## Fiscal Policy Options to Accelerate Emissions Reductions in Belgium

_Selected Issues Papers, March 2, 2023_

## Source details

**Canonical URL:** [Fiscal Policy Options to Accelerate Emissions Reductions in Belgium](https://www.imf.org/en/publications/selected-issues-papers/issues/2023/03/03/fiscal-policy-options-to-accelerate-emissions-reductions-in-belgium-belgium-belgium-530525)

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## Bibliographic details
- Authors: Nate Vernon-Lin
- Published: March 2, 2023
- Series: Selected Issues Papers

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### Summary of main finding
- Belgium’s current policies fall short of achieving its climate targets and promoting emissions reductions at limited economic costs.
- Domestic carbon pricing should form the centerpiece of an emissions reduction package because:
  - Pricing promotes mitigation at the lowest economic cost.
  - Pricing can be phased in as international energy prices fall.
  - Pricing generates revenue to compensate vulnerable households and reduce taxes on productive activities.

### Policy recommendations
- Center policy on domestic carbon pricing to achieve cost-effective mitigation and revenue generation.
- Use revenue from carbon pricing to:
  - Compensate vulnerable households.
  - Reduce taxes on productive activities.
- Reinforce carbon pricing with sectoral policies where appropriate:
  - Implement subsidy-tax schemes to promote low emissions vehicles.
  - Ensure sectoral policies complement carbon pricing and regional efforts.
- Reform social protection to be more efficient and environmentally friendly:
  - Switch from energy subsidies to income-based support.

### EU- and regional-level actions
- Promote dialogue at the EU-level to:
  - Harmonize ETS prices.
  - Include all sectors under a single trading scheme.

### Subject areas and keywords
- Subject: International organization, Monetary policy
- Keywords: climate, distributional effects, environmental economics, Environmental taxes and subsidies, fiscal policy

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## Content in this bundle

- **Sipea2023017**
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_Source: https://www.imf.org/en/publications/selected-issues-papers/issues/2023/03/03/fiscal-policy-options-to-accelerate-emissions-reductions-in-belgium-belgium-belgium-530525_