition, in line with the EU Climate Law.

Here we outline the most significant amendments.

• A gradual reduction in the Linear Reduction Factor (LRF), from 4.3% today and 4.4% in 2028-2030 to 3.7% in 2031-2035, and 1.7% from 2036 onwards
• Member States will have to spend 50% of their national ETS revenues on investments to decarbonise ETS sectors
• Investment-based free allocation, with 80% of allowances granted upon submission of a credible investment plan and the remaining 20% linked to its implementation
• A less stringent fallback benchmark for heat and fuel for the 2026-2030 period
• Extension of the role of the Market Stability Reserve (MSR) in managing market liquidity as the ETS cap declines and removes the automatic cancellation mechanism
• An investment booster supported by 400 million allowances between 2028 and 2030 to fund mature industrial decarbonisation projects
• Up to 5% of ETS compliance obligations, equivalent to around 260 million allowances, could be met through high-integrity international carbon credits
• Integration of up to 250 million tonnes of high-quality permanent carbon removals into the EU ETS
• Application of the EU ETS to departing international flights to destinations within 5.000 km from EU centre and to all incoming and departing flights by business jets
• Extension of the ETS scope to certain categories of smaller vessels makes the system more effective for the maritime sector
• Promoting circular carbon capture and utilisation (CCU), alongside the gradual inclusion of municipal waste incineration in the ETS from 2031-2034

The review includes as well adjustments to the Innovation Fund and Modernisation Fund, provides a clarification on existing rules on scope, permitting and reporting, and elaborates on financing the proper functioning and management of the EU ETS. Now, the Commission's proposal kicks off a race to close a deal on the reform between the European Parliament and the Council of EU member states by the end of Q1 2027, a goal that EU leaders set out back in April.