This paper analyses the impact of current and planned climate transition policies on Belgian firms as they approach the 2030 milestone set by the European Green Deal. Using a comprehensive online survey among members of key Belgian employers' federations, we have collected data on the past and expected impact of climate mandates on firms' costs, pricing, demand, and investments.

Our findings show that the climate transition is mostly considered as an adverse supply shock and comes with higher prices and lower activity, in particular taking into account the competitiveness challenges due to lower energy costs elsewhere in the world. Respondents experience and expect higher input costs that cannot be fully passed on to sales prices, leading to a margin squeeze. While the impact on Belgian investment is somewhat ambiguous, increased capacity will be mainly located outside the European Union. The results are stronger for firms in the higher-productivity manufacturing industry.

Scenario analysis indicates that a higher carbon price (€250/ton CO2) could exacerbate these impacts. These findings were further corroborated by a randomized information experiment embedded within the survey, where respondents were presented with objective information on Belgium's emission reduction commitments under ‘Fit for 55' and projected carbon prices. This information treatment significantly changed firms' carbon price expectations, with varied responses suggesting differing levels of pre-existing knowledge or confidence in the information provided. Notably, firms that were given a positive carbon price shock foresee higher input costs and increased likelihood of shifting investments outside the EU. These findings highlight the economic risks that could arise as climate policies become ever more stringent.

Remarkably, the survey responses also point to a broad scepticism about the EU's ability to actually meet its ‘Fit for 55' targets by 2030. Despite acknowledging the importance of the transition, firms cite concerns about high costs and reduced profitability, as well unclear policy guidance, and heavy administrative burdens as major impediments.