Environmental Policies
#6Key Findings
With increasing attention being paid to climate-change issues, Luxembourg falls into the top ranks internationally (rank 6) with respect to environmental policies. Its score in this area has improved by 1.8 points relative to 2014.
The government has set a target of climate neutrality for 2050, with a 55% emissions reduction goal for 2030. As the country still depends heavily on fuel sales to transient drivers, this will be difficult to meet under current strategies. Levels of renewable energy production and use are only moderate.
Policies are underway to address emissions more directly. The public transportation network has been made free of charge. Further investment in rail infrastructure and charging stations is underway. A carbon tax remains one of the main policy instruments.
Biodiversity has been experiencing a long-term decline due to urbanization and landscape fragmentation. The country is one of the world’s most significant contributors of public international climate finance on a per capita basis.
The government has set a target of climate neutrality for 2050, with a 55% emissions reduction goal for 2030. As the country still depends heavily on fuel sales to transient drivers, this will be difficult to meet under current strategies. Levels of renewable energy production and use are only moderate.
Policies are underway to address emissions more directly. The public transportation network has been made free of charge. Further investment in rail infrastructure and charging stations is underway. A carbon tax remains one of the main policy instruments.
Biodiversity has been experiencing a long-term decline due to urbanization and landscape fragmentation. The country is one of the world’s most significant contributors of public international climate finance on a per capita basis.
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How effectively does environmental policy in your country protect and preserve the sustainability of natural resources and environmental quality?
10
9
9
Environmental policy goals are ambitious and effectively implemented as well as monitored within and across most relevant policy sectors that account for the largest share of resource use and emissions.
8
7
6
7
6
Environmental policy goals are mainly ambitious and effectively implemented and are monitored within and across some of the relevant policy sectors that account for the largest share of resource use and emissions.
5
4
3
4
3
Environmental policy goals are neither particularly ambitious nor are they effectively implemented and coordinated across relevant policy sectors.
2
1
1
Environmental concerns have been largely abandoned.
According to the Climate Change Performance Index 2022, in which Luxembourg gained three ranks to wind up at 18th place, the Grand Duchy remains a high-performing country with regard to environmental issues. The country performs poorly with regard to greenhouse gas emissions, and at only a medium level with regard to renewable energy and energy use, but it rates high in climate policy overall, which indicates considerable potential for Luxembourg to improve its overall climate change performance.
The 2022 state budget allotted €765 million to investment in the field of climate and environment, and €210 million more will be added by 2024. A total of €1.8 billion is to be applied to implementing the national energy and climate plan. As part of efforts to diminish CO2 emissions, further investments are planned in the development of the rail and tram network, and in the electromobility sector (€300 million for rail infrastructure in 2022, and €12.6 million annually through 2025 for more electric charging stations). Luxembourg’s national mobility plan has a strong environmental component. On 1 March 2020 all buses, trams and trains became free of charge, making it the first country in the world to introduce free public transport (with a cost for the state of about €40 million per year). The Climate and Energy Fund offers subsidies to companies that reduce their environmental impact via employer mobility. The state also provides financial support for the purchase of e-bikes.
In 2021, under the leadership of Environment Minister Carole Dieschbourg, the government renewed the design of the climate pact (a co-operative agreement titled “Pacte Climat 2.0”), with the aim of strengthening the leading role of municipalities in climate policy, reducing greenhouse gas emissions and energy use, and stimulating investment at local level. Each participating municipality must commit to hiring a climate adviser, and to implementing an energy management system based on 64 measures divided into six categories (spatial planning and development, municipal buildings, resource management, mobility, internal organization, and cooperation). The state covers the costs of the climate advisers and technical assistance. Luxembourg’s Environmental Protection Fund provides subsidies to municipal projects linked to implementation of the pact.
The government plans to achieve the major goals of the National Climate and Energy Plan (NECP) 2021-2030 (which is a 10-year integrated document mandated by the European Union) through implementation of the following main measures: a CO2 tax; the electrification of car, bus and truck traffic; the introduction of the A+ energy efficiency standard for new residential buildings; improvement of the “PRIMe House” support program; replacement of oil heating with renewable energy sources or connections to heating networks; introduction of the Nearly Zero Energy Standard for functional buildings; and an expansion of heating networks.
In terms of biodiversity, the country’s achievements do not match its ambitions as set out in the two successive National Plans for Nature Conservation for the periods 2007-2011 and 2017-2021. Furthermore, biodiversity has consistently declined in the country for more than four decades. The reasons for this situation include especially the rapid economic growth, urbanization, landscape fragmentation and climate change. Biodiversity concerns are fully integrated in the current National Action Plan for the Promotion of Organic Agriculture (PAN-Bio 2025), that aims to increase the share of organically farmed land in Luxembourg to 20% by 2025, and to consolidate the green orientation of the sectoral policy in this area. Currently, only 5% of the agricultural land in the Grand Duchy is certified as “organic,” while the European average is about 7%. With this new commitment, which is in line with the green Common Agricultural Policy of the EU, Luxembourg is sending a strong political signal to the agricultural sector, suppliers, the retail sector and consumers that the government will demand stronger coordination between the national and local levels.
Citations:
“Climate Change Perfomance Index, 2022” (December 2021). https://ccpi.org/country/lux/. Accessed 3 January 2022.
“De Budget 2022.” Luxembourg’s Stat Budget 2022 official website. The Government of the Grand Duchy of Luxembourg. https://budget.public.lu/lb.html. Accessed 3 January 2022.
“Greening the Luxembourg tax system.” PapeJam (2021). https://paperjam.lu/article/greening-the-luxembourg-tax-sy. Accessed 3 January 2022.
“A Climate Pact to strengthen the role of Luxembourg’s municipalities.” OECD. https://www.oecd.org/climate-action/ipac/practices/a-climate-pact-to-strengthen-the-role-of-luxembourg-s-municipalities-b485676c/. Accessed January 2022.
“Environmental Performance Reviews : Luxembourg 2020.” OECD Publishing, Paris. https://doi.org/10.1787/fd9f43e6-en.
“Luxembourg: national targets and contributions foreseen in the draft National Energy and Climate Plan (2021-2030). European Commission (2020). https://ec.europa.eu/energy/sites/default/files/documents/necp_factsheet_lu_final.pdf. Accessed 3 January 2022.
“Évaluation de l’impact de la taxe CO2.” STATEC (Novembre 2020). https://statistiques.public.lu/fr/actualites/economie-finances/_onjuncture/2020/11/20201123/index.html. Accessed 3 January 2022.
The 2022 state budget allotted €765 million to investment in the field of climate and environment, and €210 million more will be added by 2024. A total of €1.8 billion is to be applied to implementing the national energy and climate plan. As part of efforts to diminish CO2 emissions, further investments are planned in the development of the rail and tram network, and in the electromobility sector (€300 million for rail infrastructure in 2022, and €12.6 million annually through 2025 for more electric charging stations). Luxembourg’s national mobility plan has a strong environmental component. On 1 March 2020 all buses, trams and trains became free of charge, making it the first country in the world to introduce free public transport (with a cost for the state of about €40 million per year). The Climate and Energy Fund offers subsidies to companies that reduce their environmental impact via employer mobility. The state also provides financial support for the purchase of e-bikes.
In 2021, under the leadership of Environment Minister Carole Dieschbourg, the government renewed the design of the climate pact (a co-operative agreement titled “Pacte Climat 2.0”), with the aim of strengthening the leading role of municipalities in climate policy, reducing greenhouse gas emissions and energy use, and stimulating investment at local level. Each participating municipality must commit to hiring a climate adviser, and to implementing an energy management system based on 64 measures divided into six categories (spatial planning and development, municipal buildings, resource management, mobility, internal organization, and cooperation). The state covers the costs of the climate advisers and technical assistance. Luxembourg’s Environmental Protection Fund provides subsidies to municipal projects linked to implementation of the pact.
The government plans to achieve the major goals of the National Climate and Energy Plan (NECP) 2021-2030 (which is a 10-year integrated document mandated by the European Union) through implementation of the following main measures: a CO2 tax; the electrification of car, bus and truck traffic; the introduction of the A+ energy efficiency standard for new residential buildings; improvement of the “PRIMe House” support program; replacement of oil heating with renewable energy sources or connections to heating networks; introduction of the Nearly Zero Energy Standard for functional buildings; and an expansion of heating networks.
In terms of biodiversity, the country’s achievements do not match its ambitions as set out in the two successive National Plans for Nature Conservation for the periods 2007-2011 and 2017-2021. Furthermore, biodiversity has consistently declined in the country for more than four decades. The reasons for this situation include especially the rapid economic growth, urbanization, landscape fragmentation and climate change. Biodiversity concerns are fully integrated in the current National Action Plan for the Promotion of Organic Agriculture (PAN-Bio 2025), that aims to increase the share of organically farmed land in Luxembourg to 20% by 2025, and to consolidate the green orientation of the sectoral policy in this area. Currently, only 5% of the agricultural land in the Grand Duchy is certified as “organic,” while the European average is about 7%. With this new commitment, which is in line with the green Common Agricultural Policy of the EU, Luxembourg is sending a strong political signal to the agricultural sector, suppliers, the retail sector and consumers that the government will demand stronger coordination between the national and local levels.
Citations:
“Climate Change Perfomance Index, 2022” (December 2021). https://ccpi.org/country/lux/. Accessed 3 January 2022.
“De Budget 2022.” Luxembourg’s Stat Budget 2022 official website. The Government of the Grand Duchy of Luxembourg. https://budget.public.lu/lb.html. Accessed 3 January 2022.
“Greening the Luxembourg tax system.” PapeJam (2021). https://paperjam.lu/article/greening-the-luxembourg-tax-sy. Accessed 3 January 2022.
“A Climate Pact to strengthen the role of Luxembourg’s municipalities.” OECD. https://www.oecd.org/climate-action/ipac/practices/a-climate-pact-to-strengthen-the-role-of-luxembourg-s-municipalities-b485676c/. Accessed January 2022.
“Environmental Performance Reviews : Luxembourg 2020.” OECD Publishing, Paris. https://doi.org/10.1787/fd9f43e6-en.
“Luxembourg: national targets and contributions foreseen in the draft National Energy and Climate Plan (2021-2030). European Commission (2020). https://ec.europa.eu/energy/sites/default/files/documents/necp_factsheet_lu_final.pdf. Accessed 3 January 2022.
“Évaluation de l’impact de la taxe CO2.” STATEC (Novembre 2020). https://statistiques.public.lu/fr/actualites/economie-finances/_onjuncture/2020/11/20201123/index.html. Accessed 3 January 2022.
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To what extent does the government actively contribute to the design and advancement of global environmental protection regimes?
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9
9
The government actively contributes to international efforts to design and advance global environmental protection regimes. In most cases, it demonstrates commitment to existing regimes, contributes to their being advanced and has introduced appropriate reforms.
8
7
6
7
6
The government contributes to international efforts to strengthen global environmental protection regimes. It demonstrates commitment to existing regimes and occasionally contributes to their being advanced and/or has introduced some appropriate reforms.
5
4
3
4
3
The government demonstrates commitment to existing regimes, but does not contribute to their being advanced and has not introduced appropriate reforms.
2
1
1
The government does not contribute to international efforts to strengthen global environmental protection regimes.
At the international level, at the EU and at the yearly COP meetings of the UNFCCC, Luxembourg has positioned itself as a steady supporter of ambitious climate action. In December 2020, Luxembourg adopted its climate law, introduced a climate neutrality target for 2050, a 55% emissions reduction target for 2030 and sectoral climate targets. Achieving these targets will not be easy, as Luxembourg still depends heavily on fuel sales to car and truck drivers passing through Luxembourg. These fuel sales represent a serious issue for Luxembourg’s climate targets, as according to reporting rules defined by the Intergovernmental Panel on Climate Change, fuel sold at Luxembourg’s petrol stations, after having been converted into GHG volumes, is included wholly in Luxembourg’s GHG balance, even though around 70% of the emissions cannot be assigned to vehicles registered in Luxembourg, and are emitted mostly abroad
Alongside Germany, the country has the lowest level of environmental taxes at the EU level (accounting for only 4.4% of total tax revenue). With the introduction of the carbon tax in 2021, Luxembourg took a step toward the increase of environmental taxes. This will be increased progressively from €20/ton of CO2 in 2021 to €30/ton of CO2 by 2023. According to STATEC, the Grand Duchy’s carbon tax on its own will not be sufficient to reach the targeted 55% decline in greenhouse gas emissions by 2030.
With no mineral or fossil resources, Luxembourg is a net energy importer, especially from Germany, France, Belgium and the Netherlands. The Grand Duchy is a member of the Pentalateral Energy Forum, which includes six western European countries (Austria, Belgium, Germany, France, Netherlands and Switzerland), and represents a pillar of Luxembourg’s energy security. On 3 February 2021, the Chamber of Deputies adopted a law restructuring the electricity market with the aim of promoting renewable energy generation and consumption among the citizenry. One month later, the country released its new circular economy strategy, with the goal of improving the use of natural resources and supporting climate targets.
Luxembourg is one of the largest per capita donors of public international climate finance in the world. In July 2021, it was stated that the country had provided €120 million over the 2014-2020 period for adaptation and land-use actions (including the Reduced Emissions from Deforestation and Forest Degradation program (REDD+)) in developing countries. The Grand Duchy will increase its international climate funding to €200 million by 2024. In line with the Sustainable Finance Initiative, Luxembourg was slated to launch its first sustainability bond in 2020 (destined for climate, environment and social issues) worth € 1 billion.
Citations:
“Grand Duchy of Luxembourg International Climate Finance Strategy 2021 – 2025.” The Grand Duchy of Luxembourg. Ministry of the Environment, Climate, ad Sustainable Development (July 2021). https://gouvernement.lu/dam-assets/documents/actualites/2021/07-juillet/26-fci-dieschbourg/Strategie-FCI.pdf. Accessed 14 January 2022.
“Climate action in Luxembourg: Latest state of play 2020.” European Parliament Research Service (2020). https://www.europarl.europa.eu/RegData/etudes/BRIE/2021/690664/EPRS_BRI(2021)690664_EN.pdf. Accessed 14 January 2022.
“Fourth Biennial Report of Luxembourg under the United Nations Framework Convention on Climate Change 2020 Report.” The Grand Duchy of Luxembourg. Ministry of the Environment, Climate, ad Sustainable Development (2020). https://www4.unfccc.int/sites/SubmissionsStaging/NationalReports/Documents/845269310_Luxembourg-BR4-2-BR4_LUX_Final_201123.pdf
“Assessment of the final national energy and climate plan of Luxembourg.” European Commission. SWD(2020) (14 October 2020). https://ec.europa.eu/energy/sites/default/files/documents/staff_working_document_assessment_necp_luxembourg_en.pdf. Accessed 14 January 2022.
“Luxembourg 2020. Energy Security Report.” International Energy Agency (2020). https://iea.blob.core.windows.net/assets/8875d562-756c-414c-bc7e-5fc115b1a38c/Luxembourg_2020_Energy_Policy_Review.pdf. Accessed 14 January 2022.
Alongside Germany, the country has the lowest level of environmental taxes at the EU level (accounting for only 4.4% of total tax revenue). With the introduction of the carbon tax in 2021, Luxembourg took a step toward the increase of environmental taxes. This will be increased progressively from €20/ton of CO2 in 2021 to €30/ton of CO2 by 2023. According to STATEC, the Grand Duchy’s carbon tax on its own will not be sufficient to reach the targeted 55% decline in greenhouse gas emissions by 2030.
With no mineral or fossil resources, Luxembourg is a net energy importer, especially from Germany, France, Belgium and the Netherlands. The Grand Duchy is a member of the Pentalateral Energy Forum, which includes six western European countries (Austria, Belgium, Germany, France, Netherlands and Switzerland), and represents a pillar of Luxembourg’s energy security. On 3 February 2021, the Chamber of Deputies adopted a law restructuring the electricity market with the aim of promoting renewable energy generation and consumption among the citizenry. One month later, the country released its new circular economy strategy, with the goal of improving the use of natural resources and supporting climate targets.
Luxembourg is one of the largest per capita donors of public international climate finance in the world. In July 2021, it was stated that the country had provided €120 million over the 2014-2020 period for adaptation and land-use actions (including the Reduced Emissions from Deforestation and Forest Degradation program (REDD+)) in developing countries. The Grand Duchy will increase its international climate funding to €200 million by 2024. In line with the Sustainable Finance Initiative, Luxembourg was slated to launch its first sustainability bond in 2020 (destined for climate, environment and social issues) worth € 1 billion.
Citations:
“Grand Duchy of Luxembourg International Climate Finance Strategy 2021 – 2025.” The Grand Duchy of Luxembourg. Ministry of the Environment, Climate, ad Sustainable Development (July 2021). https://gouvernement.lu/dam-assets/documents/actualites/2021/07-juillet/26-fci-dieschbourg/Strategie-FCI.pdf. Accessed 14 January 2022.
“Climate action in Luxembourg: Latest state of play 2020.” European Parliament Research Service (2020). https://www.europarl.europa.eu/RegData/etudes/BRIE/2021/690664/EPRS_BRI(2021)690664_EN.pdf. Accessed 14 January 2022.
“Fourth Biennial Report of Luxembourg under the United Nations Framework Convention on Climate Change 2020 Report.” The Grand Duchy of Luxembourg. Ministry of the Environment, Climate, ad Sustainable Development (2020). https://www4.unfccc.int/sites/SubmissionsStaging/NationalReports/Documents/845269310_Luxembourg-BR4-2-BR4_LUX_Final_201123.pdf
“Assessment of the final national energy and climate plan of Luxembourg.” European Commission. SWD(2020) (14 October 2020). https://ec.europa.eu/energy/sites/default/files/documents/staff_working_document_assessment_necp_luxembourg_en.pdf. Accessed 14 January 2022.
“Luxembourg 2020. Energy Security Report.” International Energy Agency (2020). https://iea.blob.core.windows.net/assets/8875d562-756c-414c-bc7e-5fc115b1a38c/Luxembourg_2020_Energy_Policy_Review.pdf. Accessed 14 January 2022.