Takeaways from the Belgian Presidency of the Council of the EU on Climate and Energy Topics

• Context

In the aftermath of the European elections, institutions are adjusting their priorities for the next Commission's mandate. Belgium held a strategic role as the last Council Presidency before the new Commission takes office. Starting on January 1, 2024, Belgium's Presidency faced the dual challenge of election campaigning and wrapping up essential legislations. Despite this challenge, Belgium showcased its compromise capabilities by unblocking significant bottlenecks, crucial for the upcoming focus on a competitiveness-driven "Green Deal."

• Finalisation of Swedish Presidency Work on Fit for 55 Package

Belgium inherited and successfully concluded several pioneering dossiers aimed at bolstering European competitiveness in net-zero technologies: the Critical Raw Material Act (CRMA) and the Net-Zero Industry Act (NZIA). These acts were finalized under the Belgian Presidency, paving the way for implementation by member states.

• Climate Regulation Achievements

The Belgian Presidency managed to approve the long-awaited Corporate Sustainability Due Diligence Directive (CRDD), ensuring large undertakings respect human rights and environmental standards. The Carbon Border Adjustment Mechanism (CBAM) was also approved, aimed at mitigating the risk of carbon leakage. Finally, the adoption of the Methane Regulation, which introduces new rules for monitoring methane emissions, and the Nature Restoration Regulation, which aims to restore land and sea areas by 2030, pave the way for shaping the EU's climate objectives.

• Establishment of a sustainable Energy Market

A notable success was the agreement on sustainable electricity grids, a priority for Belgium, achieved after months of effort. This agreement, however, frustrated the hydrogen sector, which felt neglected as the Energy Minister Council in April focused solely on electricity networks. Additionally, the adoption of the Electricity Market Design (EMD) and the Gas Package ensures the introduction of a coherent energy market, reducing dependency on fossil fuels and kickstarting the EU's hydrogen market.

• Energy Charter Treaty (ECT): a relative success of the Belgian Presidency

A significant achievement of the Belgian Presidency was the compromise on the EU's withdrawal from the Energy Charter Treaty (ECT). This issue had been stalled due to divergent interests between member states and the Commission's climate ambitions. The compromise clearly demonstrates Belgium's ability to foster consensus. However, despite securing a majority, the Council's adopted text fails to resolve the fundamental issue surrounding the ECT. In particular, the decision allows individual Member States to choose whether to remain in the treaty, contradicting the Commission's call for a coordinated withdrawal. Thus, while there appears to be an agreement on paper, in practice, it reflects a situation where parties agree to disagree.

• Energy Taxation Directive (ETD): the unfulfilled task of the Belgian Presidency

One major shortfall of the Belgian Presidency was the reform of the ETD.

Despite Belgium's proactive efforts, which included circulating multiple compromise proposals, consensus among Member States was not reached. Although Belgium emphasized the potential consequences of a lack of support, warning that the current directive could persist indefinitely without revision, the adoption of a new text has been postponed until the next parliamentary term. Enrico Letta's recent report underscored the importance of swiftly agreeing on the ETD to stimulate renewable energies across the single market.

However, Hungary, set to assume the Council Presidency on July 1, 2024, does not appear to prioritize this file. This delay may persist further into the subsequent Presidency led by Poland in the first half of 2025.

• Conclusion

The Belgian Presidency of the EU Council significantly shaped Europe's climate and energy policies during a critical transition period. Despite the dual challenge of election campaigning and legislative finalization, Belgium effectively navigated key bottlenecks and fostered important compromises.

Key achievements included finalizing the CRMA and the NZIA and approving the CSDD, CBAM, and a new Methane Regulation and Nature Restoration Regulation. Belgium also secured a landmark agreement on sustainable electricity grids and adopted the EMD and the Gas Package, promoting a sustainable energy market.

However, challenges remained, particularly with the Energy Taxation Directive (ETD), where consensus could not be reached, delaying reform until the next parliamentary term.

The upcoming Hungarian Presidency, commencing on July 1st, will prioritize the promotion of geothermal energy, the advancement of national energy-climate plans (NECP), and the development of electricity grids within the EU. However, this presidency is also set against the backdrop of a transitional phase into the new Commission's mandate, which is expected to temper the pace of regulatory potential and new initiatives within the EU.

Authors: David Haverbeke, Dr. Nicolas Celis and Emilie Malivert, Lawyers at the Brussels Bar, Energy practice at Fieldfisher