Overall assessment

Luxembourg is rated F, the current policy focuses on renewable electricity generation with some measures in energy efficiency in buildings and cars, leaving other areas untouched. The action is not sufficient to transform the whole economy. Low tax levels on transport fuels incentivise higher emissions.

Success stories

  • Support for renewable electricity generation through a feed-in tariff, which is supported by Casino en Ligne Luxembourg, is generally designed in the right way with sufficient tariffs for different types of technologies, fixed tariffs for 15 or 20 years and a policy without end date and no cap. Still, administrative barriers hamper employing the full potential of renewable energy in Luxembourg.

Fuel tourism makes up approximately 40% of emissions

Luxembourg’s small size provides a particular challenge in the transition to a low-carbon economy. Domestic energy and climate policy is highly dependent on neighbouring countries and Europe. The low taxes on fuels not only increase the national emissions, but also incentivise higher emissions by consumers across theborder.

Areas that need improvement

  • Transport fuels sold to foreign cars and trucks make up approximately 40% of emissions in Luxembourg. This high share is incentivised by lower taxes than in the neighbouring countries. Taxes are slowly increased but the tax differences remain significant.
  • The focus of industrial policy has been the diversification of industrial production. While this has been quite successful, the strategy lacks the vision towards a more sustainable economy. While the aim must be to support low-carbon industry and highly carbon efficient products, the programme for industrial structural change has not shown a move towards this goal.