Special Act to reform the finance of the Communities and the Regions, the extension of the tax autonomy of the Regions and the finance of new competences

The Act establishes a mechanism to incentivise climate action as part of the National Climate Strategy and contributes to reaching European and International objectives. It Is based on a multiannual reference trajectory for GHG emissions reduction in the residential and tertiary building sectors (excluding industrial buildings), specific for each region. A financial bonus is attributed to a region when it exceeds its assigned objective, to be invested in emission reduction policies. If a region fails to meet its assigned objective, a financial penalty is foreseen, calculated on the difference between the reference trajectory and actual emissions, to be invested in emission reduction policies by the national government.

This mechanism is to be financed with revenues from auctioning of the emission quotas assigned to Belgium (which are yet to be distributed between the regions and the national government through the domestic-burden sharing, currently being discussed). In order to ensure that a sufficient part of the auctioning revenues is preserved, a bonus ceiling is set at a level equal to the national government's share of auctioning revenues, while the penalties ceiling is set at 50% of the regional share of the auctioning revenues.