LUXEMBOURG’S INTEGRATED NATIONAL ENERGY AND
CLIMATE PLAN FOR 2021-2030

In accordance with REGULATION (EU) 2018/1999 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
of 11 December 2018
on the Governance of the Energy Union and Climate Action, amending Regulations (EC) No 663/2009 and(EC) No 715/2009 of the European Parliament and of the Council, Directives 94/22/EC, 98/70/EC,
2009/31/EC, 2009/73/EC, 2010/31/EU, 2012/27/EU and 2013/30/EU of the European Parliament and of
the Council, Council Directives 2009/119/EC and (EU) 2015/652 and repealing Regulation (EU)No 525/2013 of the European Parliament and of the Council

Final version

Table of contents
1.

Overview and process for establishing the plan

7

1.1.

Summary7

1.2.

Overview of current policy situation

14

1.3.

Consultations and involvement of national and Union entities and their outcome

18

1.4.

Regional cooperation in preparing the plan23

2.

National objectives and targets

31

2.1.

Decarbonisation dimension

32

2.1.1.

Greenhouse gas emissions and removals

32

2.1.2.

Renewable energy

32

2.2.

Energy efficiency dimension

37

2.3.

Energy security dimension

45

2.4.

Internal energy market dimension

47

2.4.1.

Electricity interconnectivity

47

2.4.2.

Energy transmission infrastructure47

2.4.3.

Market integration

48

2.4.4.

Energy poverty

49

2.5.

Research, innovation and competitiveness dimension

51

3.

Policies and measures

54

3.1.

Decarbonisation dimension

54

3.1.1.

Greenhouse gas emissions and removals

54

3.1.2.

Renewable energyn

82

3.1.3. Other elements of the dimension

93

3.2.

‘Energy efficiency’ dimension

100

3.3.

‘Energy security’ dimension

111

3.4.

‘Internal energy market’ dimension

116

3.4.1.

Electricity infrastructure116

3.4.2.

Energy transmission infrastructure

118

3.4.3.

Market integration

118

3.4.4.

Energy poverty

122

3.5. ‘Research, innovation and competitiveness’ dimension

124

4.

131

Current situation and projections with existing policies and measures

4.1. Projected evolution of main exogenous factors influencing energy system and GHG emission
developments
132
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4.2. ‘Decarbonisation’ dimension

135

4.2.1. GHG emissions and removals

135

4.2.2. Renewable energy

137

4.3. ‘Energy efficiency’ dimension

140

4.4. ‘Energy security’ dimension

151

4.4.1. Analysis – electricity sector

151

4.4.2. Analysis – gas sector

153

4.5. ‘Internal energy market’ dimension

156

4.5.1. Electricity interconnectivity

156

4.5.2. Energy transmission infrastructure157

4.5.3. Electricity and gas markets, energy prices

159

4.6. ‘Research, innovation and competitiveness’ dimension

161

5.

164

Impact assessment of planned policies and measures

5.1.
Impacts of the planned policies and measures described in Section 3 on the energy system andgreenhouse gas emissions and removals
165
5.1.1. GHG emissions and removals

165

5.1.2. Energy demand167

5.1.3. Renewable energy

174

5.2. Impacts of the planned policies and measures described in Section 3 on the economy, employment
and social conditions, environment and health178
5.2.1. Estimation of macroeconomic consequences178

5.2.2. Environmental/health impact

183

5.3. Overview of investment needs

185

5.3.1. Investments in energy efficiency

185

5.3.2. Investment and support requirements for renewable energy

187

5.3.3. Impact on network costs in the distribution network

188

5.4. Impacts of the planned policies and measures described in Section 3 on other Member States andregional cooperation
190

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List of tables and figures
FiguresFigure 1: Annual final energy savings in GWh in private households, the trade, commerce and services
sector, industry and the transport sector in Luxembourg (based on an energy efficiency target of 44%) ..... 39
Figure 2: Cumulative final energy savings over the period 2021 to 2030 in GWh in private households,
the trade, commerce and services sector, industry and the transport sector in Luxembourg (based on anenergy efficiency target of 44%).................................................................................................................. 40
Figure 3: Annual final energy savings in GWh from the renovation of all residential and non-residentialbuildings in Luxembourg (based on an energy efficiency target of 44%) .................................................... 41
Figure 4: Cumulative final energy savings over the period 2021 to 2030 in GWh from the renovation of allresidential and non-residential buildings in Luxembourg (based on an energy efficiency target of 44%) ...... 42
Figure 5: Annual final energy savings in GWh from the renovation of public buildings in Luxembourg(based on an energy efficiency target of 44%) ............................................................................................ 42
Figure 6: Cumulative final energy savings over the period 2021 to 2030 in GWh from the renovation of
public buildings in Luxembourg (based on an energy efficiency target of 44%) ......................................... 43
Figure 7: Luxembourg’s final energy demand in 2016, broken down by industrial; household; trade,
commerce and services; transport and agricultural sectors ..................................................................... 141
Figure 8: Final energy demand in Luxembourg in 2016, broken down by energy source ......................... 141
Figure 9: Electricity and fuel required by industry (ETS sector only) in the period from 2015 to 2040 in theevent of the reference scenario ................................................................................................................ 145
Figure 10: Sectoral development of the fuel required for heat generation by households; trade,
commerce and services, and industry (without ETS share) in the period from 2015 to 2040 in the event of
the reference scenario .............................................................................................................................. 146
Figure 11: Development of the final energy demand (broken down by energy source) of the transport
sector in the period from 2015 to 2040 in the event of the reference scenario ....................................... 147
Figure 12: Development of electricity demand (final energy demand and primary energy demand) for theperiod from 2015 to 2040 in the event of the reference scenario ............................................................ 149
Figure 13: Sectoral breakdown of the electricity demand for the period from 2015 to 2040 in the event of
the reference scenario .............................................................................................................................. 150
Figure 14: Cartographic representation of Luxembourg’s supply situation .............................................. 158
Figure 15: Electricity price components for household customers ........................................................... 162
Figure 16: Gas price components for household customers ..................................................................... 163
Figure 17:
Development of final energy demand in the period 2020 to 2040 in the case of the target
scenario, broken down by sector .............................................................................................................. 168

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Figure 18:
Sectoral breakdown of the electricity demand for the period from 2015 to 2040 according
to the target scenario ................................................................................................................................ 169
Figure 19:
Reduction in final energy demand (fuels, electricity) within the target scenario broken
down by sector for the period 2020 to 2040 ............................................................................................ 170
Figure 20: Absolute change in key macroeconomic indicators when compared with the reference in€million2016 (source: Fraunhofer ISI) .......................................................................................................... 179
Figure 21: Investments to increase energy efficiency in the period 2020 to 2040, broken down by sector ... 185
Figure 22:

Investments in e-mobility charging infrastructure in the period 2020 to 2040 in euro .... 186

TablesTable 1:
Sectoral shares of renewable energy in Luxembourg up to 2040 according to the target
scenario with the upper range value of 25% (in 2030). ............................................................................... 33
Table 2:
Technology-specific energy generation from renewable energy in Luxembourg up to 2040
according to the target scenario with the upper range value of 25% (in 2030). ......................................... 34
Table 3:
Key target figures of the target scenario in the area of energy efficiency based on the upper
range value of 44% ...................................................................................................................................... 38
Table 4: Population growth and gross domestic product .......................................................................... 132
Table 5: Assumptions on energy price trends ........................................................................................... 133
Table 6: Assumptions on cost developments for renewable energy technologies ................................... 134
Table 7: Greenhouse gas emissions by sector for 2005 to 2017, in kt CO2eq........................................... 135
Table 8: Greenhouse gas emissions by ETS and non-ETS for 2005 to 2017, in kt CO2eq ........................... 136
Table 9: Greenhouse gas emissions by ETS and non-ETS for 2020 to 2040, in the event of the reference
scenario (without additional measures), in kt CO2eq ................................................................................ 136
Table 10: Sectoral shares of renewable energy in Luxembourg by 2040 according to the reference
scenario ..................................................................................................................................................... 138
Table 11: Technology-specific energy production from renewable energy in Luxembourg by 2040
according to the reference scenario ......................................................................................................... 139
Table 12: Additional potential for the cogeneration of heat in industry by 2030 based on final energy use
in industry.................................................................................................................................................. 143
Table 13: Primary energy factors used for the various energy sources in the period from 2015 to 2040 ... 148
Table 14:Gross energy production in Luxembourg by 2040................................................................. 151

Table 15: Electricity import dependency of Luxembourg .......................................................................... 152
Table 16: Gas import dependency of Luxembourg ................................................................................... 154
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Table 17: Luxembourg’s interconnection level.......................................................................................... 157
Table 18: Existing and future capacities of the network interconnection points. ..................................... 159
Table 19: Development of electricity and gas prices for end consumers. ................................................. 160
Table 20: Greenhouse gas emissions by ETS and non-ETS for 2020 to 2040, in the event of the target
scenario (with additional measures), in kt CO2eq ..................................................................................... 166
Table 21: Comparison of the greenhouse gas emissions projections of the target scenario (with additional
measures) with the reference scenario (without additional measures) for the years 2020 to 2040 ........ 167
Table 22: Comparison of Luxembourg’s final energy demand between the reference scenario and thetarget scenario .......................................................................................................................................... 172
Table 23: Comparison of the development of Luxembourg’s heat and electricity demand in the case of
the reference and target scenarios ........................................................................................................... 174
Table 24: Comparison of the expansion of renewable energy (energy production and shares of(sectoral) demand) between the reference scenario and the target scenario .......................................... 177
Table 25: Change of key macroeconomic indicators when compared with the reference (source:
Fraunhofer ISI) ........................................................................................................................................... 180
Table 26: Investment and support requirements for renewable energy – a comparison between thereference and target scenarios ................................................................................................................. 188

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1. Overview and process for establishing the plan
1.1. Summary
The integrated national energy and climate plan is a new planning and monitoring tool for the EU and its
Member States. It aims to improve the coordination of European energy and climate policies and is the key
instrument for achieving the EU 2030 targets on climate action, renewable energy and energy efficiency. It
is based on Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action(Governance Regulation). It requires each EU Member State to draw up an integrated national energy andclimate plan for the period from 2021 to 2030.
The Paris Agreement, which was unanimously adopted on 12 December 2015, established a new basis for
global climate action. At the centre of the Paris Agreement is the target of limiting global warming to well
below 2 degrees Celsius compared to pre-industrial levels and pursuing efforts to limit it to 1.5 degrees
Celsius. There is broad scientific and political consensus that current contributions, including those of theEuropean Union, are insufficient and many signs indicate accelerated and irreversible global warming. The
IPCC Special Report on the consequences of global warming of 1.5 degrees Celsius shows the scale of thechallenge and the urgency to act.
The IPCC Special Report has led the European Commission to upwardly revise the EU’s climate target for2030. The new President of the European Commission, Ursula von der Leyen, has called for a 50-55%
reduction target by 2030, and Vice-President Frans Timmermans, Commissioner for Climate Action andEuropean Green Deal, will soon be presenting a climate law with new measures. The European Investment
Bank is also currently being transformed into a climate bank. Luxembourg will continue to encourage theEuropean Commission to introduce a credible and comprehensive strategy for a ‘net zero emissions’Europe by no later than 2050 and will also continue to advocate a policy of not promoting nuclear power,
coal, fracking, or the capture and storage of carbon dioxide1. The government’s target of a 55% reduction
in greenhouse gases by 2030 is in line with the high ambitions of Luxembourg.
The Luxembourg Government considers that nuclear power is not one of the possible solutions for reducing
greenhouse gas emissions due to its multiple risks, and it therefore strongly advocates a policy of notpromoting nuclear power. There is support at European level for efforts to phase out nuclear power andfor a fundamental reform of the Euratom Treaty, in particular with a view to abolishing public subsidies fornuclear power once and for all and making nuclear power operators liable for the full risk. In all relevantinternational forums, initiatives will be supported to ensure that extending the life of nuclear power plants
1 This policy of non-promotion does not cover carbon sequestration in forest and agricultural sinks.

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is subject to the same safety and environmental impact assessments as new projects. The Luxembourg
Government will also work at both European and national level to ensure that nuclear energy is excluded
from future investments that are classified as sustainable, and welcomes the decision at EU level to exclude
nuclear power from ‘green finance’ (the Directive on financial taxonomy).
It is clear that facing and overcoming the challenges identified in the Paris Climate Agreement will require
a huge amount of investment. In order to achieve the goals of the Paris Agreement, Europe needs
additional investment of around €260 billion per year over the next decade alone2.
These investments can be financed by green bonds, inter alia. In 2007, the Luxembourg Stock Exchange
listed the first green bond ever issued. Since then, it has been a leader in this class of investment. Now,
more than 160 green bonds are listed. The issuers range from states, development agencies and banks tofinancial institutions and companies.
The major challenge for energy policy will be to phase out fossil fuels such as coal, oil and gas much fasterthan has so far been the case. Energy efficiency is a priority for policy implementation, based on the ‘energy
efficiency first’ principle, followed by increased and consistent development of renewable energy andmobility that reduces dependence on cars and trucks and converts the remaining cars and trucks to electricor hydrogen propulsion.
Against this background, as part of the 2018-2023 coalition agreement, the current government has decided ‘… to
do its utmost to comply with this [Paris] agreement and to take into account the findings of the Intergovernmental
Panel on Climate Change (IPCC) Special Report on global warming of 1.5 degrees Celsius.’ The integrated nationalenergy and climate plan defines the framework for Luxembourg’s energy and climate policy up to 2030.
The energy transition has already been addressed in Luxembourg in recent years and is part of the Third
Industrial Revolution process, which was initiated in 2015 and the cornerstones of which involve energy
efficiency in new buildings, developing renewable energy on a large scale and incorporating it into theenergy network, developing decentralised energy storage, digitalising the energy networks and using moresustainable means of transport. The Luxembourg Government intends to further speed up the energy
transition that has already been set in motion. Its climate and energy policies are essentially based on
improving energy efficiency, promoting renewable energy and promoting more sustainable public andindividual mobility. Luxembourg wants to be actively involved in the European energy transition and to
become a country of climate solutions.

2 Information provided by the European Commission.

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The present plan offers new chances to strengthen the connection between energy and climate policies,
on the one hand, and the scientific development of Luxembourg, on the other. The aim will in fact be toensure the intelligent and sustainable development of the country in line with the conclusions of thestrategic study on the Third Industrial Revolution, in particular in the areas of environmental technologies,
mobility, climate action and digitalisation. Against this background, it is also important to intensify researchand development in the areas mentioned, in order to bring about and develop modern, industrial activity
in Luxembourg. The integrated national energy and climate plan will thus also have the potential toestablish Luxembourg as a hub for climate-friendly start-ups and businesses. In addition to new
instruments, the plan will also help to create the credibility needed to make Luxembourg a world leader inoffering investment funds in the fields of energy efficiency and renewable energy and in climate financing.
The two tables below present the central objectives, policies and measures of Luxembourg’s nationalenergy and climate plan. The IPCC’s recent reports point to the need to halve global greenhouse gases by2030 in order to achieve the goals of the Paris Climate Agreement. The Paris Agreement also states that,
due to historically high emissions of greenhouse gases, developed countries have a particular responsibility
in this respect. This also applies to the EU and Luxembourg. With regard to compatibility with the goals of
the Paris Climate Agreement, the Luxembourg government has decided at national level to reducegreenhouse gas emissions for sectors outside the EU emissions trading scheme by 55% by 2030 comparedto the reference year 2005. The government has also decided to set an energy efficiency target of 40-44%
by 2030 and to increase the share of renewable energy to 25% by 2030.

Dimension

Central objectives

GHG emissions

National climate target: -55% by 2030, compared to 2005

Renewable energy

25% share of renewable energy in the gross final energy consumption in
2030 by consistently developing wind and solar energy and heat pumps in
Luxembourg

Energy efficiency

Cooperating with other EU Member StatesEnergy efficiency target of 40-44% by 2030 (compared to the EU PRIMES
model (2007))

New fossil-free single-purpose and residential buildings

High rate of renovation and highly efficient building renovations

Developing renewable heating networks

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 9Preventing traffic through massive expansion of public transport and 49%
share of electromobility by 2030

Developing a large energy efficiency market for industry, SMEs and officebuildings

Energy security

Reducing dependence on electricity imports by expanding renewable energyExploiting the potential for flexibility by developing an energy data hub

Further intensifying regional cooperation in the field of security ofelectricity and gas supply

Internal energy market

Gas sector:


No further development of national gas infrastructure, either attransmission or distribution level

Further expansion of the cross-border connections is not needed at presentConsolidating the common gas market with Belgium

Electricity sector:

Upgrading grids to meet the needs of existing routes

Combining the sectors of electricity, heat and transport by means of sector
coupling

Research, innovationand competitiveness

Luxembourg to become a pioneer in the successful implementation of anationwide energy transition with the main pillars ‘zero carbon’,‘circularity’, ‘renewable energy’ and ‘energy efficient buildings’ withflexibility options/storage capacity as well as sustainable mobility
components and a grid and information flow enabling this

Luxembourg to promote resilient urban and spatial development,
transition processes and social innovation, in conjunction withurban/spatial planning and positive lifestyle changes

Luxembourg to become an attractive location for climate solutions
providers and start-ups, with an attractive testing and experimentation
environment for the (further) development of their products



Luxembourg’s financial centre to switch 20% of all cash flows to green
finance by 2025 and become a globally recognised financial centre forinvestments in energy efficiency, renewable energy, electro- andhydrogen mobility

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Dimension

Central policies and measures

Decarbonisation



Introducing a climate framework lawFurther developing the climate pact with the municipalities



Introducing a minimum price for CO2 and adjusting the taxation ofmineral oil productsStrengthening

financingmeasures,targetedclimateincentive

programmes, including the climate and energy fund, environmental
fund, the PRIMe House climate loan support scheme, climate loans, the‘clever fueren [drive smart]’ support scheme

Renewable energyImplementing and further developing the strategy for sustainable mobility



Reforming car tax and company car taxation



Fuel oil phasing-out programme

Solar offensive:•

pursuing calls for tenders for large photovoltaic systems•

adapting and expanding the support schemes•

strengthening internal consumption in the electricity sector

Wind energy development with a small number of large wind
installationsCreating a solar and thermal land registerBiomass in the context of sustainable wood availability in the wider regionTargeted expansion of renewable heat (heat pumps, deep geothermalenergy, renewable heating networks from waste heat)Electromobility, second-generation biofuels, green hydrogenTransnational joint projects, for example through joint tenders forphotovoltaic and wind capacity with neighbouring countries, and active
participation in the new EU Renewable Finance Platform

Energy efficiency

Cooperating with other EU Member States

Low-energy and energy-plus buildings by law for residential and singlepurpose buildings



Ambitious renovation of existing housing stock (3% renovation rate at
72% renovation depth on average)

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Developing a large energy efficiency investment market for industry,
SMEs and large office buildings (by combining audits including an audit
transparency platform, a specific energy efficiency financing fund (derisking), strengthening the voluntary agreement with industry andexpanding it to SMEs, continuing and extending the energy efficiency
obligation (EEO) for all sellers of energy)Increasing energy efficiency in transport through traffic avoidance,
massive expansion of public transport and the rapid development ofelectromobility in cars and vans (premiums, establishing a nationwide
fast charging network)

Reducing the sale of diesel to transiting HGVsState and municipalities to play an exemplary role, including in theirbuildings and lighting (Luxembourg LED 2025 programme)

Energy security



Large-scale training programme for tradespeople and engineers/architectsStrengthening regional cooperation



Network expansion measures at transmission level on existing routes

Reducing dependence on imported oil by preventing traffic andexpanding public transport and electromobilityNational strategic framework for market development in the transport
sector and for developing the corresponding infrastructure (e.g.
nationwide fast charging network)

Internal energy market



Expanding electricity transmission capacity on existing routes

Smart management at all voltage levels by building an energy data hub



No further measures for extending gas infrastructure: the existing gas
infrastructure is of a sufficient sizeActive support for gas distribution companies in setting up green gas
infrastructure (collection of biogas from decentralised biogas plants,
biogas and sewage sludge washing plants)

Research, innovation and 

Establishing a new research infrastructure involving all relevant researchcompetitivenessand innovation stakeholdersContinuously increasing investment in research and development in theenergy sector

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 12Increasing existing efforts and skills at the national research institutes

Luxembourg as an international hub for climate solutions

The success of this plan depends fundamentally on its acceptance by large parts of the population. The
social justice of the various measures of the plan is therefore one of the government’s central concerns.
This plan contains far-reaching measures to tackle the energy poverty of today and prevent it fromoccurring in the future. Through targeted and socially differentiated support and compensation, this plan
will make it possible to become a tool for both climate and social progress.

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1.2. Overview of current policy situation
When devising the energy and climate policies, a few specific details of Luxembourg’s situation and theenergy consumption pattern need to be taken into account. First of all, Luxembourg is characterised by ahighly dynamic demographic development of the population. In the last ten years, for instance, thepopulation has increased from 493,500 residents in 2009 to 613,900 residents in 2019. In addition, the very
open Luxembourg economy is characterised by dynamic development, reflected in an average annual
growth rate of more than 2.5% in the last five years. A further atypical situation compared to its
neighbouring countries is the high fuel consumption, which constitutes approximately two-thirds of theentire national final energy consumption. This is largely due to Luxembourg’s central position in Europe
and to the low price level of fuel compared to the neighbouring countries. Moreover, Luxembourg does
not have any large power plants, meaning that, in addition to its own electricity production, it relies mainlyon imports (85%), which are not accounted for on the CO2 balance sheet. This pattern is also reflected in a
relatively low consumption of electricity in Luxembourg, at just under 15%. It should also be taken into
account that the pattern of industrial energy consumption is likewise considered atypical. For example, theshare of electricity consumption in the steel industry alone amounts to about 40% of national electricity
consumption. Some of the factors mentioned above have thus become significant drivers of energy
consumption in recent years, and will remain so in the future.
It is also important to consider that Luxembourg is characterised by a high level of energy dependency. In
fact, Luxembourg is one of the few countries in the European Union that does not have any naturally
occurring fossil resources and therefore has to import all of the energy it needs, whether oil or natural gas.
Luxembourg also does not have any sea ports, any refining capacity, any gas reservoirs due to the lack ofsuitable geology, and limited storage capacity for oil products.
Luxembourg thus has only limited opportunities to influence the overarching security of supply using
national measures. In order to ensure its security of supply, Luxembourg, in close cooperation withneighbouring countries, has in the past relied on the diversification of sources and routes of supply in theframework of the Pentalateral Energy Forum (DE, FR, BE, NL, LU, AT, CH).
Luxembourg has always been a proponent of a well-functioning and competitive internal energy market
and advocates European approaches to energy infrastructure. These approaches are fully in line with theprinciples of the European Energy Union.
In recent years, Luxembourg has made considerable progress in energy efficiency, renewable energy andclimate action, and the digitalisation of the energy transition. These areas will be addressed briefly below.
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Energy efficiency
Between 2008 and 2014, Luxembourg adopted three national energy efficiency action plans andimplemented the measures contained therein. The current, fourth, National Energy Efficiency Action Plan
was adopted by the government in 2017. It contains a large number of measures that are currently being
implemented.
In the field of new buildings, Luxembourg has continually tightened its energy efficiency requirements overthe last ten years and is playing a leading role in Europe. The nearly zero-energy building standard
applicable in the field of energy classes has been compulsory for every newly constructed residentialbuilding since the start of 2017, and corresponds approximately to the internationally recognised
Passivhaus Standard [passive-house standard]. These nearly zero-energy buildings are generally identified
as AAA buildings in the national certification of energy performance certificates.
In 2014, Luxembourg presented its national building renovation strategy, which was praised by theEuropean Commission in particular for its detailed overview of the building stock and for the national
information and training programmes. In view of the significant potential for energy savings in existingbuildings, the implementation of a national initiative for energy renovation was announced as part of thebuilding renovation strategy. An extension of the building renovation strategy was developed incooperation with the relevant players in the construction sector. This extension outlined guidelines forfurther-reaching strategic approaches and contains an action plan based on the currently existing obstacles.
The strategic approaches and measures are currently being put into practice.
A series of instruments has also been developed and introduced to support the energy renovation ofbuildings. These instruments include investment aid for private households (via the PRIMe House support
scheme) and municipalities (via the environmental fund) and the launch of a climate bank that offers
reduced-interest loans for energy renovation. In order to lend fresh impetus to energy efficiency, in 2015
Luxembourg introduced a mechanism obliging natural gas and electricity suppliers to make concrete energy
savings each year by implementing energy efficiency measures in sectors of their choosing.
In the industrial sector, the voluntary agreement between the government and industry was reformed inorder to focus on increasing energy efficiency by means of binding targets. The investment aid schemes forcompanies in order to improve energy efficiency and promote renewable energy have also been reformed.

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Renewable energy
In the field of renewable energy, Directive 2009/28/EC of 23 April 2009 on the promotion of the use ofenergy from renewable sources sets a target for Luxembourg of 11% renewable energy in the final energy
consumption in 2020. Each Member State will also ensure that the share of energy from renewable sourcesin all forms of transport in 2020 is at least 10% of its final consumption of energy in transport.
Luxembourg is well on track to meet its targets for 2020. The share of renewable energy in the final energy
consumption reached 6.38% in 2017, compared with 5.44% in 2016, 5.04% in 2015 and 4.51% in 2014. In
order to be able to respect the indicative trajectory set out in Directive 2009/28/EC, Luxembourg mustachieve an average share of 7.47% renewable energy in 2017 and 2018.
In the field of new residential buildings, an implicit requirement for the use of renewable energy was
introduced by the Regulation on the energy efficiency of residential buildings. The regulations on feed-in
tariffs have been systematically adjusted in recent years to create interesting investment incentives,
particularly in the areas of biomass, wind and photovoltaics, as well as for photovoltaics cooperatives. In
addition, the feed-in tariffs for photovoltaics were increased in 2019 and a first national competitive
procedure for photovoltaic systems on buildings or industrial or landfill sites was organised in 2018. A
second invitation to tender was issued in autumn 2019. These measures have triggered a huge wave ofinvestment and could swiftly increase solar production from the current 130 MW to over 200 MW.
Finally, it should also be mentioned that the biofuel blending rate has been set at 5.85% for 2019 and 7.7%
for 2020. In 2019, the minimum rate for biofuels made from non-food waste, residues and cellulosic
materials covered by the ‘double counting’ principle was set at 35% and in 2020 was even increased to 50%(after double counting). In addition, the government programme stipulated that the use of first-generation
biofuels should be limited to no more than 5% in order to promote the use of second-generation biofuels,
which are considered more sustainable.

Sustainable mobility
In parallel to the increased support for public transport and active mobility (Luxembourg has the largest
investment programme in the EU for trains, trams and buses), recent years have seen the promotion ofelectromobility. Luxembourg has decided to set up a joint national infrastructure of public charging stations
for electric vehicles. A total of 800 charging stations are to be installed in public areas and in park & ride
car parks by 2020. Just under 280 charging stations had already been installed by the end of 2018. Relative

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to population, Luxembourg is thus already in third place in the field of public charging infrastructure inEurope.

Digitalisation
As part of efforts to digitalise the energy transition, Luxembourg legally requires electricity and gas network
operators to replace current electricity and gas meters with smart meters by 2020 and 2021, respectively,
and to manage the corresponding data using a joint central system.

Climate Pact
In 2012, the Luxembourg Government concluded a Climate Pact with the municipalities, offering technicaladvice and financial support for climate action measures. The Climate Pact is a wide-ranging instrument fororienting and shaping communal climate and energy policies, which has been expanded to include thetopics of air quality and the circular economy. It supports the municipalities in introducing an integrated
climate action and energy management system and achieving certification with the ‘European EnergyAward’. The Pact has been well received and has now been signed by all municipalities in Luxembourg, of
which more than 86% had already achieved one of the three certification levels by the end of 2018. The
2018-2023 coalition agreement envisages the further development of the Climate Pact beyond 2020.
As the above examples show, Luxembourg has managed to make significant progress in recent years in thefield of energy and climate policies, thus laying the groundwork for a sustainable energy transition. The
present national energy and climate plan picks up on this trend and sets out an ambitious route for
Luxembourg to drastically reduce energy consumption in all sectors and rapidly develop renewable energy
and electromobility.

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1.3. Consultations and involvement of national and Union entities and their outcome
Regulation (EU) 2018/1999 of 11 December 2018 on the Governance of the Energy Union and Climate
Action provides for public consultations to be carried out. In addition, a multilevel climate and energy
dialogue should be established, in which local authorities, civil society organisations, social partners andother relevant stakeholders come together to discuss the different scenarios envisaged for energy andclimate policies.
Luxembourg’s present national energy and climate plan for the period 2021-2030 was prepared in thecourse of intensive consultations under the leadership of the two responsible ministries (Ministry of Energy
and Spatial Planning and Ministry of Environment, Climate and Sustainable Development).

Involvement and consultation of the national Parliament
Following the adoption of the draft national energy and climate plan by the Government Council, the draft
was presented to Parliament’s Committee on Environment, Climate, Energy and Spatial Development on
27 February 2019.
Following the adoption by the Government Council of the draft composition of the final energy and climate
plan, an exchange of views took place on 6 and 17 December 2019 in Parliament’s Committee on
Environment, Climate, Energy and Spatial Development. This exchange between members of Parliament,
the Minister for the Environment and the Minister for Energy also served as preparation for a consultation
debate in Parliament.
During the consultation debate on 19 December 2019, the spokespersons of the political groups expressed
their views on the objectives, policies and measures envisaged under the national energy and climate plan.
Further information can be found on the Parliament’s website3.

Involvement and consultation of stakeholders and the public
Stakeholders and the public were given the opportunity to participate in the preparation of the present
national energy and climate plan at an early stage. As early as 2018, participatory processes took place
during the preparation of the draft national energy and climate plan, the results of which were included in3

https://www.chd.lu/wps/portal/public/Accueil/Actualite/ALaUne/?current=true&urile=wcm%3Apath%3Aactualite.public.chd.lu/STwww.chd.lu/sa-actualites/c96b8d5e-613c-42a7-bb1a-7f4fee350509

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the draft plan where useful and possible. Further details on the above processes (strategy study on the
Third Industrial Revolution and long-term climate strategy) are provided below.
Following the adoption of the draft plan in early 2019, it was presented in a one-day workshop on 21 May
2019 (Journée ‘Generatioun Klima – zesumme fir eise Planéit’) and discussed with representatives of civilsociety, social partners, business, academia, Parliament and other stakeholders, with the involvement of
the relevant ministries and administrations as well as local authorities. Almost 200 participants took part in
the discussions. The preparation of the final energy and climate plan involved developing, prioritising andspecifying measures on the basis of approaches that have already been identified, which should make itpossible to achieve the 2030 targets. The participatory process was led by experts and was divided into
seven thematic areas:housing and sustainable buildingsmobility

industry and entrepreneurshipagricultureenergychanging lifestyles

governance, sustainable finance and taxation.

In addition, the Ministry of Energy and Spatial Development and the Ministry of Environment, Climate andSustainable Development held a series of bilateral discussions with civil society organisations and social
partners in autumn 2019. The aim of the discussions was to reach the broadest possible consensus among
the various stakeholders on the planned policies and measures of the energy and climate plan.
In response to the mobilisation of students for climate action, the government has also actively involved
students in the consultations. In order to better understand their expectations, ideas and proposals, four
regional workshops were held in lyceums (ClimateXchange) in May 2019, in collaboration with the CNEL
National Conference of Schoolchildren. A total of around 500 students participated in the workshops, whichwere also attended by the Minister for Education, the Minister for the Environment and the Minister for
Agriculture. The workshops addressed in particular sustainable schools, mobility, waste, energy andagriculture (sustainable consumption and production).

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Process – strategy study on the Third Industrial Revolution
In 2015, at the initiative of the Ministry of the Economy and in cooperation with the Chamber of Commerceand IMS Luxembourg, Luxembourg commissioned the American social theorist, sociologist, economist andpublic speaker Jeremy Rifkin, who developed the concept of the Third Industrial Revolution and haspresented it in a number of his publications and books, to conduct a strategy study on the Third Industrial
Revolution (TIR process). The study pursued the aim of making the existing economic model moresustainable and interconnected for future generations. The preparation of the strategy study was linked toan open, participatory and long-term process, with the aim of identifying the megatrends, drawing thenecessary conclusions and introducing these in a suitable form into democratic institutions. The TIR process
also sought to make use of the ‘collective intelligence’ approach, which is considered an important part ofthe concept of open social innovation. In the follow-up to the study, the government stated that theparticipatory approach should be continued via existing platforms. In this context, the ‘Energy Future of
Luxembourg’ platform was set up for the energy sector, which has dealt with important and specific topics
relating to the energy transition at several events. On 12 March 2018, an open workshop on the energy
transition was held in the context of the developments in the European Energy Union, with presentations
and discussions on the main pillars of the Energy Union, the National Energy Efficiency Action Plan, themodelling for the development of the 2030 energy and climate strategy, the renovation potential in
Luxembourg looking ahead to 2070, the potential of renewable energy in Luxembourg looking ahead to2030, and security of supply issues and competitiveness in the areas of electricity, natural gas and oil.
Process – long-term climate strategy
With a view to developing a long-term climate strategy, the Ministry of Sustainable Development andInfrastructure organised several consultations with civil society, business, science and public administration
representatives during 2018. These consultations were also attended by Prof. Reinhard Loske. At a first cocreation workshop on the weekend of 3 and 4 February 2018, around 100 participants identified social
innovations for mitigating climate change. A second workshop took place on 15 March 2018. There, above
all the main principles of governance of the national climate policy were developed with the interest
groups. On 5 June 2018, the preliminary draft strategy was presented and discussed with the stakeholders.
This is intended to serve as the basis for developing the long-term strategy that must be prepared pursuant
to the Paris Climate Agreement and Article 15 of Regulation (EU) 2018/1999 of 11 December 2018 on the
Governance of the Energy Union and Climate Action. In addition, the main findings of the above workshops
have, where possible, been taken into account in the present national energy and climate plan.

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Public consultation
Following the adoption of the draft final national energy and climate plan for the period 2021-2030 by theGovernment Council on 7 February 2020, the draft was submitted to the public and all stakeholders in a
final public consultation. Neighbouring countries were also included in this process.
From 12 February to 29 March 2020, the aforementioned draft and the draft of the associatedenvironmental impact report were available on the Environment Portal (www.emwelt.lu) of the Ministry of
the Environment, Climate and Sustainable Development. During this period, interested citizens andstakeholders were able to submit their opinions, suggestions and comments by email or by post.
A total of 328 citizens took advantage of this opportunity. Some 30 stakeholders from civil society andbusiness, including social partners, as well as public institutions, submitted comments.
All contributions and comments, including those received after the deadline of 29 March 2020, were
evaluated and duly considered. A lot of the feedback relates to the implementation of measures containedin the plan and will therefore be taken into account in the implementation process. At the same time, afunctioning dialogue between all national stakeholders is an important prerequisite for the successful
implementation of the energy and climate plan. The bodies provided for in the draft framework law on
climate change make it possible to structure this dialogue.

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Iterative process with the European Commission
Luxembourg submitted its draft integrated national energy and climate plan 2021-2030 to the European
Commission on 18 February 2019. The draft was assessed by the Commission in accordance with
Regulation (EU) 2018/1999. On 18 June 2019, the Commission sent nine recommendations to Luxembourg
based on the above assessment. In drawing up the final national energy and climate plan, Luxembourg hastaken these recommendations into account and acted on them where possible.

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1.4. Regional cooperation in preparing the plan

Pentalateral Energy Forum
Luxembourg is an integral part of the energy markets for electricity and gas in Western Europe. As part ofthese markets, it benefits – as do the other Member States – from significantly better conditions in termsof economic efficiency, security of supply and sustainability of energy supply.
A key element of regional cooperation in the context of energy and climate policy is the Pentalateral Energy
Forum. Under the Luxembourg presidency, the following joint chapter was adopted at a conference in June
2019:
Introduction
Within the framework of the Pentalateral Energy Forum for regional cooperation, which has been
in existence since 2005, Belgium, Germany, France, Luxembourg, the Netherlands and, since 2011,
Austria have been working together on a voluntary basis – countries which together are home tomore than one third of the EU population and which account for more than 40% of electricity
generation in the EU. Switzerland joined as a permanent observer in 2011 and actively contributes
to technical and decision-making work. In close cooperation (upon invitation) with the European
Commission, the Pentalateral Energy Forum strengthens cooperation between all relevant
stakeholders and thus pursues the objective of creating a regional electricity market as anintermediate step towards establishing a single European electricity market.
The cooperation is steered by the energy ministers, who meet regularly. The continuous
monitoring of the activities is ensured by the Penta Coordinators and the Penta NECP Committee,
under the leadership of the relevant directors-general for energy in the participating countries. The
work programme is implemented by the transmission system operators (TSOs), ministries,
regulatory authorities, the European Commission and market players, who meet regularly in threeworking groups (support groups).
The great success of the past 15 years has been that the perspective of the participating countries
in terms of energy policy has evolved from a purely national focus to a regional approach. The
participating countries have set concrete regional milestones in various areas that are still relevant
today:

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Internal electricity market/market integration:
Penta Support Group 1 (SG 1) focuses on the coupling of the electricity markets in the region. SG 1
set itself the goal of the flow-based market coupling (FBMC) of day-ahead markets, which wasachieved when the Penta region became the first region in the European Union to introduce thisin May 2015. Since then, flow-based market coupling has been continuously optimised to achieve
higher welfare gains and now serves as the basis for a fully EU-based market coupling for day-aheadmarkets.
In order to increase the transmission capacity available for cross-border trading on the intraday
market, SG 1 promoted a coordinated process for calculating intraday capacities, which was
implemented in March 2016 after the flow-based market coupling of day-ahead markets for allborders in the region as a first step towards coupling the European intraday markets.
The Support Group was able to gain a privileged insight into the drastic changes in the electricity
landscape and the governance of the electricity markets. While in 2005 electricity operators werestill operating mainly independently of each other, over the years the working group has promotedcooperation between stakeholders, leading, inter alia, to the formation of regional groupings of
TSOs within their associations, the merging of power exchanges and TSOs and the emergence of
new regional players (TSCNet, Coreso, formerly CASC-CWE, SSC).
In view of the new implementation plans to be presented under the ‘Clean energy for all
Europeans’ package, the countries involved will coordinate closely and explore possibilities for joint
action.
Internal electricity market/flexibility:
Support Group 3 (SG 3) focuses on flexibility issues in the region. So far, the work of SG 3 has
focused on balancing energy, intraday and the role of demand-side management – three key areas
for regional cooperation to improve the flexibility of our electricity markets. A number of technicalbackground papers have been prepared, identifying the main obstacles to greater use of flexibility
in the Penta region. SG 3 is open to traditional participants (regulatory authorities, TSOs) as well asother stakeholders such as distribution system operators (DSOs), major consumer associations andrenewable energy producers.
In the area of balancing energy, the Pentaforum evaluated existing approaches and exchanged bestpractices. The Pentaforum also plays an important role in the implementation of the European
Union guidelines on balancing energy. In terms of demand-side management, a separate group of
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experts has prepared a report outlining the current situation in the Penta region, focusing inparticular on the rules and responsibilities of new market players in each country of the region.
With regard to further cooperation between the participating countries in the field of hydrogen, aworkshop was held to identify possible topics for cooperation in this field.
Security of supply:Support Group 2 (SG 2) deals with issues surrounding security of supply in the region. In June 2017,
the countries involved signed a memorandum of understanding (MoU) on cooperation with regard
to security of supply. On this basis, and in light of the new EU Regulation on cooperation in the fieldof risk preparedness, an emergency exercise was organised in 2018 with ‘PENTEX 2018’ in order toachieve a better common understanding of national concerns, to identify potentially relevant(cross-border) crisis situations in the region and to assess various measures to reduce the impact
of possible crises.
The first regional Generation Adequacy Assessment (GAA), carried out by the TSOs of theparticipating countries and published in March 2015, was an important milestone. The
methodology of the assessment was based on a probabilistic and chronological approach withhourly resolution for the years 2015/2016 and 2020/2021 and thus represented a significant
improvement over the existing deterministic approaches. Furthermore, the TSOs of theparticipating countries used a common regional data set based on the same scenarios andassumptions, such as a temperature-dependent load model for the whole region and harmonised
probabilistic hydrological data.
The governments of the Pentaforum countries are convinced that these parameters will remain
relevant in the future. In addition to continuing work on the above areas, the countries
participating in the Pentalateral Energy Forum will focus in the coming years on:
Decarbonisation of the electricity sector
Shared vision of a decarbonised electricity supply in the participating countries by 2050:
The participating countries will discuss their ideas on how to achieve a decarbonised electricity
supply by 2050 (and intermediate targets for 2030 and 2040) based on a highly efficient energy
system strongly influenced by renewable energy, a gradual phase-out of fossil power generationand efficient end-use of electricity. The first step is to compare national scenarios on a possible
design of the electricity system in 2050 and to identify commonalities and differences between

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these scenarios and how security of supply is ensured in the scenarios. This will serve as a basis fordeveloping a common understanding of the expectations and challenges in the development of
the future electricity system.

North Seas Energy Cooperation
Luxembourg is part of the North Seas Energy Cooperation and thus belongs to the wider North Sea region,
which has great potential in the field of renewable energy. According to the European Commission,
offshore wind energy in the North Sea is estimated to be able to cover up to 12% of the EU’s electricity
consumption by 2030.
Offshore power generation and transmission infrastructure projects can have cross-border implications forenergy prices, security of supply and the environment, including the availability of marine space and the
speed of innovation. As a result, Luxembourg and the countries bordering the North Sea can greatly benefit
from cooperating with one another.
The North Seas Energy Cooperation (NSEC) was established in 2016. It is an initiative of voluntary, bottomup and market-oriented regional cooperation. The aim is to create synergies and avoid incompatibilities
between national policies, exchange knowledge on best practices and promote common strategies where
possible and useful. It also aims to coordinate and promote the further cost-effective use of offshore
renewable energy, in particular wind energy, in order to ensure a sustainable, secure and affordable energy
supply for Luxembourg and the countries bordering the North Sea through an increased and better
coordinated use of offshore wind energy and through potential joint or cluster projects. The NSEC primarily
follows a step-by-step approach, with the longer-term prospect of further integration and increasing theefficiency of wholesale electricity markets, while contributing to reducing greenhouse gas emissions andaverage wholesale price ranges and improving security of supply in the region.
The North Seas Energy Cooperation comprises 10 countries, with the participation of the European
Commission: Belgium, the Netherlands, Luxembourg, France, Germany, the United Kingdom, Ireland,
Norway, Sweden and Denmark.
Regional cooperation
With regard to the development of this plan, the NSEC countries took full advantage of the NSEC,
where experts in the working groups shared knowledge and experience on specific aspects, suchas obstacles and best practices in the area of national offshore wind energy use, and in particular

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the coordination of national renewable energy plans for offshore wind energy by 2030 and market
integration.
The working groups (WGs) that are part of the Cooperation focus on the following topics:
WG 1: maritime spatial planning and environmental impact,
WG 2: development and regulation of offshore pipelines and other offshore infrastructure,
WG 3: support framework and financing of offshore wind energy projects,
WG 4: standards, technical requirements and regulation in the field of offshore wind energy.
Maritime spatial planning and environmental impact
Within the framework of the North Seas Energy Cooperation, the NSEC countries contribute to thedevelopment of a joint environmental impact procedure. In order to achieve our energy andclimate objectives within the EU, we need to better understand the potential environmental
limitations of large-scale wind energy use in the North Sea. Further work on maritime spatialplanning and environmental impact is needed to realise the potential of the North Sea. In order toincrease their knowledge and support the use of offshore wind energy in the North Sea,
Luxembourg and the countries bordering the North Sea will continue to work closely together on
maritime spatial planning, environmental research and cumulative environmental impact
assessment of wind farms by energy, maritime spatial planning and environmental authorities.
Offshore pipelines and other offshore infrastructure
The NSEC serves as a platform to work together on concepts for potential joint offshore windenergy projects and for coordinated electricity infrastructure, including transmission
infrastructure.
Luxembourg is working with the other North Seas Energy Cooperation countries to explore thepossibilities of specific cooperation projects. In addition to joint offshore wind energy projects
connecting and supported by several Member States, this includes work on possible hybrid
solutions that would exploit cross-border solutions to connect offshore wind farms to the grid andseek synergies with country interconnection capacities, and on appropriate market rules.
The NSEC countries therefore contribute to the development of opportunities for cooperation in
the field of hybrid projects, identifying and addressing legal, regulatory and commercial barriers.
Coordinating increased interconnection in the NSEC countries would also allow more surplus
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energy to flow to other countries where it could meet the demand in a well-functioning internalenergy market.
The NSEC has drawn up a list of possible areas and projects in the region where joint projects could
be particularly useful. These include: (1) IJmuiden Ver – offshore wind farm to UK, (2) CGS IJmuiden
Ver – Norfolk, (3) COBRA Cable, (4) the DE-NL offshore wind farm and (5) the North Sea Wind Power
Hub. NSEC is working to develop concrete approaches for the implementation of selected projects
from the above list.
The NSEC will continue to work on the action plans for the specific hybrid projects, which can also
be further developed at national and regional level. In addition, the Cooperation will continue toserve as a forum for reflection on how to deal with uncertainties regarding the regulatory
treatment of hybrid projects at EU and national level, and as a forum for discussing options toaddress these issues.
Support framework and financing of offshore wind energy projects
In terms of measures, Luxembourg benefits from the NSEC in several ways: the work of the NSEC
provides a platform for the exchange of best practices in designing support programmes anddeveloping and refining new concepts to meet new challenges in the field of promoting offshore
wind energy and developing possible options for future joint wind energy projects.
The work of the NSEC countries within the NSEC includes coordinating the timing of calls fortenders, exchanging best practices in designing support programmes for offshore wind energy and,
where possible, establishing common principles and possible options for aligning support.
As regards the coordination of tenders, the NSEC countries regularly exchange information on theirnational tendering schedules. The aim is to identify potential time overlaps and to ensure that theNorth Sea region is as even as possible in terms of the tendering process in order to optimise
competition and achieve the best value for money for consumers. The NSEC countries are preparedto take into account, among other criteria and where possible, the tendering schedules in their
future tender planning in order to avoid unnecessary bottlenecks and to ensure a steady flow ofcapacity without interruption cycles for the parties involved.
Within the NSEC, the NSEC countries exchange information on and discuss their prospective
national policy in respect of offshore wind energy, their national offshore utilisation plans and bestpractices regarding the design of tenders for offshore wind energy.

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At the ministerial meeting in Esbjerg on 20 June 2019, the North Sea states and Luxembourg agreed
to cooperate to achieve total installed capacity in the NSEC member states of at least 70 GW by
2030 on the basis of national planning.
In order to reflect the dynamics of offshore wind energy use in the region, the long-term planned
aggregate capacity of at least 70 GW by 2030 can be achieved with indicative milestones for theregion of around 25 GW in 2020 and 54 GW in 2025.
Within the NSEC, Luxembourg also contributes to analysing and developing options for mobilising
investments in joint projects, for example through EU funds such as the European Fund for
Strategic Investments (EFSI) and the Connecting Europe Facility (CEF) infrastructure fund, as wellas through institutional investors. Such future joint projects could be cross-border renewableenergy projects in line with the CEF proposal.
Harmonising rules, regulations and technical standards
The North Seas Energy Cooperation is working to harmonise standards and technical requirementsthat could contribute to further reducing the costs of using offshore wind energy. The
harmonisation of rules, regulations and technical standards focuses on five areas. These include:(1) aeronautics, labelling and lighting, (2) health and safety, (3) certification of regulatory
requirements, (4) design of wind farms and site exploration, and (5) research approaches. The NSEC
works to develop proposals and recommendations for implementation in close cooperation withindustry. The aim of these recommendations is to reduce costs while maintaining feasibility. The
Cooperation will continue to work to harmonise standards and technical requirements andexchange best practices to reduce unnecessary regulation and cut costs for industry.

European Union
Luxembourg will also continue to support ambitious goals and their implementation at European level. In
particular, the following objectives are being pursued.

1) In the European Climate Law, the EU commits to ‘zero net greenhouse gases’ by 2050 at the latest andpresents a concrete roadmap on how this will be implemented.

2) As an important first intermediate step, the EU has committed to a binding target of a 55% reduction ofgreenhouse gases in the EU by 2030.
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 29

3) The European Commission is expected to present by summer 2020 a concrete plan on how to adapt therelevant EU targets for greenhouse gas reductions and energy, as well as existing EU measures (EUemissions trading scheme for CO2 allowances for industry and power plants, EU effort sharing (ESR), landuse, land-use change and forestry (LULUCF), EU Energy Efficiency Directive, EU Renewable Energy Directive,
or regulation of CO2 emissions from passenger cars and light- and heavy-duty vehicles).
The Commission is also proposing the following additional measures:-in order to prevent unfair competition from imports that are not made in a way that protects theclimate, the EU should introduce a ‘border tax adjustment’ (CO2 border adjustment);-

in order to accelerate the phasing-out of fossil fuel drives/engines from new cars and vans, allvehicles should be fossil-free (electrical, hydrogen) from 2031 onwards;-

the EU should also introduce standards for new trucks, ships and aircraft.

4) The EU presents a financial framework on how the EU budget will proactively support the climate andenergy transition (GHG emissions in the industrial sector: zero carbon steel, cement or glass, major EU housing
renovation programme, support to build 400 GW offshore wind farms in the North Sea, infrastructuredevelopment for zero- or low-emission transport, and conversion to climate-friendly agriculture and landuse). Progress will be measured by a credible and transparent system and a methodology for verification,
traceability and monitoring of expenditure and its impact on climate action and the energy transition.
The European Investment Bank will be transformed into a climate bank that will no longer lend for fossil
fuel projects. It is also important that no common funds are wasted on the further development ormaintenance of nuclear energy in Europe.

5) Before summer 2020, the EU is expected to present a new law to ensure that all batteries sold in the EU(in cars, buses, but also in other electronic devices) are 100% recycled and produced from materials thatmeet high environmental and human-rights standards.

6) The EU should not only tax the big internet companies, but also commit them to high energy efficiency
standards (immersion cooling) and 100% renewable energy.

7) The EU should establish the industrial basis for a radical energy transition through large-scale research
projects (zero carbon steel, cement, glass, green batteries programme, hybrid electric aircraft/ships) andprevent dumping by imports through binding climate clauses in trade agreements.
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 30

2. National objectives and targets
As part of the trialogue in June 2018, the EU Member States, the European Parliament and the European
Commission reached a political agreement on the target system for 2030, with binding EU targets of a 40%
reduction in greenhouse gases (GHG), a 32% share of renewable energy in the final energy demand and32.5% for energy efficiency, and a revision clause providing for an increase in 2023. According to Regulation(EU) 2018/1999 on the Governance of the Energy Union and Climate Action, the Member States are obliged
to submit to the European Commission a national energy and climate plan, comprising a detailed
presentation of the national objectives for reducing greenhouse gases, the objectives for renewable energy
and energy efficiency and the measures planned in this regard. This plan sets out Luxembourg’s objectives
under the target system referred to above. There is also the requirement that the combined trajectories
submitted by the Member States achieve the European minimum targets.
For Luxembourg, there is already a minimum binding GHG reduction target that arises from Regulation(EU) 2018/842 on binding annual greenhouse gas emission reductions by Member States from 2021 to2030. The GHG reduction set down in this regulation is 40% by 2030, based on Luxembourg’s GHG
emissions in 2005. In terms of renewable energy, Directive (EU) 2018/2001 on the promotion of the use ofenergy from renewable sources provides for a benchmark formula, resulting in an increase in the target for
Luxembourg of around 12 percentage points, which corresponds to a 2030 target of around 23%. Thistarget can be met by using domestic resources, importing biofuels or promoting electromobility in thetransport sector as well as by using cooperation mechanisms. For the area of energy efficiency, EU effort
sharing and the EU target for energy efficiency result in a target corridor of 35 to 40%, which is determinedin comparison with the EU reference development for Luxembourg for 2030, which was published in 2007
(EU PRIMES 2007)4.
Luxembourg’s objectives in the dimensions to be considered are presented below. It should be mentioned
at the outset that all of the minimum requirements outlined above, whether in the area of GHG reduction
or regarding the contribution of renewable energy or energy efficiency, are clearly met. Luxembourg
considers it essential to embark on an ambitious path together with its European partners.

4 European Commission DG for Energy and Transport (2008). European energy and transport -TRENDS TO 2030 — UPDATE 2007.

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2.1. Decarbonisation dimension
2.1.1.

Greenhouse gas emissions and removals

In terms of consistency with the objective set out in Article 2.1.a of the Paris Climate Agreement,
Luxembourg is aiming at a national level to reduce GHG emissions for the sectors outside the emissions
trading scheme by 55% by 2030 compared to the base year 2005. In fact, the IPCC special report on theimpacts of global warming of 1.5 °C above pre-industrial levels states that it will only be possible to limit
global warming to 1.5 °C if global greenhouse gas emissions are halved by 2030 (compared to current
levels), followed by climate neutrality by 2050.

The national GHG reduction target is therefore more ambitious than Luxembourg’s binding contribution to
the EU target in accordance with Regulation (EU) 2018/842 on binding annual greenhouse gas emission
reductions by Member States from 2021 to 2030. The GHG reduction target enshrined in this regulation
for the sectors outside the emissions trading scheme is 40% by 2030 compared to 2005. The annual
emissions budgets are calculated on the basis of a linear reduction trajectory between the real average
GHG emissions in 2016 to 2018 and the points target for 2030.
According to Regulation (EU) 2018/841 on the inclusion of greenhouse gas emissions and removals fromland use, land use change and forestry in the 2030 climate and energy framework, each EU Member Stateis given a target for the LULUCF sector5. Taken together, the debits from the land use categories includedin the accounting (in accordance with Article 2 of Regulation (EU) 2018/841) may not exceed the credits at
the end of the two five-year periods 2021 to 2025 and 2026 to 2030 (‘no net debit rule’).

2.1.2.

Renewable energy

Luxembourg is aiming to increase the share of renewable energy from 11% in 2020 to 25% by 2030.

According to current scenarios, the national expansion of renewable energy by 2030 would amount to19.6%, in each case on the basis of the gross final energy demand, in other words the sum of the sectoralenergy demands for electricity, heat and fuels in the transport sector. In addition to ambitious renewableenergy policies, what these scenarios have in common is a significant increase in energy efficiency (seeSection 2.2) and thus a reduction in energy demand, which in turn implies an additional increase in theshare of renewable energy in relation to consumption. However, in line with the EU target (increasing therenewable share to 32% at EU level by 2030), a national contribution of 25% would appear to be reasonable

5

LULUCF: Land Use, Land Use Change and Forestry

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and appropriate. To cover the corresponding shortfall, it is advisable to cooperate with other EU Member
States, which would involve the use of the cooperation mechanisms that had already proved themselvesby 2020. Cooperation with other Member States as well as statistical transfers will be further developed
and will include concrete projects (e.g. large solar installations in southern Europe or offshore wind
installations).

Target volumes at sectoral and technological level will be presented below, while the following chapters
contain a discussion of the measures and an impact assessment. The results and values presented relate
to the target of 25%.

Table 1 :Sectoral shares of renewable energy in Luxembourg up to 2040 according to the target
scenario with the upper range value of 25% (in 2030).

Renewable energy shares, sectoral

2017

2020

2025

2030

2035

2040

%

8.1%

11.9%

23.5%

33.6%

38.8%

45.4%

%

8.1%

13.7%

19.9%

30.5%

35.8%

47.1%

transport sector

%

6.4%

11.3%

18.4%

25.6%

40.4%

54.3%

Admixture rate for biofuels

%

5.6%

7.7%

8.8%

10.0%

14.4%

18.7%

%

6.4%

9.4%

13.9%

19.6%

24.8%

31.9%

%

6.4%

11.8%

17.6%

25.0%

31.0%

39.3%

Renewable energy share,electricity sector
Renewable energy share, heatsectorRenewable energy share,

Renewable energy share, total national production/consumption
Renewable energy share, total - incl.
renewable energy cooperation
Source: Own illustrations, 2019
Renewable energy currently plays a significant but comparatively limited part in energy generation in
Luxembourg. However, this can and should change significantly in the coming years, thus making it aconsistent continuation of the trend that has been set in the recent past. Renewable energy such as windenergy and photovoltaics, but also biomass – the core technologies in the field of electricity generation for
Luxembourg – have also seen considerable growth in recent years. In the space of a decade, theircontribution has doubled – both in the electricity sector (from 3.3% in 2007 to 8.1% in 2017) but also in

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 33

terms of heat production (from 4.4% in 2007 to 8.1% in 2017). In the transport sector, this change has beeneven more pronounced. The renewable energy share was 2.2% in 2007 and increased to 6.4% in 2017.

Table 2 :Technology-specific energy generation from renewable energy in Luxembourg up to 2040
according to the target scenario with the upper range value of 25% (in 2030).

Energy production,technological details

2017

2020

2025

2030

2035

2040

Electricity sector
Biogas*

GWh

72

56

70

93

96

97

Biomass**

GWh

101

192

228

271

268

338

Hydroelectric power

GWh

104

93

97

100

104

107

Photovoltaics

GWh

108

197

786

1,112

1,257

1,442

Wind energy

GWh

185

211

382

674

956

1,166

GWh

570

748

1,563

2,251

2,680

3,150

GWh

302

589

625

676

669

728

Biomass, decentralised

GWh

672

883

1,084

1,263

1,083

1,083

Solar thermal energy

GWh

25

58

115

190

236

290

Heat pumps

GWh

52

95

207

422

507

507

GWh

1,052

1,626

2,030

2,551

2,495

2,609

GWh

1,282

1,632

1,563

1,485

1,738

1,749

GWh

2,904

4,006

5,156

6,287

6,914

7,508

GWh

0

1,000

1,374

1,748

1,748

1,748

Renewable energy electricity, total
Heat sector
Biomass & biogas, gridconnected

Renewable energy heat, total
Transport sector
Biofuels, total
Renewable energy use, total(national)
Renewable energy cooperation
Renewable energy cooperationenergy* Central plants (fed into a heating network)** Decentralised plants (not fed into a heating network, all sectors)

Source: Own illustrations, 2019
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 34

The coming decade was looked at in the context of an underlying study (cf. Resch et al. 2019), using avariety of possible development trajectories and corresponding energy scenarios. The target scenariopresented in this plan corresponds to 25% in 2030. If the status quo (2017) and the reference development,
which corresponds to a continuation of the existing policies, are additionally taken into account, theincrease is even more noticeable. The share of renewable energy in gross final energy demand, in otherwords the sum of the sectoral energy demands for electricity, heat and fuels in the transport sector, would
accordingly increase from 6.4% in 2017 to 12.9% in the case of merely continuing with the existing policies(reference development) – as illustrated by corresponding data in Section 4 of this report. If additional
interventions are made, in both renewable energy and energy efficiency, an increase to 19.6% in 2030
would be possible in accordance with the target scenario presented here.

Table 1 provides information on the sectoral decomposition of the overall balance and Table 2 provides
supplementary details on the potential underlying technology split. Accordingly, the highest growth isexpected for renewable energy in the electricity sector. Here, a share of around 33.6% appears possible for2030 – including on the basis of projects that are already in progress (for example in the field of windturbines, solar installations and biomass cogeneration). By 2040, the share of renewable energy in grosselectricity consumption would then increase further to a remarkable 45.4%. In second place in terms of the
speed of change is the heat sector. Considerable growth compared to the current situation is expected
here, partly in line with electricity generation (biomass cogeneration), but also at a decentralised level, forinstance in the case of heat pumps, solar thermal collectors for water heating or modern biomass heating
systems. Accordingly, the share of renewable energy in the heating sector would rise from the current 8.1%
(2017) to 30.5% by 2030 and to 47.1% by 2040. The considerable increase in the share of renewable energy
in the years after 2030 is mainly a consequence of the significant increase in energy efficiency, and thus
the reduction of energy demand in the heating sector. Furthermore, a massive increase in the use ofrenewable energy is also expected in the transport sector. This assumes an increase in biofuel blending(second generation). It is also assumed that the biofuel mix up to and including 2030 will consist of a
maximum of 5% of first-generation fuels6, measured by total road transport fuel demand. The aim is also
to massively increase e-mobility. Overall, this will result in a significant increase in the share of renewableenergy in the transport sector, to 25.6% by 2030 and 54.3% in 2040 (using the calculation logic established

6

More specifically, both the target and the reference scenarios assumed that by 2030 the share of first-generation biofuels could be reduced to2.5% of road transport fuel demand.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 35

under EU Directive 2018/2001). The required renewable energy volumes, which are to be covered in future
by renewable energy cooperation with other countries, as they are necessary to achieve the envisaged
renewable energy targets of 11%7 in 2020 and 25% in 2030, are also listed in Table 2. In the target scenario
considered here, these amount to 1 TWh in 2020 and 1.75 TWh in 2030 (and beyond).

7 In the target scenario, the assumed renewable energy cooperation volumes (1 TWh) mean that the national minimum target (11%) will be

exceeded in 2020 – thus, taking into account renewable energy cooperation, a renewable energy share of 12% of gross final energy demand isachieved.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 36

2.2. Energy efficiency dimension
Regarding compatibility with the GHG reduction target mentioned in Section 2.1.1, Luxembourg is aiming
for a reduction of final energy demand of between 40% and 44% by 2030 compared to the EU PRIMES
baseline (2007).

With regard to achieving the goal, which in the illustration below is 44%, a distinction is made in particularbetween the following areas, based on the assumed intensification of existing policy instruments and theintroduction of new ones:level of ambition in the building stock, both for new construction and energy renovation –renovation rate and depth of renovations implemented,

efficiency in industry and SMEs,the extent to which transit and cross-border commuting are addressed,the development of electromobility in existing vehicles.

The key target figures of the target scenario, based on the upper range value of 44%, are presented in Table
3.

The sum of the annual final energy savings of all sectors (private households, trade, commerce and services,
industry and transport) compared to the corresponding final energy demand in the reference scenario in
the period 2021 to 2030 is shown in Figure 1. In 2030, the final energy savings achieved by all sectors
through the implemented measures amount to approximately 14.5 TWh, resulting in a final energy
consumption of 35,568 GWh compared to the final energy consumption of 50.5 TWh in the reference
scenario. The final energy demand of 35,568 GWh in 2030 (see Table 3), corresponds to a 44% reduction
in final energy demand according to EU PRIMES 2007.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 37

Table 3 :Key target figures of the target scenario in the area of energy efficiency based on the upper
range value of 44%
Target scenario

44% efficiency (EFF44)

Efficiency target 2030 (versus EU PRIMES in 2030)-44%

Final energy demand [GWh]35,568

Total

-30%

Households-40%

Tertiary-24%

Industry-17%

Road transport-38%

Road fuels (excluding electricity for e-mobility)-41%

Renovation rate 2020-20308

2.7%

Depth of renovation(average reduction in heat requirement after full renovation)
E-mobility: Share of electric cars/plug-in hybrids in existing vehicles 2030
(residents)

72%

49%

Source: own calculations 20198

Based on the additional renovations compared to the baseline scenario. The renovation rate expresses the proportion of buildings renovated
per year in relation to the old building stock (buildings built before 1991).

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 38GWh
16.00013.77014.00014.481

12.664
11.53812.00010.4009.243

10.000
8.067
8.000
6.000

6.917
5.717
4.528

4.000
2.000

0
2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Source: own calculations 2019
Figure 1:

Annual final energy savings in GWh in private households, the trade, commerce and services
sector, industry and the transport sector in Luxembourg (based on an energy efficiency
target of 44%)

The cumulative final energy savings of all sectors (private households, trade, commerce and services,
industry and transport) in the period 2021 to 2030 amount to a good 97.3 TWh if the planned energy
efficiency measures are implemented (see Figure 2).

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 39GWh120.000
97.326100.000
82.84580.00069.07556.41160.00044.87340.00034.47325.22917.16220.0004.528

10.245

0
2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Source: own calculations 2019
Figure 2 :Cumulative final energy savings over the period 2021 to 2030 in GWh in private households,
the trade, commerce and services sector, industry and the transport sector in Luxembourg(based on an energy efficiency target of 44%)

The sum of the annual final energy savings of residential and non-residential buildings in Luxembourg
compared to the corresponding final energy demand in the reference scenario in the period 2021 to 2030
is shown in Figure 3. In 2030, the final energy savings achieved by the planned measures in residential andnon-residential buildings amount to approximately 4 TWh (see Figure 3).

The cumulative energy efficiency renovation of residential and non-residential buildings in Luxembourg
over the period from 2021 to 2030, at just under 28.6 TWh, contributes to the final energy savings in all
sectors (see Figure 4). The biggest final energy savings are achieved by the renovation of private dwellings,
followed by the renovation of office and public buildings and the renovation of other buildings (see Figure4). This is explained by the fact that even in Luxembourg, despite the importance of the financial centre,
there are considerably more square metres of residential than office buildings.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 40

GWh
4.000
3.500
3.000
2.500
2.000

517

1.984

2.194

3.013

1.766

2.808

1.549

2.607

1.333

2.402

1.118

497

2022

2023

2024

2025

2026

2027

2028

2029

2030

1.000
500

145
215
390

178
255
474

2021

109
169
297

1.500

128
194
347

119
183
323

137
206
370

157
230
421

168
243
448

195
274

187
265

0

Wohngebäude

BürogebäudeÖffentliche Gebäude

GWh
Wohngebäude
BürogebäudeÖffentliche Gebäude
Sonstige Gebäude
Source: own calculations 2019
Figure 3 :Sonstige Gebäude

GWh
Residential buildings
Office buildings
Public buildings
Other buildings

Annual final energy savings in GWh from the renovation of all residential and nonresidential buildings in Luxembourg (based on an energy efficiency target of 44%)

GWh
30.000
1.553
2.179
1.352
1.917

2022

2023

Wohngebäude

GWh
Wohngebäude
BürogebäudeÖffentliche Gebäude
Sonstige Gebäude

2024
Bürogebäude

2025

2026

2027

Öffentliche Gebäude

2028

4.112

3.589

14.953

645
956
1.734

12.346

2021

4.000

109
169
297

359
543
969

2.451

1.118

0

229
351
621

5.766

5.000

498
745
1.341

7.750

10.000

806
1.180
2.157

9.944

15.000

977
1.416
2.609

17.761

1.159
1.662
3.087

20.0002029

20.77525.0002030

Sonstige Gebäude

GWh
Residential buildings
Office buildings
Public buildings
Other buildings

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 41

Source: own calculations 2019
Figure 4 :Cumulative final energy savings over the period 2021 to 2030 in GWh from the renovationof all residential and non-residential buildings in Luxembourg (based on an energy efficiency
target of 44%)

In Figure 5, the development of the final energy savings that will be achieved through the renovation of
public buildings in Luxembourg by 2030 is once more presented separately by way of example. The public
sector will serve as an example and will be the starting point for the development of a large energy
efficiency market in Luxembourg. Over this period, the annual final energy savings will grow gradually from
169 GWh (2021) to 274 GWh (2030), corresponding to a total increase in annual final energy savings of
105 GWh. The renovation of public buildings accounts for approximately 8% of the total final energy savings
through energy efficiency renovations of buildings.

GWh
300
250
200

169

183

194

206

215

230

243

255

265

274

150
100
50
0

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Source: own calculations 2019
Figure 5 :Annual final energy savings in GWh from the renovation of public buildings in Luxembourg(based on an energy efficiency target of 44%)

In Figure 6, the development of the cumulative final energy savings that will be achieved through therenovation of public buildings in Luxembourg by 2030 is once more presented separately by way of
example. Over this period, the cumulative final energy savings from the renovation of public buildings willgrow gradually from just under 169 GWh (2021) to just under 2.2 TWh (2030), corresponding to an increasein cumulative final energy savings of around 2 TWh.
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 42

GWh
2500
2.179
1.917

2000
1.662
1.416

1500

1.180
956

1000

745
543
351

500

169
0

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Source: own calculations 2019
Figure 6 :Cumulative final energy savings over the period 2021 to 2030 in GWh from the renovationof public buildings in Luxembourg (based on an energy efficiency target of 44%)

As a result of the dynamic economy and population growth, new construction is more important than inother EU countries, in terms of both residential and purpose-built buildings. Therefore, in 2017,
Luxembourg introduced a statutory energy standard for new buildings, roughly corresponding to the level
required by the Passivhaus Standard.
The interplay between building efficiency (roof, walls, windows, basement) and the phasing-out of fossilfuel heating systems should help to make the building renovation strategy a success. This will becomplemented by a fuel oil substitution programme and the establishment of low-temperature heating
networks fed by waste heat from industry and renewable energy sources (deep geothermal energy, heatpumps, sustainable wood). The national building renovation strategy will be developed in cooperation withall stakeholders. In particular, social aspects, heritage protection aspects, and ‘multi-apartment buildings’
will be discussed in detail and specific measures implemented.
Due to the dynamic development of the housing market that is characteristic of Luxembourg, driven byhigh demographic growth and strong price increases, it should be mentioned at this point that the
proportion of new buildings resulting from the demolition of existing buildings is not insignificant, as thisLuxembourg’s integrated national energy and climate plan for the period 2021-2030 | 43

also makes it possible to steadily reduce the number of unrenovated existing buildings and achievesignificant efficiency improvements.

Further national long-term targets regarding the further development of energy efficiency in Luxembourg
are presented in Luxembourg’s 4th National Energy Efficiency Action Plan (NEEAP 2017). In accordancewith Article 3(1) of the Energy Efficiency Directive, Luxembourg has set an energy efficiency target of
49,292 GWh for 2020 (NEEAP 2017). In order to achieve this energy efficiency target, measures will
inevitably be needed in all sectors.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 44

2.3. Energy security dimension
Luxembourg has neither its own large power plants for electricity generation nor gas production andstorage facilities and is therefore highly dependent on imported energy. Security of supply is the
responsibility of the undertakings operating on the market and those regulated by the regulatory authority(Institut Luxembourgeois de Régulation, ILR), as provided for in the revised Law of 1 August 2007 on theorganisation of the electricity market and the revised Law of 1 August 2007 on the organisation of the gas
market. The government is responsible for monitoring security of supply.
Luxembourg’s dependence on energy imports calls for a well-functioning European internal market forelectricity and gas. It is therefore aiming to rapidly achieve an internal electricity and gas market withintensive cross-border competition between suppliers and tap in to the flexibility potential of consumers.
Luxembourg is also in favour of further intensifying regional cooperation on security of supply in theelectricity and gas sectors. On the basis of their legal obligations, electricity and gas network operators
attach great importance to ensuring that their infrastructure is in good condition and in line with the stateof the art. The available capacity of the networks must meet the growing demands caused by the country’s
economic and demographic development. The widespread installation of smart meters for all consumers
will allow network operators to manage their networks even more intelligently and securely.
The expansion of renewable energy that is needed to achieve the targets will allow Luxembourg to
noticeably reduce its dependence on electricity imports. Nevertheless, due to the enormous demand forelectricity by industry, domestic energy sources will still only be able to make a certain contribution to
Luxembourg’s energy supply in future. In the field of load flexibility, Luxembourg is aiming to significantly
increase the share of consumers actively participating in the electricity market (including by setting up anenergy data platform).
The increased thermal insulation requirements for new buildings and the planned renovation strategy forthe building stock will lead to a downward revision of the demand for natural gas.
Luxembourg has no oil reserves of its own and must therefore import 100% of the oil it consumes.
Moreover, Luxembourg does not have any refineries on its national territory. Therefore, only mineral oil
products, and not crude oil, are imported. The vast majority of these come from Belgium, followed byGermany, France and the Netherlands. In the interests of security of supply, it is important to maintain thediversification of countries of origin in the future and to diversify supply routes. Since the airport in
Luxembourg is supplied with fuel directly via an underground pipeline (CEPS), the diversification of supply
routes relates primarily to the mineral oil products diesel, petrol and fuel oil. The majority of imports are

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 45

via road, with only about a fifth being handled by rail. The remainder is imported by inland waterway via
the Moselle to Mertert, the only port in Luxembourg.
As a member of the European Union and the International Energy Agency (IEA), Luxembourg is obliged tomaintain stocks of mineral oil equivalent to, on average, 90 days of the previous year’s imports. The
importers of mineral oil products have a national legal obligation to hold compulsory stocks of 8 days on
national territory, 37 days on regional territory outside Luxembourg, and the remainder elsewhere in the
EU.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 46

2.4. Internal energy market dimension
2.4.1.

Electricity interconnectivity

Luxembourg is almost completely reliant on imports to cover its demand for electricity. A high level ofinterconnection is therefore essential for Luxembourg and can only be compared to a limited extent with
the interconnection levels of other EU Member States. Luxembourg already has interconnection capacities
that far exceed the 2030 targets set in the Council Decision of October 2014. In mathematical terms, the(N-0) interconnection level in relation to the annual peak load is currently approximately 270%. With the
network expansion projects that are currently planned, this will increase to approximately 400% in 2030
and should therefore offer sufficient reserves to be able to adequately manage future increases in
consumption in all areas.

2.4.2.

Energy transmission infrastructure

In the gas sector, the currently existing transmission system infrastructure is considered sufficient,particularly because peak demand has fallen significantly due to the decommissioning of the TwinErg CCGT
power plant. There is no need to further expand cross-border connections. At the same time, the gas
market with Belgium, which has been shared since 2015, is to be further enhanced.
In the electricity sector, apart from the fact that the Creos public grid is located in the same bidding zone
as the German Amprion grid, the integration of Luxembourg into the European electricity grid has beensignificantly improved by the commissioning of a phase-shifting transformer and the establishment of apermanent line connection between the Luxembourg and Belgian transmission systems. Testing of thephase-shifting transformer has now been completed. Currently, the phase-shifting transformer is used to
optimise the load flows in Luxembourg and the surrounding regions. Luxembourg aims to further
strengthen this meshed integration over the medium term. Since an increase in the demand for electricity
and peak load is expected in Luxembourg, in part due to the expected population increase, diversificationof economic activities and general economic growth, it is necessary to expand the existing
interconnections. The transmission system operator Creos is therefore planning to convert an existing
220 kV interconnection towards Germany to high-temperature conductors by 2020 and, in the medium tolong term, to upgrade/reinforce the 220 kV line towards Germany. There are still no plans to connect the
Luxembourg public grid to the French grid.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 47

2.4.3.

Market integration

From Luxembourg’s perspective, bringing about an internal energy market is of central importance,
particularly for the electricity sector. Luxembourg is supporting the European Commission’s efforts todevelop a new European market design for the electricity markets. The consistency of electricity market
design in the Member States will be of paramount importance here. Separate national routes will only
burden the electricity consumers, disregard the impact on other Member States and, at worst, jeopardise
security of supply.

In a complete internal electricity market, national borders should no longer pose a challenge to market
players. The Luxembourg Government, the regulatory authority ILR and the transmission system operator
Creos are actively participating in the further development of the internal electricity market in European
bodies and institutions.

Particular importance is attached to cooperation within the framework of the Pentalateral Energy Forum(PLEF), which, in addition to Luxembourg, comprises Belgium, the Netherlands, France, Germany, Austriaand Switzerland. This region, which is closely linked from a technical and economic perspective, has beenplaying a leading role in bringing together the European electricity markets for years. Within the PLEF, theclose integration of the electricity markets of Germany and Luxembourg with the cross-border market area
once again stands out. Luxembourg aims to maintain this joint market area and further enhance thecooperation.

Luxembourg will investigate whether the conclusion of bilateral agreements with other Member States on
mutual solidarity in the event of energy crises could improve security of supply in Luxembourg.

Compared with the rest of Europe, electricity and gas prices for final consumers in Luxembourg are well
below the European average. However, the proportion of consumers who change suppliers is relatively
low. In this context, it is important to create comparability and transparency. By actively comparing thetariffs of their supplier with those of competitors and changing suppliers if necessary, energy consumers
can considerably reduce their energy costs. It is therefore an aim to ensure that the prices are readily
comparable and transparent.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 48

To improve the involvement of active consumers in the market, whether by decentralised production or byparticipation in flexibility markets yet to be defined, Luxembourg will convert 95% of its electricity meters
to smart meters by 2020.

To improve the market integration of renewable energy, Luxembourg has converted parts of its support
system to a sliding market premium. Joint, cross-border calls for tenders for renewable energy with other
European countries are also in the planning stage.

In order to minimise the risk of supply bottlenecks in the natural gas sector, as well as to increase securityof supply in general and to integrate the markets, Creos merged the two national gas markets to form asingle, country-wide market in 2015 in cooperation with the Belgian network operator Fluxys. As part ofthis consolidation of the market areas, the guaranteed, uninterruptible capacities at the Belgian borderwere also considerably increased to their maximum technical availability. This significantly increases
uninterruptible capacities even without line upgrades and ensures long-term security of supply for
Luxembourg.

2.4.4.

Energy poverty

Luxembourg has a comprehensive strategy for tackling poverty in general (minimum wage, social inclusion
income (REVIS), etc.). In addition, there is a series of measures in Luxembourg offering targeted help topeople affected by energy poverty.

The amended laws of 1 August 2007 on the organisation of the electricity market and on the organisationof the natural gas market stipulate that household customers who are unable to pay their electricity or gas
bills can receive social assistance from the responsible social welfare office.

For its part, the Law of 18 December 2009 on the organisation of social assistance stipulates that, when
applying the procedures established in the above-mentioned laws on the organisation of the electricity andnatural gas markets, the responsible social welfare office must investigate whether the household
customer is able to pay his or her energy bills and is thus entitled to social assistance.

Particular attention must be paid to housing in the fight against energy poverty, as rising housing prices
have become a major social challenge in Luxembourg. Low-income population groups can often only haveaccess to poorly maintained rented housing in old buildings with low energy standards. The government is
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 49

therefore targeting the creation of affordable housing. Energy efficiency measures in the housing sector
will be designed in a way that simultaneously improves the national energy balance and the living
conditions of low-income groups.
The government will also work with all relevant stakeholders to develop innovative programmes, as part of
the national long-term renovation strategy, which will create incentives to renovate old housing whileproviding housing for low-income households.
It should also be mentioned that there is already a programme in place through the cost-of-living allowance(‘Allocation de vie chère’), which also counteracts energy poverty. At the same time, the state rent subsidy
can help those in need to face a possible increase in the cost of housing. It should also be pointed out thatthe current social assistance legislation stipulates that any person who satisfies the conditions forentitlement to social assistance is entitled, under defined conditions, to a minimum provision for domesticenergy if he or she is unable to cover the costs of domestic energy.
The enormous amount of investment in infrastructure development and the introduction of free public
transport from 1 March 2020 are certainly not only transport policy measures, but also clearly social
measures.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 50

2.5. Research, innovation and competitiveness dimension
Luxembourg is a dynamic country in terms of industrial research, development and technology. In order tomake the transition to a low-carbon economy and society, considerable efforts are needed to support
technological development, research and development of new technologies and social innovation. The
development of research and innovation activities is crucial for the competitiveness of a country, and the
Luxembourg Government is therefore investing considerable financial and organisational resources inthese activities.
The consistent energy and climate policies, combined with the transformation of Luxembourg’s financial
centre towards green finance and the emerging university and research landscape, make Luxembourg an
ideal location for green tech and climate solutions. The Luxembourg Government will develop a concrete
strategy in the coming months, bringing together all relevant stakeholders and embedding this in the ‘Let’s
make it happen’ strategy.

In June 2010, the European Council adopted the development of the Europe 2020 strategy and thus
confirmed the five joint EU targets: promoting the employment of those able to work, improving theconditions for accessing innovation, research and development, achieving the climate change and energy
targets, improving the level of education and promoting social integration, in particular by reducing
poverty. Each Member State has aligned its national 2020 targets with the core targets of the EU and set
out a number of actions in its National Reform Programme (NRP). The NRP is a key contribution of theMember States to the Europe 2020 strategy. Luxembourg’s latest NRP9 of April 2019 explains how theobjectives are to be achieved. Implementing an effective research policy for both the public and private
sectors is a priority for the Luxembourg Government. For 2020, Luxembourg has set itself a national
research intensity target of between 2.3% and 2.6% of GDP. The associated key measures for achieving thenational target are set out in the NRP. In Luxembourg, the trend in state resources spent on research andinnovation has grown steadily, both in the public and the private sector, from €23.6 million in 2000 (0.13%
of GDP) to €368.5 million in 2018 (0.65% of GDP).

Public support for research and development is focused on innovation in all businesses. Research anddevelopment has traditionally focused on the steel, aviation and automotive sectors. In recent years,
however, the government has made considerable efforts to develop further priorities in the areas of
information and communication technologies, logistics, health technologies, materials, energy and
9 https://odc.gouvernement.lu/fr/publications/rapport-etude-analyse/programme-national-de-reforme/2019-pnr-luxembourg-2020.html

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environmental technologies (cleantech). Environmental technologies are among the priorities of thenational economic diversification strategy. In recent years, Luxembourg has made concrete progress in theareas of sustainable construction, sustainable mobility and the circular economy. Initiatives in these areas
are in line with EU policy and the various directives on issues such as the energy efficiency of buildings,
smart transport systems or ecodesign requirements.

Thanks to its steel industry, Luxembourg has a long-standing tradition of materials-based research. Today
it is working, among other things, on the development of sustainable building materials. In addition,
Luxembourg now has three research teams in the field of materials research for solar photovoltaics, which
are working on the further development of resource-optimised thin-film PV.
Furthermore, Luxembourg also has innovation clusters that are dedicated to the issues mentioned above.
Public research stakeholders, including the University of Luxembourg, play a key role in this. The same
applies to Luxinnovation, the national agency for promoting innovation and research, which offers
personalised consultancy and support for the stakeholders and the government in the areas of researchand innovation (access to funding opportunities, finding partners, business creation, etc.) and thus plays animportant role in terms of the European networks in this area.

To strengthen the competitiveness of the country, Luxembourg has in recent years created the liberal,
modern, flexible, attractive and innovative legal framework needed to develop new activities, by means ofan active economic policy.

Regarding competitiveness, compound index values that combine several pieces of information to form asingle numerical value and therefore only give a rough overall picture of territorial competitiveness are
increasingly being used for international comparisons. In Luxembourg, the Observatoire de la Compétitivité(ODC) analyses and monitors a number of international reference values and rankings in its annualcompetitiveness report10. The ODC monitors the annual reports, including those of the World Economic
Forum, the Institute for Management Development, the Heritage Foundation and the European
Commission. According to the results, Luxembourg is within the top 10 at EU level for the vast majority ofthe benchmarks analysed.

10

https://odc.gouvernement.lu/fr/actualites.gouvernement%2Bfr%2Bactualites%2Btoutes_actualites%2Bcommuniques%2B2018%2B11novembre%2B13-bilan-competivite-2018.html

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In addition to the international reference values, the ODC has also kept a national ‘scoreboard’ forcompetitiveness since 2004, in order to measure and assess Luxembourg’s competitive position, the resultsof which are published in the competitiveness report and discussed with social partners and experts. Since
2017, the ODC has developed a new national ‘scorecard’11, which is a flexible instrument that can be further
developed over time and adapted if necessary. It covers the dimensions of competitiveness, welfare andsustainability and at the same time ensures that there is a balance between economic, social and ecologicalaspects. This Luxembourg reference value analyses 68 different indicators. This instrument makes it
possible to summarise the performance of the countries in the indicators of the three aspects of economy,society and environment and the associated advantages and disadvantages. In the overall ranking,Luxembourg is in ninth place at EU level, thus securing its position among the ‘high performance’ countries.
The result of the national ‘scoreboard’ confirms the results of the analysed international reference values
at EU level.

In terms of innovation, reference can be made to an annual comparative evaluation analysis by theEuropean Commission, which measures the innovation performance of the EU Member States bycomparing the innovation performance with the international competition. This ‘European Innovation
Scoreboard’ assesses the relative strengths and weaknesses of national research and innovation systems
and helps countries to identify areas that they need to address. The 2018 edition of the EIC emphasisesthat the innovation performance of the EU Member States is continuing to improve, progress is accelerating
and the outlook is very positive. Since 2010, the average innovation performance of the European Union
has risen by 5.8 percentage points and is expected to improve by a further 6 percentage points in the next
two years. The 2018 evaluation is led by Sweden (average evaluation: 0.710 out of 1), followed by Denmark(0.668) and Finland (0.649). Luxembourg is also among the group of innovation leaders, in sixth place(0.611).

11 https://odc.gouvernement.lu/fr/statistiques/tableau-bord-competitivite.html

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3. Policies and measures
3.1. Decarbonisation dimension
3.1.1.
3.1.1.i.

Greenhouse gas emissions and removals
Policies and measures to achieve the target set under Regulation (EU) 2018/842 as referred

to in point 2.1.1 and policies and measures to comply with Regulation (EU) 2018/841, covering all key
emitting sectors and sectors for the enhancement of removals, with an outlook to the long-term vision andgoal to become a low-emission economy and achieving a balance between emissions and removals inaccordance with the Paris Agreement
Introducing a climate framework law
With the aim of climate policy to provide a legal basis in line with the Paris Climate Agreement, thegovernment presented a draft climate law in autumn 2019, in line with the coalition agreement. This draft
law is designed to strengthen the framework of national climate policy, in particular to allow for acoordinated and integrated approach between all relevant stakeholders, levels and sectors, and to improveconsistency during the implementation. The draft consists of three main parts.
The first part establishes an institutional framework for climate policy and sets out the principles andobjectives as well as the governance structure of Luxembourg’s climate policy.
The draft law sets out the following four principles: the principle of climate justice, the principle ofprogression, according to which only continual improvements to climate policy are possible, the principle
of integrated pollution control, according to which climate policy must not be pursued at the expense of
biodiversity, air quality, water or other elements of the environment, and the principle of integrity,
according to which climate policy genuinely pursues the objective of ensuring a safe and healthy climate.
In addition to national climate targets consistent with the Paris Climate Agreement, the draft introduces
sectoral climate targets. This will ensure that there is a shared responsibility. If the annual amount ofemissions available in a sector is exceeded, the matter will be referred to the Government Council with aview to establishing an emergency programme to ensure compliance with the climate objectives. A Grand
Ducal Regulation sets the respective emission allowances for the sectors for an initial period up to 2030.
The target scenario presented in Section 5 provides a template for this. The inter-ministerial committee forthe coordination of climate policy provided for in the draft climate framework law will participate in thedrafting of the said regulation.

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The draft law also establishes three bodies with regard to the governance structure. Firstly, an interministerial committee will be set up to coordinate climate policy. A climate action platform will beestablished in accordance with Article 11 of Regulation (EU) 2018/1999, which requires Member States toestablish a multi-level dialogue on climate and energy issues. There are also plans for an independent bodyto deal with the scientific, ethical and societal aspects of climate policy and the associated challenges.
In accordance with Regulation (EU) 2018/1999, it also sets out the procedure for adopting and updating
the integrated national energy and climate plan, the long-term strategy for reducing greenhouse gas
emissions and the strategy for adapting to climate change.
The second part of the draft law re-enshrines the existing Climate and Energy Fund and adapts it to thecurrent challenges12.
The third part transposes Directive (EU) 2018/410 of the European Parliament and of the Council of
14 March 2018 amending Directive 2003/87/EC to enhance cost-effective emission reductions and lowcarbon investments, and Decision (EU) 2015/1814.

Climate action, budgetary and social policy
The budgeting of the measures included in the integrated national energy and climate plan will be in linewith the fiscal path and the rules of the Stability and Growth Pact. National measures are given priority
because of their co-benefits (air quality, jobs). Climate action is one of the most pressing tasks facing
humanity. Accordingly, our national and international climate commitments are also a high priority in termsof budgetary and fiscal policies. They are important investments for the benefit of future generations.
Measures with a direct impact on public finances will, like all capital expenditure, be subject to multi-annual
budgeting. The Climate Framework Law establishes an inter-ministerial committee to assess theeffectiveness of the measures on a regular basis. This will take into account the ministerial powers(compétences ministérielles). To this end, the measures shall be subject to a qualitative assessment of theirimpact on the national budget in terms of revenue and expenditure and their effectiveness in relation tonational targets for reducing greenhouse gas emissions, improving energy efficiency and developing
renewable energy. This will also take into account the co-benefits (air quality, jobs). It is therefore quite

12 See the section on financing measures below for further details on this point.

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possible that the prioritisation of measures will be adjusted according to their efficiency and that therespective measures will be replaced or supplemented by more efficient measures, if necessary.
The climate crisis is also a social crisis: vulnerable people are far more affected by the climate crisis thanthose in a better position. There is a gap between richer and poorer people, both geographically (NorthSouth divide) and within societies.
The government is aware that it is taking people with it in the fight against climate change. The climate andenergy plan will only be accepted if there is fair compensation for the more vulnerable groups in our society.
For this reason, the measures of the climate plan will be assessed in terms of social justice and, if necessary,compensation will be provided for affected citizens. This important principle is also in line with the ClimateBill and is guiding the government’s climate policy.
The measures in the integrated national energy and climate plan that have already been adopted and are
set down in a law or Grand Ducal regulation are taken into account in the draft budget for 2020 and in themulti-annual plan.
It goes without saying that the new measures in the integrated national energy and climate plan have notyet been reflected in the draft budget for 2020, as this law was already deposited in Parliament on
14 October 2019.
Knowing that the implementation of this plan entails expenditure, it is important not to overlook any
revenue that could result from carbon pricing.
The tax measures outlined in the plan will be analysed in detail before their final adoption as part of the tax
reform negotiations.

Minimum price for CO2 – introduction of the ‘polluter pays’ principle
In addition to the emissions trading scheme for industry introduced more than 10 years ago at EU level,carbon pricing – a cost-effective tool for reducing greenhouse gas emissions – already plays an importantrole in many EU Member States.
Following this model, Luxembourg will introduce a minimum CO2 price as part of the forthcoming tax
reform and continuously adapt it in line with the objectives of the Paris Climate Agreement. The target
starting price will be the average CO2 price in our neighbouring countries. For 2021, this means a CO2 priceof approximately €20 per tonne of CO2. This amounts, for example, to approximately 5 cents per litre of
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diesel fuel. An increase of €5 per tonne is planned in both 2022 and 2023. This corresponds toapproximately 1.5 cents per litre of diesel fuel. The further implementing provisions for a dynamic CO2 pricewill be drawn up as part of the preparations for the planned tax reform. This will involve looking into
whether a scaling of the CO2 price should be introduced.
The socially fair implementation of the CO2 price will be ensured by using the revenues in a targeted way.
Based on the currently available data, revenues of approximately €150 million can be expected for 2021.
These are used in a balanced way (d’une manière équilibrée) for concrete climate action and targeted social
relief via fiscal (e.g. tax credit) and social justice (équité sociale) measures for low-income households.

Climate support measures
A successful climate policy requires effective measures to reduce emissions. Although everyone has
individual responsibility, climate policy can only be successful if it indicates the direction, creates thenecessary framework conditions and thus offers concrete alternatives to all stakeholders. Therefore,
enhanced incentive mechanisms will be put in place through improved support schemes, which are
explained in more detail in Section 3.1.1.iii.
The PRIMe House support scheme provides investment aid for the energy and sustainable
renovation of residential buildings and related, qualified energy advice, for the construction ofsustainable residential buildings and for the use of renewable energy (PV installations, solar
thermal installations, heat pumps, wood pellet and wood chip heating systems).



In addition to the PRIMe House support scheme, the energy and sustainable renovation ofresidential buildings is supported by low-interest or – to help low-income households – interestfree loans (climate bank).

The ‘Clever fueren’ scheme supports the purchase of electric vehicles, electric motorcycles andbicycles through direct grants.

The support schemes for improving the protection and sustainable management of forest
ecosystems ensure sustainable timber production, improve the condition of forests and help ourforests adapt to climate change. In this way, the state, society and forest owners together ensurethat we will continue to have stable, healthy, climate-tolerant and species-rich forests in
Luxembourg in the future.

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

In industry and small and medium-sized enterprises, the existing instruments will continue to be
used and expanded by the relevant ministries. The voluntary agreement (accord volontaire) andthe energy saving obligation (ESO) will be further developed and continue to serve as important
cornerstones for future efficiency efforts.

With regard to the efficiency efforts of small and medium-sized enterprises, new instruments suchas a de-risking instrument and a transparency platform for audits will be created in order both toovercome the financing hurdles and to improve the overview and identification of energy efficiency
measures.

In terms of agriculture, climate action schemes (methane strategy, climate check, etc.) are being
drawn up by the relevant ministries.

Social measures
Climate change and the health impact of fossil energy supply affect low-income population groups inparticular. Climate action therefore also provides a tangible contribution to social justice. However, climate
action must also be socially embedded in order to prevent energy poverty.
Luxembourg has a comprehensive strategy for tackling poverty in general (minimum wage, social inclusion
income (REVIS), etc.). In addition, there is a series of measures in Luxembourg offering targeted help topeople affected by energy poverty. The amended laws of 1 August 2007 on the organisation of theelectricity market and on the organisation of the natural gas market stipulate that household customers
who are unable to pay their electricity or gas bills can receive social assistance from the responsible social
welfare office.
For its part, the Law of 18 December 2009 on the organisation of social assistance stipulates that, when
applying the procedures established in the above-mentioned laws on the organisation of the electricity andnatural gas markets, the responsible social welfare office must investigate whether the household
customer is able to pay his or her energy bills and is thus entitled to social assistance.
Particular attention must be paid to housing in the fight against energy poverty, as rising housing prices
have become a major social challenge in Luxembourg. Low-income population groups can often only accesspoorly maintained rented accommodation in old buildings with low energy standards. The government istherefore targeting the creation of affordable housing. Energy efficiency measures in the housing sector
will be designed in a way that simultaneously improves the national energy balance and the living

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conditions of low-income groups. In particular, climate support measures in the housing sector will be
improved with the aim of increasing support for low-income households.
The Luxembourg Government will also work with all relevant stakeholders to develop innovative
programmes, as part of the national long-term renovation strategy to be developed in the coming year,
which will create incentives to renovate old housing while providing housing for low-income households.
It should also be mentioned that there is already a programme in place through the cost-of-living allowance(‘Allocation de vie chère’), which also counteracts energy poverty. At the same time, the state rent subsidy
can help those in need to face a possible increase in the cost of housing. It should also be pointed out thatthe current social assistance legislation stipulates that any person who satisfies the conditions forentitlement to social assistance is entitled, under defined conditions, to a minimum provision for domesticenergy if he or she is unable to cover the costs of domestic energy.
The enormous amount of investment in infrastructure development and the introduction of free public
transport from 1 March 2020 are certainly not only transport policy measures, but also clearly social measures.

Strengthening EU law and standards
Improved EU standards and regulations facilitate the achievement of Luxembourg’s climate and energy
targets. This is why the government will promote an ambitious climate and energy policy framework at EU
level. In addition to the EU emissions trading scheme, other important climate action instruments originate
at EU level, such as the Regulation on the effort sharing of emission reduction targets among the individual
EU Member States, the Regulation on emissions from land use, land use change and forestry, as well as the
Directive on the promotion of the use of energy from renewable sources, the Energy Efficiency Directive
and the Energy Performance of Buildings Directive. Other instruments include ecodesign requirements forappliances and the regulation of CO2 emissions from cars, vans and trucks. Luxembourg will advocate a banon the sale of internal combustion engine vehicles at EU level as of 2030.

Government to lead by example
The government will increasingly play a leading role in the use of renewable energy and the improvementof energy efficiency. It will build on existing programmes and their results, but will also take or develop new
initiatives.
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Ultra-efficient public buildings
The government is developing a strategy for ‘sustainable and energy-efficient public buildings’ in
new and existing buildings to improve sustainability, energy efficiency and the use of renewableenergy in public buildings. It will incorporate the principles of the circular economy and the relevant
health aspects. This includes the introduction of an obligation to install photovoltaic systems onstate-owned buildings, both for new buildings and renovations. This will also be reflected in a
ramping up of the existing photovoltaics programme of the Public Buildings Administration. The
aim is for all suitable public buildings to be equipped with photovoltaic installations by 2025.
The state-owned buildings should become the most efficient in all of the EU Member States. In
order to better assess and improve the environmental performance of existing public buildings, themandatory use of the Environment Management and Audit Scheme (EMAS) will be introduced forthe management of buildings in order to minimise the environmental impact of buildings andcontinuously improve their performance. EU institutions based in Luxembourg can serve as amodel here.
In addition, the Luxembourg Government is currently developing major housing projects with therespective state and municipal players (SNHBM, Fonds du logement, Fonds Kirchberg, Fonds Belval,
Agora, Entwicklungsgesellschaft Nordstad). The planning is in the direction of ‘zero CO2’, ‘zero
waste’, ‘car free’ and ‘socially inclusive’. These projects provide the basis for a significant part ofthe expected population growth in these areas to be climate neutral.
Luxembourg LED 2025 initiative
The government, through its administrations, will completely convert all lighting sources in streets,
public places, buildings, stations and monuments from the existing energy-wasting luminaires toenergy-efficient LED lighting.
Car fleets
In addition to public buildings, the state’s car fleet policy is to be revised with regard to thepurchase and use of official cars, and more efficient fleet management is to be introduced. By thesame token, the share of electric vehicles in the fleet is to be steadily increased.
Sustainable purchasing
Public administrations will make greater use of sustainability criteria when purchasing. The
framework established by the revision of the legislation on public procurement (Loi du 8 avril 2018

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sur les marchés publics) makes it easier to use other criteria than the price component for theaward of contracts. This means that both environmental (life cycle) and social criteria can play agreater role in procurement. Standardisation of tender criteria for different product groups will
help to leverage public procurement on the markets. In this context, digitalisation will also be
further promoted in order to minimise the use of paper in the long term.
Climate-friendly schools
It is particularly important to focus more on schools and their infrastructures, as young people want
to experience and learn about climate action in practice. The ‘ClimateXchange’ organised withpupils in spring 2019 gathered together many ideas to reduce the ecological footprint of schools.
In addition to increasing the use of renewable energy sources (both electricity and heat),sustainable mobility and transport concepts, as well as elements that reduce water consumption,
will be taken into account in planning and in major refurbishment works. It is often possible anduseful to involve the students themselves in the implementation of their ideas. For example, pupils
have already helped to install solar panels on school roofs. In order to make future generations
more aware of sustainability issues, the themes of energy efficiency, renewable energy, climatechange and sustainability will be integrated into the curriculum.

Further developing the climate pact with the municipalities – Climate Pact 2.0
In order to guide and shape municipal climate and energy policy, Luxembourg has an effective and legallyenshrined instrument for climate action in the municipalities (Loi modifiée du 13 septembre 2012 portantcréation d'un pacte climat avec les communes) – the Climate Pact (see Section 1.2 – Overview of current
policy situation). In view of an agreement in the coalition agreement 2018-2023, and based on a broad
acceptance by the municipalities, the current climate pact, which will expire in 2020, will be continued andfurther developed under the name ‘Climate Pact 2.0’. In order to meet the climate objectives, the climate
pact will evolve over the period 2021-2030 in a targeted way in three areas: strengthening thequantification approach, improving framework conditions for the municipalities and providing greater
support for the municipalities in their civic work. On the one hand, based on the measures of the climate
pact and in view of the objectives of the integrated national energy and climate plan, more locally relevant
quantitative indicators will be integrated into the climate pact and given greater weight in the overall
assessment. The development of monitoring and communication tools also plays a role in improving theworking framework for municipalities, as does the increased support for municipalities in their civic work.
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The overall aim is to anchor Climate Pact 2.0 even more firmly as a key implementation tool for nationalenergy and climate policy at local level.

Mobility
Almost two-thirds of Luxembourg’s non-ETS climate emissions come from fuel sales, with two figuresconcisely reflecting the atypical situation. Around 70% of the climate emissions from fuel sales come frommotor vehicles registered abroad and the share of lorries is close to 60% of the climate emissions from fuelsales. Increasing fossil-fuelled truck traffic is not only a climate and health issue, but also a transport
problem for transit countries such as Luxembourg. Tax and excise policies have a significant impact on thevolumes of diesel and petrol sold. This is described in the ‘Tax measures’ section.
Luxembourg will continue to support schemes at national and European level that reduce lorry traffic (e.g.
Eurovignette) and facilitate shifting freight transport to alternative propulsion systems and to rail. In thiscontext, Luxembourg will also promote the development of a sustainable logistics location and support thesector’s efforts in this regard. Among other things, existing initiatives to optimise the logistics sector(Lean+Green) will be further developed in the future. Integrated spatial planning, traffic avoidance and theconsistent development of soft mobility and public transport will reduce the need for individualised cartransport. The remaining cars will be consistently switched from the current ‘fossil’ age (diesel and petrol)
to climate-friendly alternatives (electromobility, hydrogen). This rapid changeover is an essential
contribution to achieving the Luxembourg and European climate and energy targets. The measures forelectromobility are described in detail in Section 3.1.3.iii.
The transport sector therefore plays a particular role in decarbonising Luxembourg’s society and economy.
However, the improvement or optimisation of mobility can only be achieved by introducing many different
measures.

As part of a long-term national mobility plan, the government adopted the sustainable mobility strategy‘MoDu 2.0’ on 23 May 2018. The basic principles of the 2012 ‘MoDu’ strategy, namely multimodality andthe strengthening of public transport and active mobility, were retained. The strategic objective for 2025
is to improve the flow of traffic at peak times, with 20% more passengers to be transported than in 2017.
The desired modal split on commuting routes should be 46% drivers, 19% passengers, 22% public transport
users, 9% pedestrians and 4% cyclists. In addition, the government will set new targets up to 2035 in its
MoDu 2.0 development programme during this legislative period.
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In addition, ‘MoDu 2.0’:highlights the progress made since 2017;

contains up-to-date key figures;sets fixed targets for Horizon 2025;

integrates recent technological advances;

ensures the coherence of new global and national strategies (e.g. Paris Climate Agreement, Third
Industrial Revolution, etc.);develops a strategy for the creation of a mobility toolbox;is explicitly addressed to four stakeholders:ocitizensothe municipalitiesoemployers and educational establishmentsothe state.

As part of the planning of mobility projects, a long-term cost-benefit analysis will be used, which will takegreater account of climate considerations. The MOBIMPACT tool will be used for project planning. A more
multimodal approach will also be put in place for the planning of road-building projects. This includes, forexample, preference being given to public transport and carpooling in new road-building projects.
At company level, a mobility plan or strategy for relocations will be established. It will also raise awarenessabout increasing the use of public transport and creating car pools in existing establishments and activity
zones. In addition, the reorganisation of the RGTR network will also improve the coordination ofconnections to activity zones.
Technical and financial assistance programmes will be made available to municipalities in order toimplement concrete measures that reduce the carbon footprint. New mobility plans for activity zones andnew municipal mobility concepts will meet predefined criteria in future and will receive technical andfinancial support. The new procedures and criteria are intended to promote initiatives that reduce thecarbon footprint in the transport sector (following the Austrian model ‘Klimaaktiv Mobil’). For example, thefollowing criteria could be integrated into the mobility plans and concepts:
removing P&R from urban centres (transnational cooperation),

improving the combination of public transport and passenger cars,

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 63providing electric company cars.

As a tool for traffic management (reducing peak hourly traffic and avoiding traffic caused by people looking
for parking spaces) and behavioural management through the availability of parking spaces, a national
parking space strategy is being developed, based on the meaningful design, pricing and use of parking
spaces.
A regulatory framework and new incentives will be created for the development of ‘Mobility-as-a-service’services. The aim is to provide more support for innovative transport solutions through ongoingdigitalisation. In addition, existing offers (such as the carpooling project CoPilote) will be reinforced or
reinvigorated. The development of a comprehensive mobility app will also be pursued.
In order to promote carpooling, the ‘CoPilote’ portal will be further promoted and targeted cooperation
with employers will continue. In addition, carpooling will be granted further benefits, notably on
motorways, in order to increase the number of passengers per vehicle.
At company level, employees who choose a means of transport other than a car should not be further
disadvantaged. A ‘mobility budget’ tax benefit will be introduced which is equivalent to that for company
cars and thus offers an alternative to the company car. Alternatively, the following measures may form partof or complement the mobility budget:

car sharing of electric vehicles,financial or administrative support for the creation of car pools within companies or activity zones,

support for the construction of secure bicycle storage facilities within activity zones,



financial aid to companies for the installation of charging points,

offering zero-emission lease cars.

The creation of such a mobility budget will also involve adapting the regulatory framework to encourage atransformation in transport within companies. For example, the use of low-emission and zero-emission
vehicles is to be given priority by adjusting the taxation of company vehicles.
Traffic avoidance
In order to avoid traffic, a regulatory framework will be established, in consultation with the social
partners, to promote teleworking and thus also to create modern and flexible working conditions.
To this end, the tax treatment for the use of teleworking by commuters will be adapted and thecurrent labour and health laws will be amended. Following the example of the current discussions
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 64with Belgium, negotiations will be launched with France and Germany in order to find an
appropriate tax treatment that favours teleworking by frontier workers. In addition to promoting
teleworking, coworking spaces will also be established in the border area in order to reduce crossborder commuting. Work on the first such structure is due to start at the beginning of 2019 in EschBelval, with additional structures to be provided preferably along the A1, A3 and A6 motorway axes
and the N31 national road in Rodange.

Consistent development of local public transport
In order to promote public transport, its free use will be introduced on the territory of the Grand
Duchy of Luxembourg on 1 March 2020. However, important infrastructure work and projects will
also continue to be pursued and implemented. The government sees consistent and continuous
investment as an essential precondition for promoting the attractiveness of public transport.
Supply, punctuality and quality of service are crucial in encouraging people to change their habits
and switch from private cars to public transport. The investments in the railway planned between
2018 and 2023 amount to €2,212,000,000. In 2019, the national railway company, CFL, concluded
the largest contract for the procurement of materials in the history of the railway, amounting to€400 million. The material will be delivered between 2020 and 2023. Tram investments between
2018 and 2023 amount to €390,000,000.
As part of the upgrading of the tramway, the existing tram line will be further extended as planned
and new tram lines will be created taking into account cost-benefit, coherence with multimodaltransport networks, feasibility, etc. In addition, the express tramway project between Luxembourg
City and Esch-sur-Alzette will be further developed and integrated into any further road-building
project on this line.
In order to improve train services, the extension of double or quadruple tracks on existing lines andthe extension or modernisation of existing stations (in particular Luxembourg City and Ettelbruck)
will continue. In addition, comfort on the trains will be enhanced by providing quiet compartments
in 1st class as well as free Wifi, and by increasing capacity on the train routes. In addition to theseinfrastructural works, the overall aim is to improve communication and the flow of information tocustomers regarding disruptions on the railway network and train delays or cancellations.
Communication and coordination will be improved for customers, especially in the case ofcancellations. To further increase comfort for customers, the coordination between the train andbus networks is to be continuously improved and adapted to ensure that bus connections run
smoothly even in the event of delays.
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In addition to the rail network, further investment is to be made in the bus network, which will be
constantly expanded and improved. The current reorganisation of the RGTR network will besystematically continued with the aim of prioritising and optimising the regional bus routes. This
includes optimising the bus network on weekends and public holidays and increasing the frequencyof bus services in the evening hours. In addition, the reorganisation of the RGTR network will also
improve the coordination of connections to activity zones. In addition to organisational
adjustments, however, infrastructural improvements, such as the creation of specific bus lanes on
motorways or express bus lanes on the main axes, are to be continued. In order to increase comfort
for customers, the aim is also to harmonise bus stops and other bus or train lines in terms ofconnections, as well as providing a minimum level of equipment (bench seat, display boards, etc.).
In rural areas in particular, the use of dial-a-bus systems with minibuses will increase, avoiding
empty runs outside peak hours and weekends without weakening peak hours capacity.
In addition to the respective projects on the rail and bus networks, the number and capacity of
P&R will be increased, especially in the border area. To this end, an appropriate connection to
public transport should also be ensured, in particular through the measures mentioned above.
As part of the decarbonisation of the bus sector, a gradual replacement of the traditional RGTR
buses by electric buses is also planned. The aim is to analyse the feasibility of the bus routes andbuild on the experience of the urban bus operator.
A significant part of the reduction in CO2 emissions will also be achieved through the broad promotion ofelectromobility and the increased use of biofuels. The detailed measures to be taken in this context are set
out in 3.1.3.iii.
Taking responsibility for aviation and shipping
In order to reduce GHG emissions from aviation, the Luxembourg Government supports carbon
pricing at European level. In this regard, Luxembourg, together with Belgium and the Netherlands,
has put forward a proposal to introduce a Europe-wide kerosene tax. Luxembourg will also increase
its support for carbon offsetting measures, for example through the tax deductibility of payments
to government-accredited organisations (e.g. myclimate.org).
The infrastructure of Luxembourg’s international airport is to be made free of GHG emissions. The
airport operator has signed a declaration of the Airports Council International Europe (ACI Europe)in which it commits itself to reducing CO2 emissions to net zero by 2050. In addition, hybrid electric
aircraft are to be tested and a new tax regime introduced. Approach charges with a strong
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environmental component will be introduced and the ‘passenger’ charge will be raised to a levelcomparable to that at neighbouring airports.

The Luxembourg Government is also committed to a Europe-wide solution to improve the climate
and environmental compatibility of shipping and has submitted or supported a corresponding
proposal at EU level. Improving the energy efficiency and reducing the CO2 intensity of shipping
would not only protect the climate but also reduce air pollution from ships, including nitrogen andsulphur oxides (NOx and SOx) and particulate matter (PM), with positive effects on public healthand the quality of life of European citizens.
The Luxembourg Government is working towards the adoption, as soon as possible, of binding andeffective measures to implement the IMO target – adopted as part of the International Maritime
Organisation’s (IMO) first strategy to reduce greenhouse gas emissions from ships in 2018 – of a
40% reduction in the carbon intensity of shipping by 2030 compared to 2008 in the EU. To this end,
greenhouse gas emissions from international shipping must now also be included in the EU’s
emission reduction commitment under the Paris Agreement and the Commission must assess andreport on the progress made towards reducing them, in relation to European climate andenvironmental objectives and the related international commitments, on an annual basis. The
government is open and optimistic about the measures to be announced for the sector by the next
Commission.

The taxation of Luxembourg-flagged vessels (registration fee) will be revised along the lines of the‘green shipping’ concept.

The building sector
Measures for sustainable construction and building renovation
The building sector (residential and functional buildings) is currently responsible for around 12% ofnational climate emissions. This important sector needs a mix of standards and norms, in particularfor new construction, but also targeted support schemes for energy upgrading of existing buildings.
Luxembourg is a global leader in energy standards for new residential buildings, as in 2017 (rather
than waiting until 2021 as permitted by the EU Directive) it became the first country to introduce
the new ‘nearly zero energy standards’ established in 2012. This courageous policy also explains

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why, despite the increase in population and new buildings, the energy requirement for residentialbuildings has decreased. This success story now needs to be extended to cover new functionalbuildings. Like all other EU countries, Luxembourg still has much to do in terms of energy
renovation. There has been a lot of renovation in Luxembourg, but not enough energy renovation.
Strategy and measures relating to the use of renewable energy and energy efficiency in the building
sector are set out in Chapters 3.1.2. and 3.2. An overview of the financing measures can be foundin Chapter 3.1.1 iii. In the building sector, the PRIMe House support scheme for residential buildings
merits particular mention.

Alternative forms of housing
The government wants to pursue a conscious policy to promote innovative housing concepts, suchas housing for the elderly (intergenerational housing), housing without cars, housing cooperatives
or modular housing. Associated information campaigns, support schemes and pilot projects will be
carried out. The legal framework must be reviewed and adapted to allow this kind of housing tobecome established in order to create affordable and high-quality living space:building and housing cooperatives must be legalised by making the Law on
Cooperatives [Loi modifiée du 25 février 1979 concernant l’aide au logement] more
flexible and adapting the legal framework, so that citizens can be provided withcheaper housing.

In addition, Luxembourg needs a legal definition of the terms logements sociaux [social
housing] and logements à loyer modéré [affordable housing].

Pacte logement 2.0
The Pacte Logement [housing pact] of 2008 (Loi du 22 octobre 2018 portant sur la promotion del’habitat et la création d’un pacte logement avec les communes), which provides municipalities
with, among other things, additional financial resources to create new housing and public
infrastructure, will come to an end in December 2020. Considering the high demand for affordable
housing in Luxembourg, the government has decided to extend and refocus the Pacte Logement.
This pact between the government and the municipalities is to be relaunched under the name
Pacte logement 2.0 and, on the basis of a wide range of measures, will help the municipalities toachieve important objectives in relation to housing construction and to improve the quality of

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housing available to inhabitants. The focus here is on increasing the supply of housing and themobilisation of building land, and improving the quality of housing and energy performance in bothnew housing projects and existing ones. The new Pacte Logement will be in force until around 2030
and its structure will be more diverse. Possible elements include improved advice to municipalities
from the Ministry of Housing, providing a housing consultant and promoting various measures
focusing on both the quantity and quality of housing. The range of measures for achieving theseobjectives was drawn up in cooperation with the municipalities. The advice provided tomunicipalities on implementing larger housing projects is to be improved under Pacte Logement
2.0. to help them strengthen their position as participants in the housing market. This advisory
support covers, in particular, the acquisition and development of land, housing construction(independently or in collaboration with the private sector), the sale or letting of land and residential
properties, and the management of an inventory of rented buildings. For this purpose, themunicipalities will be provided with a professional consultant on housing construction (housing
consultant). As a general rule, synergies with the Climate Pact and the Nature Pact will be identified
and valorised. Furthermore, the Ministry of Housing will be provided with increased capacity inorder to support the municipalities in creating housing developments.

Spatial planning is becoming more important, including in relation to climate change
Heat map and solar map
Energy investment planning will play a more important role in the climate age. For this reason, theEnergy and Spatial Planning Departments within the Ministry for Energy and Spatial Planning areworking hand in hand to produce two important maps; a heat map to show where our country can,as a priority, replace housing blocks and entire districts which today run on natural gas or fuel oilwith heating networks which use renewable energies or waste heat from industrial plants or data
centres. A national solar map will also facilitate the planning of large and smaller solar plants.

Eco-district made in Luxembourg
The Luxembourg government is in the process of developing major housing projects with therespective national and municipal bodies (SNHBM, Fonds du logement, Fonds Kirchberg, Fonds
Belval, Agora, Entwicklungsgesellschafft Nordstad). Planning is moving in the direction of ‘zero
CO2’, ‘zero waste’, ‘car free’ and ‘socially inclusive’. These projects provide the basis for a significant
part of the expected population growth in these areas to be climate neutral.
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Bringing together housing, work and leisure
The best energy is energy that is saved, i.e. that never has to be produced at all. The best mobility ismobility which never takes place. In order to improve planning for the country and its urban areas ina dynamic economic environment, the government, led by the Ministry for Energy and Spatial
Planning, is working on a new planning strategy for 2035 (programme directeur). This strategy setsout proposals for where an increased number of residential properties should be built in Luxembourg
in the future (e.g. close to existing or new railway stations), what new transport infrastructure isneeded and which areas must be off-limits as they are key to maintaining biodiversity. The 2035
Planning Strategy will also include concrete proposals for improving cooperation with our borderregions. In order to allow discussion surrounding the drafting of the 2035 Planning Strategy to takeaccount of fundamental issues, an ideas workshop will be organised for Luxembourg in 2050, basedon the model of the Grand Genève’s ‘competition for ideas’ [concours d’idées].

EconomyThe 22 largest industrial CO2 consumers are subject to the EU Emissions Trading Scheme. In total, industry
was responsible for 50% of electricity consumption and 44% of natural gas consumption in 2018. When
combined with the services sector, these figures rise to around 62% and 83%. Consequently, in addition to
the EU Emissions Trading Scheme, further efforts are needed in relation to the best available technologies,
energy efficiency and renewable energies. This will reduce energy costs and thus make a significant
contribution to competitiveness.
The industrial sector will play an important role in achieving the energy efficiency targets pursued because,due to its high share of overall electricity consumption in Luxembourg (50%), this sector still has a lot ofsavings potential. Therefore, the government will introduce additional measures (e.g. de-risking,transparency platform for audits, continuing the EEO) to make it easier for those in industry to invest inenergy efficiency themselves or via third parties. The government will also proactively participate in EU
research projects on zero-carbon steel, zero-carbon cement, zero-carbon glass etc.
In Luxembourg, the 2018-2023 coalition agreement provides for the creation of an integrated support
instrument for SMEs, which functions supplementary to the Accord volontaire [voluntary agreement] andthe de-risking instruments (described under 3.2.1.i) and aims to provide the relevant companies with asupport framework for their implementation of energy and climate policies.
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Green Jobs and Climate Solutions made in Luxembourg
Many studies show that climate protection also leads to net creation of jobs. This applies in particular tocountries in which there are now few jobs in coal mines, natural gas fields and on oil rigs.
Investment is needed in Luxembourg in solar plants, wind farms, electric charging columns, energy
efficiency measures in industry and SMEs, developing heating networks, the circular economy and inparticular energy renovation of existing buildings. The government is aware of this, and has introduced
initiatives both in basic training and in further training (formation continue).
Luxembourg should however also be entitled to become a ‘start-up nation’ in the field of climate change.
The pioneering role in key technologies (zero-energy buildings, electromobility, photovoltaics), thedevelopment of energy research and innovation in Luxembourg, and particularly the high level of expertisein ‘green finance’ create an environment which facilitates assisting existing companies in Luxembourg withclimate protection, and attracting new companies from Europe and around the world.

Important role of the circular economy as a climate protection measure
The circular economy can also help to reduce GHG emissions, beyond the measures described elsewhere.
A 2018 study shows that if a circular economy were to be consistently implemented, European emissions
from heavy industry could be reduced by up to 50% by 2050.
On the basis of the Circular Economy Study (2014) and the Rifkin process, it is important to define thecircular economy in Luxembourg, in order to ensure that all parties from different sectors have the sameunderstanding. This definition is equally important in order to determine and best support the social
aspects of a transition to a circular economy. A change to a circular economy can only take placeaccompanied by a societal shift. Economic concepts which meet this challenge are, for example, thedevelopment of ‘sharing initiatives’ and cooperatives or the upgrading of service offers. Another important
issue in relation to developing a circular economy is promoting a regional focus.
A key aspect of the circular economy is resource management, which is strongly defined by waste legislation. Only
through continued promotion of cascading use can transition from a linear economy to circular value creation beachieved. It is only possible to establish cascading use if the necessary steps are taken in the design stage to arrange
for the further use or the reuse of resources. The current Waste and Resources Management Plan (2018) already
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sets out targets for, among other things, prevention, recycling and different waste categories. Thus, recycling rates
for packaging are already set at 70% for the year 2022. A review of the legal basis for waste management will
provide the necessary impetus. Other strategic aspects are set out in a ‘Null Offall Lëtzebuerg’ [zero waste
Luxembourg] strategy and a circular economy strategy. Work on the ‘Null Offall Lëtzebuerg’ strategy has alreadybegun and has been accompanied by public consultations. This strategy aims to transform the current waste
management system into an economy with a stronger focus on resource management.
In addition to these structural measures, companies in particular require support during the transition. In
this context, a material flow analysis will be carried out to identify the flows for which circular and regional
value creation appears possible. In addition, continuous adjustments will be made to the businessenvironment to promote circular business models.
In addition, the construction sector will be assisted and supported in order to further promote sustainable
construction and the circular economy. In this regard, national criteria will be defined and developed forsustainable and circular construction in cooperation with the various operators in the sector, with the aimof creating a database that is also compatible with the BIM working method. In addition, legal andregulatory measures to ensure implementation of sustainable construction in Luxembourg will also be
analysed. There will be continued efforts to increase timber construction. Due to its potential for cascadinguse, the possible regional nature and the reduced climate impact, this building material in particular has
potential which should be further exploited.
Furthermore, sustainable living and ecology and circular economy ideas within urban neighbourhoods will
be supported, for example, by the promotion of sharing economy and urban farming projects.
Lastly, circular value creation will be further promoted in commercial and industrial areas. Important aspects
in this context, which also have a direct impact on greenhouse gas emissions, are the efficient use of energy,
e.g. the use of waste heat, the use of roof surfaces for solar energy or reducing the need for mobility.

Waste and household water management
In the waste sector all measures are listed in the national waste management plan. Additional measures
will be introduced with the new waste regulation. In relation to greenhouse gas emissions, the most
relevant measures here are those which aim to reduce waste production. In particular, the aim is to reducefood waste by 50% by 2022.

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In the household water management sector, Luxembourg will increasingly find itself confronted with the
problem of sewage sludge. The size of treatment plants and the amount of sewage sludge produced areincreasing with population and economic growth. The government programme anticipates theimplementation of a national strategy to propose sustainable solutions for recovery (energy recovery,
phosphorus recovery, etc.) or removal of sludge. A study is expected to deliver initial results by the end of
2020. The Strategy for Adapting to Climate Change in Luxembourg (2018-2023) also sets out
recommendations for integrating aspects related to climate change into the design of sewerage systems.
The recycling of wastewater will be further promoted and the effective use of grey water (e.g. thermal use)
will be further developed.

Industrial processes and fluorinated gases
Mitigation measures in the field of industrial processes are subject to the EU ETS standards. However,mitigation measures established as part of the national air pollution control programme under European
Directive 2284/2016 may lead to an additional reduction in greenhouse gas emissions, in particular in theuse of various products such as solvents. Measures in the energy efficiency sector can also lead to additional
reductions in industrial processes.
Reduction measures for fluorinated gases are set out in European Regulation No 517/2014 on fluorinatedgreenhouse gases. These include both placing on the market and monitoring the use of various fluorinatedgases, and reducing the quantity of hydrofluorocarbons placed on the market through allocation of quotas
and creation of a register.

Agriculture and forestry
Agriculture and forestry are both actors in and affected by climate change. On the one hand, they directly
influence the development of greenhouse gas concentrations in the atmosphere through release ofgreenhouse gases and carbon storage. On the other hand, climate change affects agricultural and forestry
production conditions.
Anticipatory adaptation to climate change should help Luxembourg’s agriculture and forestry sector tomaintain and increase its production and public services in the long term.

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The IPCC Special Report on Climate Change and Land highlights the impacts of climate change observed
across the globe on natural terrestrial ecosystems, land degradation and food security. The frequency andintensity of some extreme climate and weather events affecting the land surface has increased. The reportillustrates the vulnerability of terrestrial ecosystems and resources and food security to climate change.
Climate change is expected to exacerbate the existing challenges facing land systems, posing serious risks
to livelihoods and the well-being of the population.
All of the reduction trajectories evaluated in the report, which limit warming to 1.5 °C or to clearly below
2 °C, require land-based mitigation measures and changes in land use which remove CO2 from theatmosphere. The report also shows that there are many land-based mitigation measures which do notcompete with land use (such as sustainable agricultural practices and agroforestry) and have potential
added benefits. A change in eating habits and reduction of food waste and loss could also reduce pressure
on the land, while contributing to the eradication of poverty and improving health and hygiene. However,
the report also emphasises that the use of large-scale land-based solutions (such as bioenergy with carbon
capture and storage, and reforestation), if applied on a large scale and in a non-sustainable manner, canincrease pressure on the land and food security.

Agriculture
In line with the aforementioned IPCC Special Report, a first set of measures has been identified for
reducing GHG emissions in agriculture by reducing the use of nitrogen-containing fertilisers, and insome regions even promoting the elimination of nitrogen-containing fertilisers altogether. These
measures include agri-environmental measures defined under the EU’s Common Agricultural
Policy (CAP) and incorporate programmes to reduce nitrogen fertilisation on arable land andgrassland, but also the non-fertilisation of, for example, flower borders and field margins.
A second set of measures concerns the use of organic manure and mineral nitrogen fertilisers.
These are implemented as part of the agri-environmental measures and the NEC Directive andinclude promoting environmentally friendly techniques for spreading manure, the ban on splash
plates from 2025 and the ban on open new slurry or biogas slurry containers, with support available
for covering existing open containers. These measures also all lead to a reduction in GHG emissions.
There will be further promotion of biogas as an energy source in the interests of the circular
economy. As explained in more detail under 3.1.2.i., organic manure of animal origin should be

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used as a priority in biogas plants, in order to concurrently reduce methane emissions. The coalition
agreement provides for the drafting of a strategy to reduce methane emissions.
A number of interventions under the agri-environmental measures, the Agricultural Biodiversity
Action Plan and the Water Protection Act will lead to extensification of agricultural land use, inparticular in sensitive areas, but also by promoting the grazing of dairy cows. Furthermore, thecoalition agreement anticipates that at least 20% of agricultural land will be subject to organic
cultivation by 2025 (and 100% by 2050), which will contribute to extensification of agricultural use.
In addition, greening measures and the landscape conservation premium will also help to reduce
GHG emissions. Overall, agriculture should remain land-dependent.
Further development of advice and diversification of the consultancy modules on offer, which
promote climate-friendly, climate-resilient, environmentally friendly and economical crop andanimal production, is another measure which will help to reduce GHG emissions. In this sense, any
major agricultural investment project financially supported by the State will in future be subject toan economic, social, ecological and energy-related analysis. Furthermore, sustainability checks will
be introduced for agricultural holdings. There is also a need to increase knowledge about climatechange and agriculture and to promote innovation through relevant research projects relating to
Luxembourgian agriculture.
Preventing food waste makes a key contribution to reducing emissions. The ‘Antigaspi’ [anti-foodwaste] campaign must be continued and intensified in order to prevent waste along the entire foodchain.
In addition to forestry, the agricultural sector also provides a carbon sink which absorbs CO2 fromthe atmosphere and is therefore vital to achieving the objectives of the Paris Agreement. A
research project will draw up the necessary guidelines to specifically encourage the developmentof humus as a carbon sink. In this area, the existing ban on ploughing permanent grassland insensitive areas and the promotion of reduced tillage and cover crops should be pointed out. The
crop diversification obligation under the agri-environmental measures and greening are othermeasures which increase carbon sinks. Agroforestry would have a positive impact here.

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Forestry
All relevant forestry measures have been listed in the national forestry accounting plan (Regulation(EU) 2018/841). These include, in particular, the protection of existing woodland, sustainable forest
management and the designation of semi-natural forests. Based on these already existingmeasures, a reference value has been established for forests which serves as a basis for accounting
rules in the forestry sector. These existing measures will be maintained in order to record zero
emissions in the forestry sector.
New subsidies will be introduced in relation to increasing semi-natural and climate-resilient forest
management. Reforestation measures and steps to increase the volume of wood in forests will betaken to increase CO2 sinks. Furthermore, increased use of wood products in the construction
sector and improved cascading use of wood will prolong the CO2 storage effect.

Taxation measures
Energy and environmental taxes in Luxembourg are low in comparison to Europe and its neighbours. Thisposes various challenges in relation to climate and energy policies. The government is aware of this, andthe coalition agreement accordingly states that the government will develop and implement a predictable
and coherent tax policy which will provide adequate responses to the realities and challenges of family,social, economic and environmental policy.
As part of the tax reform planned in this regard, energy and resource taxation, including the describedminimum CO2 price, will be revised to incorporate the treatment of non-sustainable tax privileges
detrimental to the climate. This will also take into account the findings and recommendations of theongoing study ‘Effects of subsidies and tax incentives on sustainable development – environmentally
harmful subsidies in Luxembourg’.13
The social fairness of an energy and resource taxation reform is a prerequisite for its success. The coalition
agreement states in this regard that revenue from an increase in energy taxes is to be used to finance thesocial efforts necessary to create ecological change, which should at the same time be socially just.

13

The study ‘Effects of subsidies and tax incentives on sustainable development – environmentally harmful subsidies in Luxembourg’ is explainedin more detail in Chapter 3.1.3.iv.

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Fuel taxation
The government is aware that Luxembourg can only meet its climate and energy targets ifenhanced measures are taken in relation to fuel sales in general and in particular in relation to fuelexports to HGVs. This is because, according to the Paris Agreement and the detailed EU framework
legislation, CO2 emissions are recorded where the fuel is sold. The fuel prices for diesel and petrol
in Luxembourg are cheap in comparison with neighbouring countries. Price differences withneighbouring countries must thus be gradually reduced in order to reduce fuel exports. In thisconnection, it will also be necessary to reduce the dependency of public finances on fuel sales andto avoid supporting false price signals which lead to an increase in fossil-fuelled HGV traffic.
Revenue that is incompatible with the objectives of the Paris Climate Agreement will be
relinquished.
It was decided in the coalition agreement to adjust taxation of mineral oil products, in particular
fuels, to bring it into line with the objectives of the Paris Climate Agreement. An initial increase inexcise duties on diesel (+2 euro cents per litre) and petrol (+1 euro cent per litre) was introducedon 1 May 2019.
An inter-ministerial committee (finance, environment, energy, economy) monitors and analyses
trends in the sale of fuels and the impact of the new measures proposed by the government. With
regard to achieving climate targets, under the coalition agreement the committee will also identify
measures for steadily reducing the impact of the sale of fuels on Luxembourg’s greenhouse gasbalance and will regularly propose adjustment measures to the government. Care will be taken to
reduce the unjustified preference for diesel over petrol in the event of any future increases.
In addition to the taxation measures, there are also instruments that could contribute to reducing
fuel exports. For example, aspects relevant to climate change must be enshrined in motorway
service station licences and, at the same time, police checks on HGVs at motorway exits must be
increased, and carried out with greater cooperation from the municipalities, in order to prevent
transit fuel traffic placing an increasing burden on our towns and villages.
Vehicle taxation
Although the vehicle tax for vehicles in category M1 registered after 1 January 2001 is calculated
according to CO2 emissions (according to the EU Conformity Certificate) and fuel type, their current
steering effect is low.

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Therefore, the vehicle tax will be revised to take account of the polluter pays principle. The revised
vehicle tax will exclusively apply to vehicles which are registered after a date yet to be determined.
The current tax regime for company cars (40% of all new cars sold in Luxembourg) provides an
incentive for both employers and employees to purchase and use these cars. Since 1 January 2017,
the financial benefits to the employee have been calculated on the basis of CO2 emissions per
kilometre and are thus intended to encourage selection of lower-emission vehicles.
The coalition agreement also provides for further revision of the financial benefits of company cars,
with the aim of promoting electromobility through this route. In addition, employees who choosea means of transport other than the car should not be further disadvantaged. The introduction ofa ‘mobility budget’ tax benefit will be considered, equivalent to that for company cars. This will
facilitate workers’ access to LPT mobility, active mobility or car-sharing services.
Taxation of fuel oil and natural gas
Taxation of fuel oil will be gradually increased as part of the aforementioned tax reform, taking into
account the described minimum CO2 price, in order to encourage the shift towards renewable,comparatively climate-friendly heating. In order to ensure that this measure is socially just, an
attractive support scheme for oil heating exchange will be introduced. In this connection, thecompetent ministries will analyse the impact of increasing the cost of fuel oil with the public subsidy
from the Allocation de vie chère [cost of living allowance] and, if necessary, adjust the effectivenessof this premium, as well as respecting the technical feasibility.
Further taxation measures
To promote the circular economy and tackle excessive consumption of resources, the government
will consider applying the super-reduced VAT rate of 3% to eligible repair work under European law.
The government will also explore opportunities to introduce tax incentives for natural persons
investing in sustainable development, climate protection and energy transition. The benefits of suchinvestments will be proportionate to the taxable income and the risks taken by the taxpayer
concerned.

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3.1.1.ii. Any regional cooperation in this area
Within the framework of the Pentalateral Energy Forum (DE, FR, BE, NE, LU, AU, CH), Luxembourg willprioritise action in the following areas:A shared vision for a decarbonised electricity system in western Europe by 2050

initiating cross-border cooperation in the field of renewable energyintegrating electromobility options and services without regional constraints



Exploring options for CO2 pricing and its cross-border impact on electricity prices.

These issues have already been further discussed in Chapter 1.4.

3.1.1.iii. Without prejudice to the applicability of State aid rules, financing measures, including
Union support and the use of Union funds, in this area at national level, where applicable
Climate and Energy Fund
The Climate and Energy Fund (Loi modifiée du 23 décembre 2004 1) établissant un système d’échange dequotas d’émission de gaz à effet de serre; 2) créant un fonds de financement des mécanismes de Kyoto) on
the one hand finances governmental and semi-governmental projects in the areas of climate action andrenewable energy at national level and on the other hand is used for international climate financing. The
Fund is fed from three sources:

a proportion of the fuel tax (3.5 euro cents per litre of diesel and 2.5 euro cents per litre of petrol,
since the increase in excise duties of 1 May 2019 (see Chapter 3.1.1.i.))

40 % of the vehicle tax revenue; andnational auction proceeds from EU emissions trading.

The future climate law (see Chapter 3.1.1.i – introduction of a climate law) will again enshrine the Climate
and Energy Fund in law and adapt it to current challenges in line with the Paris Climate Agreement. This
will lead to adjustments in terms of both expenditure and revenue. The Climate Pact for municipalities is
to be funded by the Climate and Energy Fund.

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Environmental fundThe environmental fund (Loi modifiée du 31 mai 1999 portant institution d’un fonds pour la protection del’environnement) is used to support communal projects in the areas of climate action, energy efficiency andrenewable energy, as well as the waste sector and nature conservation. It subsidises energy concepts,
energy renovations, communal buildings, energy-efficient new construction, renewable heat and power
generation (photovoltaic installations, solar thermal installations, heat pumps, biomass heating plants andcombined heat and power plants), communal heating networks based on renewable energy and waste heatand converting street lighting to LED technology, among other things. The kinds of project eligible and theassociated eligibility criteria are regularly updated and adapted to technical and economic development aswell as climate and energy objectives.

PRIMe House housing support scheme
The PRIMe House support scheme (Loi du 23 décembre 2016 instituant un régime d’aides pour la promotion
de la durabilité, de l’utilisation rationnelle de l’énergie et des énergies renouvelables dans le domaine dulogement) offers investment aid for the sustainable energy renovation of residential buildings andcorresponding qualified energy consultancy, for the construction of sustainable residential buildings andfor the use of renewable energy (photovoltaic installations, solar thermal installations, heat pumps, woodpellet and wood chip heating systems). The support scheme has been extended and reviewed a number oftimes since 2001. The current programme runs until the end of 2020.
Regarding the continuation and further reinforcement of the programme, the following aspects will be thefocus of further development:

Checking and, if necessary, adjusting the amounts of supportIntegrating additional sustainability criteria, in particular to promote the circular economy

Including criteria to reduce health risks in residential buildings

Developing eligibility criteria for energy efficiency in listed buildings, in coordination with existingsupport schemes run by the National Sites and Monuments Service.

Further administrative simplification, for example by increasing the digitalisation of the application
procedure and optimising quality control (relationship between quality improvement and intensityof controls)

An inter-ministerial working group is responsible for monitoring and further developing the support scheme.
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In addition to the further development of PRIMe House, the criteria for the Luxembourg sustainability
certification for residential buildings (Lëtzebuerger Nohaltegkeets Zertifizéierung – LENOZ) will also be reviewed:The certification is to be generalised.

A selection of LENOZ criteria is to be progressively introduced as compulsory and promoted, andthen gradually phased out from PRIMe House support.

Climate loans for residential buildings
In addition to the PRIMe House support scheme, the sustainable energy renovation of residential buildings
is supported via low-interest or (for low-income households) interest-free loans (Loi du 23 décembre 2016
relative à un régime d’aides à des prêts climatiques), with the technical requirements being the same as
the PRIMe House criteria.
There are plans to review and simplify the terms and conditions and application procedure, so that more
homeowners can benefit from a climate loan in the future.

‘Clever fueren’ [drive smart] support scheme for electric vehicles
As regards increased promotion of electromobility, the tax incentives for electric vehicles in effect until the endof 2018 were replaced by direct subsidies on 1 January 2019 (Règlement grand-ducal du 7 mars 2019 portant
introduction d’une aide financière pour la promotion des véhicules routiers à zéro ou à faibles émissions de CO2).
Passenger cars, vans, motorcycles and bicycles are subsidised via the ‘Clever fueren’ scheme. All-electricvehicles, plug-in hybrid vehicles (≤ 50 g CO2/km) and hydrogen-powered fuel cell vehicles are eligible.
The support scheme was continued in 2020. The subsidy for plug-in hybrid vehicles is due to end in 2021.

Subsidy schemes and financial incentives for businesses
Under Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid
compatible with the internal market in application of Articles 107 and 108 of the Treaty, the Luxembourg
government can provide direct investment aid in the fields of environmental technologies and innovation
for businesses (both SMEs and also larger companies). The Ministry of the Economy is responsible for
granting the aid, supported by the innovation and research agency Luxinnovation (Loi du 15 décembre 2017
relative à un régime d’aides à la protection de l’environnement; Loi du 17 mai 2017 ayant pour objet 1) le
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renouvellement des régimes d’aides à la recherche, au développement et à l’innovation; 2) les missions del’Agence nationale pour la promotion de l’innovation et de la recherche; et modifiant la loi modifiée du 5
juin 2009 relative à la promotion de la recherche, du développement et de l’innovation).
In addition, SMEs can also apply for funding through a special government support scheme.
To support companies’ efforts and to accelerate the energy transition, the following aspects will be thefocus of further development:

Increased promotion of aid schemes by providing companies with better informationSimple and transparent communication of the measurable benefits of support schemesSimplifying the eligibility conditions, in coordination with national and European law

Accelerating administrative simplification, in particular through increased digitalisationMore resources for the support scheme directed at SMEs



Enhanced efficiency through a combination of support schemes for SMEs and larger companies

The existing support schemes will be reviewed.
3.1.2.

Renewable energy

The Luxembourg government would like to accelerate the push for renewable energy with a target of 25% by 2030,
and supports further development through investment aid and subsidies for private individuals and businesses.
Wind power, as one of three key technologies for Luxembourg (wind, solar, biomass), surpassed the expectationsof the NREAP in 2009 and continues to be financed accordingly. There will be a fresh attempt to instigate
widespread use of photovoltaics (recently, development has almost stagnated). For biomass, priority will be given
to improving cascading or multiple use (round timber for sawmills for use in furniture and construction, used andresidual wood for particleboard plants, waste and scrap wood for cogeneration installations) and sustainability
criteria (including procuring wood from the Greater Region in principle or within a radius corresponding to theGreater Region). In addition, new options, such as geothermal energy, will be further explored and promoted.
Luxembourg’s aim is to become a proactive player in the energy transition, involving its whole population. In
addition to the expansion in Luxembourg, the government will also actively participate in renewable energy
development in Europe, through the instruments provided for in the new Directive 2018/2001 on the promotionof the use of energy from renewable sources. The following points will be implemented:
In order to increase investment in renewable energy, new incentives will be introduced, such asincreasing feed-in tariffs for photovoltaic installations, regular calls for tender for large installations
and the removal of current barriers.
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 82In general, Luxembourg will promote the expansion of renewable energy production at European
level and will not support new projects based on fossil fuels or the development of fossil fuel power
plants. By 2050, 100% of the energy supply in the EU should come from renewable energy sources.

3.1.2.i. Policies and measures to achieve the national contribution to the binding 2030 Union target
for renewable energy and trajectories as referred to in Point (a)(2) of Article 4, and, where applicableor available, the elements referred to in Point 2.1.2 of this Annex, including sector- and technologyspecific measures.
Wind energy
A large proportion of renewable energy production in Luxembourg already comes from wind power(installed capacity in 2018: 123 MW from 69 installations). At present, around 10 wind farm projects, someof which have already undergone the strategic environmental assessment and other required impact
studies, are in the development and finalisation phase for 2020 and are expected to produce electricity foraround 50,000 additional households per year.
The existing feed-in payment/market premium will be continued and existing barriers will be removed
where possible. The possibility for municipalities and citizens to make a financial contribution will also
remain a key development factor. In the past, this has ensured a very high level of acceptance for wind
power plants among the population and will continue to do so.

Solar energy
Due to its strong potential and multiple direct uses, solar power plays a key role in the country’s energy mix
and will be developed even further in the coming years. As regards photovoltaics, Luxembourg is currently
in 6th place in the European Union in terms of installation capacity per inhabitant, with a total of 6990
photovoltaic installations (2018). The government’s aim is to reach the top of this ranking by 2030.
Feed-in tariffs
The increase in feed-in tariffs in 2019 aims to maximise the use of building roofs (and othersealed/non-agricultural areas) in Luxembourg to fit photovoltaic installations. Attractive feed-in
tariffs for small installations up to 10 kW should allow all households to fit their own installation,

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including with a view to later self-consumption. As previously, co-operative installations will besupported separately. Every citizen will have the opportunity to take part in the energy transition.
After the introduction of a new category, collective installations in the range of 30 to 500 kW cannow benefit from a feed-in tariff. Municipalities will be encouraged to make their roof areas
available to cooperatives. More than 100 of these large ‘solar power plants for the people’ arecurrently in the pipeline.
Calls for tender
In order to speed up the expansion of photovoltaics in Luxembourg, a call for tender for large
photovoltaic installations (≥ 500 kW) was launched for the first time in 2018. The contract wasawarded to 15 MW capacity on buildings and industrial areas/landfills. The second call for tender
over 40 MW took place in autumn 2019 and now provides a specific category for carports, among
other things. It also permits installations between 200 and 500 kW.

On the basis of the results and analyses of both these calls for tender, a multiannual plan for calls
for tender will subsequently be published in 2020, in which the volumes offered for tender will be
successively increased each year in order to achieve the targets in the photovoltaics sector.
Self-consumption
The inclusion of self-consumption concepts (in conjunction with energy storage) and energy
communities will play a new, specific role in the PV sector. Both concepts, as provided for in
Directive 2018/2001, have already been enshrined in a legislative amendment (on the electricity
market), allowing accompanying measures and support measures to be implemented quickly.
The ‘30-200 kW’ category for self-consumption will be specifically targeted in the overall
photovoltaics approach – attractive tariffs for small installations, special categories forcooperatives for citizen participation, calls for tender for larger and major installations from200/500 kW – in order to create incentives for SMEs and office buildings.
Solar map
The coalition agreement (2018-2023) provides for the creation of a national solar map for
Luxembourg. Up to now, such a tool has only been available at municipal level in some cases, forexample in the capital city. The development of a solar map provides a decision-making tool in
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relation to solar energy and helps to recognise and exploit existing potential in terms of private
photovoltaic installations, energy cooperatives and public calls for tender. Furthermore, the map
can be used by network operators and administrations to help them optimise the integration ofsolar installations into the network.
The map, which should be complete by the end of 2020, should facilitate more efficient planning.
This tool will take account of the type of roof (flat roof, etc.) and the heights of buildings, so thatcitizens/company only need to click on their roof in order to obtain an initial assessment of whether
it would make sense to install photovoltaics. The map is intended to serve as a planning andmanagement tool for administrations in relation to larger areas (along roads, old industrial or
landfill sites, possibly later free agricultural space).

Heat pumps
Heat pumps are stated as the reference technology for new buildings in the improved thermal insulation
regulations for residential and service buildings. It is estimated that the use of geothermal energy inconnection with heat pumps has an achievable potential of around 180 GWh/a. Heat pumps are a highly
versatile technology for using renewable energy and energy efficiency technologies and have proved to beparticularly effective heating systems in well-insulated buildings. The government intends to continue topromote and develop this technology by means of financial aid (see Chapter 3.1.1.iii) and an improved
information policy (e.g. updated restriction map via Geoportal).

Medium-depth geothermal energy
Potential for exploiting medium-depth geothermal energy will be more systematically identified and moreconsistently taken into account in relevant project areas. The aim is to reduce the existing uncertainties
and risks and to promote increased use of geothermal energy in suitable locations. The main focus here ison the area around Düdelingen and Esch-sur-Alzette.

Biomass
In recent years, use of biomass has predominantly been promoted in cogeneration plants. The new
Directive 2018/2001 provides sustainability criteria for the use of biomass in large plants (> 20MW). On thisLuxembourg’s integrated national energy and climate plan for the period 2021-2030 | 85

basis, the Luxembourg Government intends to set stricter requirements in relation to sustainability criteria
for new plants in future, and therefore plans to extend the European sustainability criteria for biomass use
in cogeneration plants to smaller installations. Plants with a rated electrical output over 10 MW which use
biomass or used and residual wood as an energy source must comply with these sustainability criteria inorder to receive a feed-in tariff/market premium. In addition, it will also be ensured that the objectives of
Directive 2016/2284 on the reduction of national emissions of certain atmospheric pollutants remain
achievable, through the use of suitable technology.
The stated objective is for biomass for energy production to be sourced from the Greater Region or withina radius corresponding to the Greater Region. More detailed provisions will be set out when thesustainability criteria are developed. In general, the cascading use principle should become more firmly
entrenched in relation to the use of wood. The Luxembourg Government is considering creating its own
sustainability label, which could be linked to the ‘Holz vun hei’ [locally sourced wood] label. In addition, thedraft code forestier [forestry code] law also sets out better sustainability criteria for national forestry.

BiogasBiogas continues to be a pioneering energy source (electricity, heat, supply). The framework conditions
need to be revised in order to better promote biogas and to better take account of the not insignificant
environmental and water protection issues (methane, NH3 emissions, nitrate, phosphorus). Part of thereform will involve adjustments to state aid to better recognise the non-energy related benefits of thesector. The government is setting very clear priorities, including in relation to the circular economy, therecovery of slurry, manure, biowaste and other residues. The biogas strategy is therefore also part of themethane reduction strategy. Currently, only slightly more than 10% of the theoretically available slurry isused for energy purposes (13.6% in 2018). The use of renewable raw materials is restricted. Biogas
produced will be fed into the gas network as a priority.
To this end, a technical and economic analysis was commissioned to determine the potential of biogas andthe implementation of all of the above factors. In view of the scarcity of land in Luxembourg, the 2030
renewable energy targets and the results of the study, the Ministries concerned (energy, environment andagriculture) will work closely together to define the future role of agriculture in energy production andspecifically in relation to biogas and photovoltaics.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 86Government to lead by example
As already mentioned under 3.1.1, Luxembourg has adopted a strategy for ‘sustainable and energy-efficientpublic buildings’ in relation to new construction and existing structures, in order to improve energy
efficiency and the use of renewable energy in government and government-related buildings. This includes
the introduction of an obligation to fit photovoltaic installations on government and government-relatedbuildings, for both new and renovated structures. This should also be reflected in an improvement to theexisting photovoltaics scheme run by the Administration des bâtiments publics [Administration for Public
Buildings]. The aim is for all suitable public buildings to be equipped with photovoltaic installations by 2025.
In addition, better integration of photovoltaic installations and increased use of renewable heat, inparticular based on medium-depth geothermal energy, will be promoted in schools and theirinfrastructures.
Army barracks to go green
It has already been decided that the infrastructure on the Herrenberg will be extensively renovatedinto an ‘energy autonomous zero CO2’ area. The houses will be renovated, solar energy will be
installed on many rooftops and the heating network will be switched to renewable energy. Many
army vehicles will also be examined to see if they can run on electricity or hydrogen. Through smart
energy management, the entire area will then be largely self-sufficient in terms of energy.
HydrogenThe production of hydrogen, which is mainly used in industry, is today largely based on fossil fuels, primarily
gas and what is known as gas reformation. In order for hydrogen to play its part in decarbonisation,
renewable hydrogen or ‘green hydrogen’ must be produced by electrolysis of demineralised water using
renewable electricity (photovoltaics or wind power). This low-emission or zero-emission hydrogen can beused in many fields, including in industry, in transport or even in energy storage (it is primarily suitable forseasonal storage of renewable energy).
There are plans to construct a hydrogen refuelling station. A key factor is the certification and supply of‘green hydrogen’ which is an essential condition for commissioning.
Committees such as the Pentalateral Energy Forum or Hydrogen Europe also take this position.
Luxembourg will contribute to a Europe-wide network of hydrogen refuelling stations. To enable longer
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journeys within Europe, in particular in the trucking and logistics industry, locations along or on the
motorways are the most logical. Studies in this regard are currently being prepared.
Hydrogen can also play an important role in reducing CO2 emissions, in particular in the steel and cement
industries. Companies in Luxembourg specialising in steelworks construction are already active in this field.
Looking ahead to 2030, hydrogen can play a crucial role in energy supply and in sector coupling for theelectricity, heat and transport sectors, in particular if energy losses in production and conversion throughelectrolysis are improved and the effectiveness of fuel cells developed for use in transport is increased.
Luxembourg intends to work closely with other EU Member States in this area.
A hydrogen strategy for Luxembourg is currently being prepared as part of the European Green Deal and afuture European hydrogen strategy. The H2 strategy for Luxembourg will analyse potential in the following
areas:-How substantial is the current and future demand for hydrogen?

-

Is it possible to produce renewable hydrogen in Luxembourg, and if so, how much? Alternatively,
how can the importation of hydrogen be arranged?

This analysis will examine, in particular, potential in the transport, industrial and renewable energy sectors(production – flexibility – storage – recovery).
A future hydrogen economy will operate across borders, and it is therefore essential to have discussions at
various levels with neighbouring countries and EU Member States. The Ministry of Energy and Spatial
Development is currently preparing an initial strategy document for Luxembourg, in close cooperation andfrequent discussion with interested parties from the scientific community and from industry.
Innovative funding instruments for renewable energy
Luxembourg’s financial centre is already home to a considerable number of investment funds which invest
in renewable energy globally. The Luxembourg government is currently considering setting up a ‘de-risking
fund’ for renewable energy. In 2018, Luxembourg’s legislation relating to mortgage bonds was extended tocover a form of financial instruments secured by ‘renewable energy’ projects. It was the first financial
centre in the world to do anything of the kind.

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Luxembourg intends, together with the EIB, to promote a de-risking instrument for long-term renewables
power purchase agreements (PPA) at European level as well. This will make green electricity contracts
cheaper for industry and for SMEs. During the last legislative period, the Luxembourg Finance Centre
became a pioneer in matters of sustainable finance. Luxembourg will continue to be very active in this area,for example by supporting the Luxembourg-EIB Climate Finance Platform and the International Climate
Finance Accelerator-Luxembourg (ICFA). On an international level, Luxembourg participates in the UN’s
GCF (Green Climate Fund) and the Network of Financial Centers for Sustainability. Luxembourg also
promotes renewable energy through development cooperation. Luxembourg is a member of theInternational Renewable Energy Agency (IRENA) and has applied to join the International Solar Alliance(ISA).

Monitoring tool and financial measures for businesses
In order to increase companies’ investment in renewable energy and energy efficiency measures, financial
incentives will be reviewed and further developed. The associated strategy and measures for creating amonitoring tool and reviewing financial incentives for companies in relation to renewable energy can befound in Chapters 3.1.1.i. Economy and 3.1.1.iii. Funding measures.
PRIMe House support scheme
Strategies and measures relating to the national support scheme PRIMe House and the associated implicitly
required use of renewables are set out in Chapter 3.1.1.iii.

3.1.2.ii. Any specific measures for regional cooperation, as well as, optionally, the estimated excess
production of energy from renewable sources which could be transferred to other Member Statesin order to achieve the national contribution and trajectories referred to in point 2.1.2
Cooperation mechanisms (statistical transfers, joint projects, etc.)
Luxembourg also wants to contribute to the development of renewable energy abroad. As stated in
Directive 2009/28/EC and in the NREAP, Luxembourg needs to use cooperation mechanisms in order toachieve its 2020 targets. Luxembourg has made various efforts in the past to explore and promote possible
methods of cooperating with different countries. In 2017, Luxembourg became the first Member State toenter into two statistical transfer contracts with Lithuania and Estonia. Both agreements include theLuxembourg’s integrated national energy and climate plan for the period 2021-2030 | 89

mandatory transfer of minimum quantities and the possibility of carrying over quantitative limits for theperiod 2018-2020, which is a clear indication of enhanced European cooperation in the field of renewableenergy.
In this sense, the Luxembourg government intends to continue to rely on cooperation mechanisms in the
future. The new Directive 2018/2001/EU continues to build on existing cooperation mechanisms (statisticaltransfers, joint projects and shared support mechanisms) and also provides for new methods ofcooperation: the Union renewable development platform (URDP) and the Union renewable energy
financing mechanism.
Statistical transfers will continue to play a certain role. The cooperation should, however, also be further
developed and involve specific projects. The specific framework for this is the Benelux and/or the North
Seas Energy Cooperation, but also the Pentalateral Energy Forum (Germany, France, Benelux, Austria,
Switzerland). Luxembourg intends to participate in the Union renewable development platform (URDP) andalso has a strong interest in the establishment and functioning of the Union renewable energy financing
mechanism enshrined in Article 33 of the European Regulation 2018/1999/EU.
The European Commission will establish this financing mechanism by 1 January 2021, to tender support for
new renewable energy projects in the Union. It is anticipated that this financing mechanism will support
countries in implementing the development of renewable energies towards the EU target and will have thepotential to improve investment conditions for renewable energy across the EU.
Luxembourg has already made some efforts in the past to launch a joint tender with another country in the
renewable energy sector. Due to its complexity, this project did not come to fruition. This is another reason
why Luxembourg supports the introduction of this European instrument, which is a move towards a
European tendering process, and will actively participate in the first steps towards its implementation.

3.1.2.iii. Specific measures on financial support, where applicable, including Union support and theuse of Union funds, for the promotion of the production and use of energy from renewable sourcesin electricity, heating and cooling, and transport
The main support schemes in this area are already listed under 3.1.1.iii. The most important support
schemes are mentioned again here:
The PRIMe House support scheme offers investment aid for the use of renewable energy (photovoltaic
installations, solar thermal installations, heat pumps, wood pellet and wood chip heating systems). The
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support scheme has been extended and reviewed a number of times since 2001. The current
programme runs until the end of 2020.
The environmental fund is used to support communal projects in the areas of climate action, energy
efficiency and renewable energy, as well as the waste sector and nature conservation.

Passenger cars, vans, motorcycles and bicycles have been supported through direct subsidies via the‘Clever fueren’ scheme since 1 January 2019.

3.1.2.iv. Specific measures to introduce one or more contact points, streamline administrative
procedures, provide information and training, and facilitate the uptake of power purchase agreements
The ministries and administrations concerned are currently discussing how to set up this contact point.

3.1.2.v. Assessment of the necessity to build new infrastructure for district heating and cooling produced
from renewable sources
Low-temperature heating networks
In order to comply with Article 14 of Directive 2012/27/EU on energy efficiency, a study assessing thepotential for use of high-efficiency cogeneration was published in 2016. This study assessed the potentialof the heating network supply and revealed that a significant proportion of the co-generation potential isalready being exploited in the building sector. However, there is still potential to further develop thecurrent situation in the future. Mainly as a result of the high energy standard for buildings (NZEB for
residential buildings since 2017), the Luxembourg government expects a high number of potential heating
and cooling uses for low-temperature heating networks. These low-temperature networks will in future be
supplied predominantly from environmentally friendly sources (deep geothermal energy, heat pumps,
waste heat from industry and data centres, solar thermal installations), insofar as this is economically
viable. High potential, particularly in the field of geothermal energy, is expected in the south of the country.
The opportunities for using medium-depth geothermal energy for heating networks to supply residential
areas, schools and sports complexes are currently being studied more closely. In this context, myenergy, incooperation with the Luxembourg Geological Service and a research institute, is launching a project toimprove the data currently available, to more accurately assess the geothermal potential in Luxembourg
and to provide scientific support for construction projects currently planned.
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Heat map
The creation of a web-based heat map will increase transparency on the heat market by means of an
integrated analysis and presentation of the relevant data in this connection. The main focus is on illustrating
the heat demand and heat supply in the territory of Luxembourg, which can be used to, inter alia, prepare
and further develop heat strategies at regional and national level. However, the tool will also be used by
the municipalities as part of the Climate Pact, for example to implement energy planning or generalaccounting within the Climate Pact. However, existing heating networks will also be represented and anassessment of potential energy recovery (i.e. sewage sludge drying) will also be carried out. There are alsoplans to map the energy sources used to produce heat and the share of heat they produce.
Additionally, a hot-spot analysis will make it possible to identify larger renovation areas and possiblesynergies at industrial level. The economic viability of potential projects for planners and companies will bebetter assessed using relevant indicators. This is expected to increase energy efficiency for companies,
SMEs and in residential areas. These hot-spot analyses will also include an assessment of the use of waste
heat from efficient ‘green’ data centres.

3.1.2.vi. Any specific measures to promote the use of energy from biomass, especially for new
biomass mobilisation, taking into account:
The key factors in this area are listed under 3.1.2.i. Specific measures are as follows:Extending the sustainability criteria to cover installations with a rated electrical output above
10 MW



Sourcing biomass for energy production in principle from the Greater Region or within a radiuscorresponding to the Greater Region

Cascading use of woodCreating a sustainability label for Luxembourg.

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3.1.3. Other elements of the dimension
3.1.3.i. Any national policies and measures affecting the EU ETS sector and assessment of thecomplementarity and impacts on the EU ETS
The voluntary agreement with industry (accord volontaire) described under 3.2.i. involves companies which
are participating in the EU emissions trading scheme.
3.1.3.ii. Policies and measures to achieve other national targets, where applicable
Sustainable funding
International solidarity and climate financeRegarding climate finance, the Paris Climate Agreement calls on developed nations to provide
financial resources to support developing countries for both damage mitigation and adaptation
purposes.
In recent decades, Luxembourg has provided substantial financial and technical assistance tosupport climate action in developing countries, focusing on Least Developed Countries (LDCs),
Small Island Developing States (SIDS) and Luxembourg’s development cooperation partners.
Luxembourg will continue to support developing countries in the fight against climate change: from2021 to 2025, it will be able to contribute a total of €200 million and an annual budget at least
equivalent to the 2020 contribution of €30 million. This total amount includes a significant financial
contribution, currently €10 million annually, to the Green Climate Fund and an annual budget of€5 million for climate projects by Luxembourg Non-Governmental Organisations (NGOs).
These funds are designated as International Climate Finance (ICF) and are new and in addition to
Official Development Assistance (ODA). They are made available through the Climate and Energy
Fund, which is supervised by the Minister for the Environment. It is guaranteed that the ICF will be
continue to be available in addition to the ODA.
In the run-up to the COP21 Paris Climate Conference in 2015, the government had alreadycommitted to supporting climate action in developing countries, with a contribution of €120 million
from 2014 to 2020.

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A strategy for distributing the Luxembourg ICF, including eligibility criteria, was drawn up in 2017.
It is aiming towards a provisional distribution of 40% for mitigation, 40% for adaptation and 20%
forestry (REDD+).
Furthermore, the Government Council has endorsed the introduction of a comprehensive
approach to governance in the primary partner countries for development cooperation, in orderto reinforce cohesion and synergies between development measures and other areas, including
the fight against climate change and the development of economic, cultural, political and security
relations. As Cape Verde is the country with which Luxembourg has the most diverse and developed
relations, this new approach will be implemented there first.
Knowing that public investment alone will not be sufficient to reach the target of $100 billion by
2020, it is essential that public investment provide leverage for other sources of funding, including
the private sector.
However, investment in new forms of climate financing will be far from sufficient. Trillions of US
dollars and euros must be transferred from carbon-intensive investments to low-carbon
alternatives in order to ‘make finance flows consistent with a pathway towards low greenhousegas emissions and climate-resilient development’, as enshrined in the Paris Climate Agreement.
Luxembourg today acts as an important international platform for sustainable finance, whichconnects investors around the world. In the coalition agreement, the government clearly madesustainable finances a priority for developing the financial centre. The aim is to develop
Luxembourg as a centre of expertise in sustainable finance, and to promote and support publicprivate partnerships in the field of sustainable finance.
The underlying principle of Luxembourg’s success has always been its capacity for change andconstant innovation. Building on Luxembourg’s financial infrastructure, Luxembourg’s financial
centre has found a new direction and diversified. It has adopted green, sustainable finance and is
now the European market leader in this field.
In recent years, the government has launched several important climate finance initiatives together
with partners from the financial sector:
the LU-EIB Climate Finance Platform, a joint initiative with the European Investment Bank
(EIB), has been developed to mobilise investments for climate action projects with the
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combination of a first loss guarantee. It is the first time that the EIB has entered into sucha project with a Member State. This kind of initiative is key to reducing the risks (de-risking)of climate investment and to attracting private investors who would otherwise be reluctant
to invest.


The International Climate Finance Accelerator, a public-private partnership, provides fundmanagers with financial and operative support to launch new and innovative climate funds.



The Forestry and Climate Change Fund is a ground-breaking impact fund which aims todemonstrate that sustainable forest management in secondary and degraded tropicalforests generates economic, environmental and social value.

Thanks to its important financial centre, Luxembourg can create a substantial leverage effect andplay an important role in sustainable finance, far out of proportion to its geographical size. Thismeans that Luxembourg acts as a catalyst driving sustainable investment, in particular by matchinginvestors with sustainable investments.
The roadmap towards sustainable finance
Luxembourg already has a long and successful history in relation to sustainable finance, frommicrofinance to green bonds. LuxFLAG, a dedicated finance labelling agency, was set up back in2006. In 2007, the world’s first green bond (EIB) was listed on the Luxembourg Stock Exchange andthe Luxembourg Green Exchange (LGX) was established in 2016. The LGX is the first platform in theworld to deal exclusively with green securities. Currently, almost half of the world’s green bonds
are listed in Luxembourg.
Boosted by recent successes in this field, the relevant ministers presented the Luxembourg
Sustainable Finance Roadmap (LSFR) in October 2018, together with the United Nations
Environment Programme-Finance Initiative. This will further consolidate the leading role played by
Luxembourg’s financial sector in sustainable finance. In fact, Luxembourg ranks 4th on the Global
Green Finance Index.
The aim of the roadmap is to take stock of existing sustainable finance initiatives in Luxembourg,to lay the foundations for a sustainable finance strategy in order to contribute to the 2030 agenda
and to achieve the targets set out in the Paris Climate Agreement, and to consolidate the leadingrole played by Luxembourg’s financial centre in relation to sustainable finance.

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The roadmap is ambitious in terms of Luxembourg’s contributions to sustainable development andto European and international climate initiatives. It is leading the way towards future opportunities
and challenges.
The recommendations cover several aspects of the financial centre, such as developing financial
products for sustainable finance, developing education and training programmes to meet theneeds of the financial sector, or promoting innovation to facilitate financing of sustainable
development.
In this connection, the government will support the creation of conditions which encourage afurther increase in the market share held by sustainable financial products, in order to give
Luxembourg’s financial centre a leading role in sustainable finance.
The LSFR recommendations will be supplemented by further analyses in the coming years, in orderto produce a customised and feasible action plan. To achieve this, the Luxembourg Sustainable
Finance Initiative, a public-private body, will be set up to bring together the relevant parties in thefield of sustainable finance and will be led by the relevant ministers.
This body will provide the ideal forum for drawing up Luxembourg’s national sustainable financestrategy, based on the key elements of the LSFR. It will also serve as a discussion platform for
examining the feasibility and impact of the measures resulting from the LSFR recommendations.
Equal opportunities and human rights
Luxembourg is committed to implementing climate change policies which help to promote equal
opportunities, empower women and girls, and show respect for human rights.
Luxembourg recognises that climate change has gender-specific effects, and that increasing theparticipation and leading roles played by women and girls will boost the effectiveness of the fight against
climate change and the level of ambition in all areas.
The National Plan for Sustainable Development is the main tool for implementing the 2030 Agenda inLuxembourg. Pursuant to SDG 5: ‘Achieve gender equality and empower all women and girls’, Luxembourg
has identified the following objectives as a priority: 5.1. ‘End all forms of discrimination against women’,
5.2 ‘Eliminate all forms of violence against women’ and 5.5 ‘Equality of the sexes’.
As regards climate finance, in May 2017 Luxembourg presented its strategy for providing resources forinternational financing to fight climate change. Luxembourg’s strategy is based on a number of guiding
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principles, including that funding should meet stringent requirements of environmental integrity, social
benefits and gender equality.
At international level, aspects of climate change relating to human rights and to protecting local
communities and indigenous peoples will also be taken into account. Luxembourg is actively engaged inpromoting and protecting human rights in relation to climate change in various ways:

Establishing (May 2015) an inter-ministerial committee on human rights to improve national
coordination and close cooperation with civil society, which is an integral component of thecommittee’s workSupporting the Local Communities and Indigenous Peoples Platform (UNFCCC)

Organising round tables and events, as well as encouraging the preparation of reports on humanrights in the context of climate change in collaboration with the Center for International
Environmental Law (CIEL) and the Office of the United Nations High Commissioner for Human
Rights (OHCHR).

In addition, over the past few years Luxembourg has signed all declarations and initiatives specificallyfocusing on human rights and gender equality in relation to climate change:Geneva Pledge for Human Rights in Climate Action, COP21



Declaration on Gender Equality and Climate Change, COP24



For all Coalition, UNEA4

Climate Actions that advance Gender equality and Women Empowerment, UNCAS 2019

3.1.3.iii. Policies and measures to achieve low emission mobility (including electrification oftransport)
E-mobility
As explained in Chapter 3.1.1.i, electromobility plays a particularly important role in decarbonising thetransport sector in Luxembourg. The government has laid the foundations for supporting this by way ofregulatory adjustments, such as supporting the inclusion of empty conduits in new buildings for subsequent

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installation of a charging infrastructure, the regulated construction of a public charging network, andintroducing financial support for purchasing electric vehicles.

Luxembourg will prepare a detailed route map in order to boost development of electromobility, and inview of the objective of the corresponding scenario of 49% of cars being electric by 2030 (see Chapter 2.2).
The cross-border element is particularly important in terms of promoting electromobility in Luxembourg,
in order to make the switch an attractive prospect for over 200,000 commuters and Luxembourg residents
who travel long distances abroad. The government will implement associated initiatives at the level of thePentalateral Forum (DE, FR, B, NL, LU, AU, CH) and the Greater Region.
Active mobility will also make a significant contribution to low-emission mobility. The detailed measures
under MoDu 2.0 are described in 3.1.1.i.

Green batteries
The government is proactively committed to new legislation on green batteries at EU level. The EU
Commission will table a new directive at the start of 2020, which will enshrine in law a future 100%
recycling rate for lithium and other materials used in batteries for all batteries used in cars, buses
or elsewhere. The standards for the industrial processes which are necessary for producing
batteries will also be subject to strict criteria. The EU Commission is also working with Canada,
Japan and South Korea on an agreement to develop a sustainable mining initiative, to ensure thatraw materials used in the EU come from mining areas with good health and safety conditions.

The EU budget also supports the development of European green battery production. With EU
funding, Northvolt has already created the first ‘major green battery factory’ in northern Sweden,
where electricity comes from 100% renewable energy sources and the sourcing of minerals meetshigh environmental standards.

Biofuels
A comprehensive strategy for the use of sustainable biofuels will be developed to help reduce emissions forconventional transport users. The blending of first-generation biofuels with fossil fuels plays a limited role
here due to their less positive CO2-balance. The Luxembourg government will promote the use of secondgeneration biofuels through mandated blending and cooperation particularly with Benelux partners. The
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government programme stipulated that use of first-generation biofuels is to be limited to no more than
5%, in order to promote the use of second-generation biofuels which are thought to be more sustainable.

EU standards for cars, vans and HGVs
Alongside the national initiatives and programmes, the revision of the European legal framework
establishing CO2 limit values for passenger vehicles and light commercial vehicles (final compromise with
reductions of 37.5% and 31%, respectively, by 2030 compared to 2021) and for heavy goods vehicles(general approach with a reduction of 30% by 2030 compared to 2020) will also contribute significantly to
lower-emission mobility. Luxembourg will strive to ensure that this revision stipulates that as of 2030, only
fossil-free drive systems will be approved in the EU, for cars and vans at least.

3.1.3.iv. Any national policies, timelines and measures planned to gradually phase out energy
subsidies, in particular for fossil fuels
The study ‘Effects of subsidies and tax incentives on sustainable development – environmentally harmful
subsidies in Luxembourg’
The 2018 government programme indicated the intention to analyse the numerous direct and indirect
subsidies and tax incentives relating to sustainable development and to finalise the test results of theongoing study and use them for possible adjustment.
Luxembourg has set itself standards in its own plans (e.g. the National Plan for Sustainable Development)
and targets that trigger a review of the existing subsidy policy. Launching such reforms of the framework
conditions is necessitated not only by climate change objectives, but also other environmental and social
targets.
The study focuses on three specific sectors in particular (transport, energy and agriculture) where economic
activities play a particular role that can lead to environmental pressures.

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3.2. ‘Energy efficiency’ dimension
Energy efficiency is considered a top priority (implementation of the ‘energy efficiency first’ principle
enshrined in EU legislation) and is of particular importance for Luxembourg in achieving its energy andclimate objectives, given its extremely dynamic economy. In the area of new buildings, Luxembourg isalready at the forefront of the implementation of the energy efficiency requirements for residentialbuildings with virtually zero energy consumption and has successfully decoupled population growth fromCO2 emissions. In line with the European ‘energy efficiency first’ principle, Luxembourg intends to continue
to pay particular attention to improving energy efficiency in the building sector. By increasing therenovation rate of buildings and using all available smart technologies, this sector has much to offer a
climate neutral and competitive economy. As 50% of electricity consumption is in industry, this will also be
a focus of energy efficiency policy. There is also a need to increase the efficiency of mobility (from internal
combustion engines to electric motors, which are far more efficient). In general, all energy efficiency
measures should pay particular attention to social impacts and measures should be taken to embed the
new regulations in social terms.

3.2.i. Energy efficiency obligation schemes and alternative policy measures under Articles 7a and 7b
and Article 20(6) of Directive 2012/27/EU and to be prepared in accordance with Annex II to thisRegulation
Continuation of the energy efficiency obligation scheme;
In order to transpose Article 7 of Directive 2012/27/EU into national law for the period up to 2020,
Luxembourg introduced a national system of energy efficiency obligations in 2015. The instrument should
lead to the achievement of the energy efficiency target under Article 7(1), subject to the possibility of using
other alternative measures in the future.
A guide was published in August 2019 to facilitate the accounting of transport measures under the ‘Lean
and Green’ programme. The new programme will target 1.2 to 1.5% of final energy and will cover all
sectors.
There were a few teething problems, but some of the parties bound by the programme have now improved
their resources, invested in structures and developed concepts to improve the effectiveness of themechanism.

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For these reasons, the Luxembourg government is determined to continue with and optimise the Energy
Efficiency Obligation Scheme for the period 2021 to 2030 in order to comply with the obligation set out in
Article 7 of the amended Energy Efficiency Directive.
The creation of new instruments in the field of energy saving for industry, small and medium-sizedenterprises and large office buildings (de-risking financial instrument, transparency platform for audits,
exemplary role of public buildings) will also increase the scope for energy efficiency investments for the‘parties obligées’. The final energy savings target for the period 2021-2030 will be set at 1.2 to 1.5% peryear and will cover all sectors. In addition, the further development of the commitment system will include
an adjustment to the penalties for failure to comply, making non-compliance with the savings commitment
more costly than the investment required to meet the targets. To ensure that the framework is in force intime for the start of the new period (1 January 2021), details for the 2021-2030 period will be provided in
the early implementation of EED II (Revised Energy Efficiency Directive) or via the current version of theElectricity Act [Stromgesetz].
Industrial sector
Strategies and measures aimed at creating a monitoring tool for businesses and future measures andframework conditions to support energy efficiency in industry by 2030 are set out in Section 3.1.1.
Accord volontaire
The ‘Accord volontaire’ between the industrial sector, represented by FEDIL, the Luxembourg government
and My Energy G.I.E., which has been in existence since 1990, is a voluntary agreement to improve energy
efficiency in the industrial sector in Luxembourg. The current agreement is valid from 2017 to the end of2020 and includes 54 companies from the industrial and tertiary sectors. In return for fulfilling several
requirements and achieving a 7% improvement target for a joint energy efficiency indicator for thereference periods 2014-2015 and 2020, participating companies will receive a tax credit on electricity andnatural gas allowed under Council Directive 2003/96/EC of 27 October 2003 restructuring the Community
framework for the taxation of energy products and electricity. This voluntary agreement is to be continued,
deepened and extended after 2020 in order to reach out to more companies, especially SMEs. Improved
communication and cooperation between participating companies should help to identify and make use of
possible synergies in the field of energy efficiency. A detailed analysis of the current ‘Accord volontaire’ willserve as a basis for this. In addition, the continuation of the voluntary agreement should lead to more
ambitious energy efficiency improvement targets by encouraging and adequately supporting companies in

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the implementation of identified savings measures and providing additional opportunities for action in thefinancing and implementation of projects.

Energy audits transparency platform
An important prerequisite for investing in energy efficiency is detailed knowledge of potential savings in anindustrial process or a building. This is ensured by means of audits. As these audits are currently only
mandatory for very large consumers, a simplified version will be extended to medium-sized industrial
processes and office buildings. In addition, a transparency platform will be set up for the results of energy
audits, following the example set by France. This will improve the contact between the ‘parties obligées’
under the Energy Savings Regulation and industrial, SME and office buildings.

New financial instrument for energy efficiency in industry and large office buildings
Experience in recent years has shown that there is a large discrepancy between the savings potential
identified in the audits and the savings actually achieved by industry and owners of large office buildings.
Many potential investments identified as useful by engineers are blocked by companies’ strict financial
requirements. In order to remedy this discrepancy, consideration is being given to making theimplementation of the results of the ‘Accord volontaire’ audits mandatory and to establishing an additional
financial instrument in close cooperation with the EIB (European Investment Bank).

De-risking
Although the financial aid described in point 3.1.1.iii. helps to improve the economic viability of projects inthe field of climate and environmental protection, it does not make it possible to remove all barriers andobstacles to the use of environmental technologies in order to achieve national climate and energy
objectives more quickly. In this context, the Luxembourg government is looking into creating an additional
financial instrument that will allow a number of obstacles to the implementation of energy efficiency
measures to be addressed in a systemic manner at national level. A pre-financing and risk management (‘derisking’) tool is to be developed and promoted for energy transition projects at industry and SME level. The
aim is to increase investment in energy efficiency measures through improved use and a more transparent
analysis of data from existing building and industrial projects. Pre-financing will be provided through a state
fund or bank guarantee to cover part of the investment risk, and a ‘risk’ climate fund (private/public), orpart of the climate and energy fund, will be used to assess and mitigate existing risks. In addition, a poolingof invoices (‘securisation of receivables’) is to be made possible in order to spread the risk and an
instrument is to be created that can be used to quantify legal, financial and ecological aspects (possibly as
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a research project). Within the scope of de-risking projects, it is also important to create a mechanism
between ‘risk takers’ and ‘risk providers’ in order to promote a standardised process and ensure hedging.

Lean & Green programme
The ‘Lean & Green’ programme will continue to be implemented with stakeholders from the transport andlogistics sector in order to further reduce the sector’s CO2 emissions. The programme was set up by
Connekt, an independent network of Dutch companies and public authorities, with the aim of encouraging
companies to reduce their environmental impact. Any company that can demonstrate, on the basis of adetailed action plan, that it will achieve a 20% reduction in CO2 emissions over the next 5 years can apply
for the ‘Lean and Green’ label.
As a number of the measures can be booked through the Energy Efficiency Obligation Scheme, this ‘Lean
and Green’ label was more strongly integrated into the scheme in 2019.
The optimisation of the logistics sector will also support the conversion of supply fleets to small electrictrucks and cargo bikes.

3.2.ii. Long-term renovation strategy to support the renovation of the national stock of residential
and non-residential buildings, both public and private, including strategies, measures and actions tostimulate cost-effective deep renovation and strategies and actions to target the worst performing
segments of the national building stock, in accordance with Article 2a of Directive 2010/31/EU
Implementation of the national renovation strategy
Within the framework of Directive 2012/27/EU of 25 October 2012 on energy efficiency, amending
Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC, in
November 2016, the Luxembourg government published the further development of the national building
renovation strategy drawn up within the framework of the third NEEAP, which is based on four guiding
principles:Priority to high-efficiency renovations



Affordability of energy renovation measures

Alignment of energy policy and heritage protection objectives

Inclusion of elements of sustainable construction and the circular economy

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These guiding principles are consistently taken into account in the development of projects, in awarenessraising and information policy and in legal or regulatory amendments in the area of building renovation.
In addition to the guiding principles, some 35 measures have been identified to reduce legal and financial
barriers, among others, that have been reviewed and implemented within the scope of the work carriedout by the ‘Conseil national de la construction durable’ (CNCD). The following measures were identified aspriorities:

To remove obstacles faced by building managers

To introduce an obligation to establish renovation reserves for owners’ associations

To adjust the decision-making quorums for the implementation of renovation measures(introduction of a simple majority for decisions by owners’ associations)

Municipalities should become pioneers in building renovation (climate pact, financial aid,
logistical aid, competitions, etc.)To examine the possibility of applying the reduced VAT rate of 3% to buildings constructed 10
years ago (instead of 20 years)

To promote energy-efficient renovation in the building stock by simplifying the administrative
stages of the ‘climate loan’.



Oil replacement programme in old buildings

An ambitious long-term building renovation strategy is being presented with a view to increasing therenovation rate (to 3% per year) and the depth of renovation (‘deep renovation’), with the aim of
rehabilitating all existing houses to ‘net zero’ by 2050. In addition to the requirements for a long-termbuilding renovation strategy as described in the EU Directive 2012/27/EU EED, the existing building
renovation strategy is to be extended to include the following:

Monitoring of the existing renovation strategyCreation of an interministerial working groupWorkshops with stakeholders to define how the objectives will be achievedUpdated potential analysis or assessment of the baseline situation

Stronger social embedding of the measures

The measures defined as part of the building renovation strategy drawn up in 2016 will be further
developed, but may be extended by newly identified measures. For this purpose, workshops or acomprehensive survey to identify new measures can be implemented as in the existing building renovation
strategy. The following measures, among others, have already been identified and are being implemented:

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 104Improved and faster advice from independent energy consultants and a new digital ‘app’ thatis also made available to tradesmenTargeted advice, financial measures and a reform of the ‘Syndic’ law for larger apartmentbuildings



Systematic urban district or entire street rehabilitationIn addition, densification of the existing building stock, following the example of the City of
Vienna, is being researched in pilot projects

Renovation of functional buildings
In order to support building renovation in the non-residential sector, there are plans to extend the
mandatory energy audits for large energy consumers in the commercial sector to SMEs, taking account of
the specificities and possible simplifications for SMEs. This means that SMEs would also be obliged to havetheir energy consumption regularly checked in order to better assess the renovation potential of theirbuildings.
In order to increase the energy performance and renovation rate of non-residential buildings, considerationis also being given to introducing a renovation obligation along the lines of the Dutch model.
In November 2018, a measure was introduced in the Netherlands setting the energy standard of officebuildings at energy class C from 2023 onwards. Owners of existing properties are therefore obliged torenovate their buildings to energy standard C by 2023 or to prove that the necessary measures have beentaken to this end.
Introduction of an energy passport ‘plus’ in the building stock (housing and functional buildings)
In order to improve and generalise the information base in the building stock, there are plans to introduce
an energy passport ‘plus’ specifically for existing residential buildings, which should provide a better pictureof the real renovation potential. The purpose of this energy passport is to provide the owner with atransparent and individualised ex-ante assessment of the renovation potential and the associated savings.
There are also plans to introduce a similar energy passport ‘plus’ for existing functional buildings.
Post-densification
At district level, the aim is to support the densification of the existing stock by simplifying the municipal
framework conditions and promoting self-contained flats. To some extent, corresponding adjustments
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pursued further, especially for the municipalities that still need to implement this revision. In particular,
the revision of the specific urban development plans for existing neighbourhoods can show an important
tax effect in the case of densification. To raise the awareness of citizens in the participatory processes,
there are also plans to make sample plans and regulations available in order to better inform the affected
citizens about the possibilities of post-densification.
There are also plans to make the cadastral register more flexible or to revise it in general, so as to allow fora sharper division of ownership within the buildings, particularly in the case of apartment blocks andterraced houses. The public social housing agencies SNHBM and Fonds du Logement will launch the firstpilot projects in this area.
Financing measures – climate bonus programme
The main support schemes have already been listed under 3.1.1.i. The following funding programmes are
relevant in the field of building renovation:


The PRIMe House support programme offers investment grants for the energy-efficient andsustainable renovation of residential buildings. The support scheme has been extended andreviewed a number of times since 2001. The current programme runs until the end of 2020.



In addition, the sustainable energy renovation of residential buildings is supported via low-interestor (for low-income households) interest-free loans, with the technical requirements being thesame as the PRIMe House criteria. There are plans to review and simplify the terms and conditions
and application procedure, so that more homeowners can benefit from a climate loan in the future

Reduced VAT rate of 3%
The conditions for obtaining the reduced VAT rate of 3% for renovation work will be adapted andharmonised with the requirements of the PRIMe House programme. The aim is to examine whether ownersof buildings constructed 10 years ago can benefit from the reduced VAT rate instead of the current 20
years.

3.2.iii. Description of policy and measures to promote energy services in the public sector andmeasures to remove regulatory and non-regulatory barriers that impede the uptake of energy
performance contracting and other energy efficiency service models
The ministries and administrations concerned are currently discussing how these barriers can be removed.
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3.2.iv. Other planned strategies, measures and programmes to achieve the indicative national energy
efficiency contributions for 2030 as well as other objectives referred to in point 2.2 (for example
measures to promote the exemplary role of public buildings and energy-efficient public
procurement, measures to promote energy audits and energy management systems, consumer
information and training measures, and other measures to promote energy efficiency)

New construction
In addition to the comprehensive energy-related renovation of buildings to increase energy efficiency,
measures must also be implemented in the new build sector. The following measures are to be developed
or expanded within the scope of the improvement of energy efficiency in new buildings:
Raising the building standard for non-residential buildings
Following the introduction of the ‘Nearly zero energy building (nZEB)’ energy standard for new
residential buildings in 2017, this standard will also apply to non-residential buildings from2020/2021. This standard is to be further increased by 2030 and the ‘near zero’ standard is to be
redefined by improving energy efficiency requirements for new non-residential buildings.

Introduction of an A+ energy class for residential buildings
As mentioned in the section above, the ‘nZEB’ construction standard for new residential buildings
has been in force since 2017. This is to be extended in the short term (A+ energy class) to ensure
100% renewable energy coverage.

Sustainability and health in construction
New residential and non-residential buildings will also integrate aspects such as health and wellbeing, alongside a stronger anchoring of sustainability. This will be implemented through the
integration of elements in the national energy passport, the ‘LENOZ’ sustainability certification orLuxembourg’s integrated national energy and climate plan for the period 2021-2030 | 107the creation of a new label. Toxic and harmful building materials are to be banned and a positive
list of building materials is to be drawn up which includes natural and ecological options.

Circular economy
The concept of the circular economy will be further promoted in the construction sector in orderto improve the quality of future buildings. This should be achieved through support programmes
within the scope of ‘progressive requirements’. Specific strategies and measures with regard to thecircular economy in the construction sector can be found in Section 3.1.1.i.
Sustainable neighbourhoods – Made in Luxembourg ecodistricts
Luxembourg will ensure that neighbourhoods built in the future allow for improved urban quality
and quality of life while also being CO2-free. To this end, a definition of sustainable neighbourhoods,
with uniform criteria, a clear methodology and new subsidies will be drawn up under the guidanceof the Minister for Spatial Development. In addition, the existing system of building inspections is
to be analysed and, if necessary, revised in order to guarantee compliance with building and energy
standards through increased and harmonised building inspections by the municipalities.
Green data centres
As digitalisation progresses steadily, data centres are essential. However, in the future these will need to
be built in a far more energy efficient manner and operators will have to make greater efforts to operate
more efficiently. It is important to apply the best technical solutions, such as immersion cooling, and to use
the waste heat produced by data centres for heating or cooling buildings or whole neighbourhoods. The
reduction of energy consumption and the preference for renewable energies should also be implemented
at the level of computer infrastructures, such as data centres, which is why the Luxembourg government
is committed to creating appropriate framework conditions for green data centres, including at EU level.
Government to lead by example
As already mentioned under 3.1.1, Luxembourg has adopted a strategy for ‘sustainable and energy-efficientpublic buildings’ in relation to new construction and existing structures, in order to improve energy
efficiency and the use of renewable energy in government and government-related buildings.
In the ‘Fourth National Energy Efficiency Action Plan Luxembourg (2017)’, drawn up within the frameworkof Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy
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efficiency, Luxembourg has identified energy efficiency measures in public institutions that will be partiallyadopted and further developed for 2030. For example, the government has taken the lead as a state andhas stepped up efforts in recent years and implemented an ambitious renovation programme. In order tocalculate the renovations, Luxembourg drew up an inventory of the public buildings concerned. According
to Article 5(7) of the EED, public facilities that are not part of the central government (e.g. schools) should
also be encouraged to act as role models in the energy efficiency of buildings. For example, the public social
housing agencies, the Société Nationale des Habitations à Bon Marché (SNHBM) and the Fonds duLogement are working to gradually renovate and improve the energy efficiency of the rental housing stock.
The airport in the capital city is to be transformed to become the Findel Green Airport within this framework.
In particular, this involves the implementation of energy-saving measures and the use of renewable energy,
primarily to convert the existing terminal into an energy-plus building. Another aspect of the state’s
pioneering role is the replacement of all light bulbs in public buildings and street lighting with LEDs by 2025
in order to improve efficiency and contribute to the fight against light pollution. In addition, theintroduction of a state Top Runner programme will encourage the purchase of energy-efficient equipmentfrom the state and municipalities.
Businesses
Strategies and measures with regard to financing measures for new construction can be found in
Section 3.1.1.
Pacte logement 2.0
Strategies and measures with regard to the ‘Pacte logement 2.0’ can be found in Section 3.1.1.

3.2.v. Description of measures to exploit energy efficiency potentials in gas and electricity
infrastructure
Electricity and gas network operators are continuously pursuing programmes with a view to ensuring
security of supply in the future. These programmes include investment measures for the conversion,
expansion, maintenance and replacement of the respective infrastructures. In addition to ensuring securityof supply, these measures also help ensure that networks are constantly up-to-date, thereby contributing
to improving energy efficiency.

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Other specific measures to exploit energy efficiency potentials in gas and electricity infrastructure aresometimes not foreseen.

3.2.vi. Any regional cooperation in this area
Specific measures for regional cooperation aimed at exploiting energy efficiency potentials in gas andelectricity infrastructure are sometimes not foreseen.
3.2.vii. Financing measures, including Union support and the use of Union funds, in this area atnational level
Strategies and measures with regard to financing measures for the energy efficiency sector can be foundin Section 3.1.1.

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3.3. ‘Energy security’ dimension
3.3.i. Strategies and measures related to the elements set out in point 2.3
In order to analyse and ensure the security of supply in the electricity and gas sector, the Luxembourg
government draws up reports on this subject every two years. These reports not only consider the balance
between supply and demand, but also investigate the extent to which network operators in Luxembourg
are making sufficient investments in the maintenance and expansion of their networks. The most recent
reports, dating from 2018, clearly show that national electricity and gas infrastructures are in goodcondition and are as close as possible to the state of the art. The existing gas infrastructure is large enoughfor the current and foreseeable supply task and, accordingly, no further expansion measures are planned,
except for possible densification within the connected municipalities. In the electricity sector, on the other
hand, various investment measures are foreseen (see Section 3.4.1). In the context of security of supply in
the Greater Region of Luxembourg, the Vianden Pumped Storage Power Plant has an important role toplay.
Pursuant to Article 7 of Regulation (EU) 2017/1938 of 25 October 2017 concerning measures to safeguard
the security of gas supply, Luxembourg is currently also carrying out risk assessments to ensure the securityof gas supply. Current analyses indicate that although the security of supply in Luxembourg is highly
dependent on neighbouring countries, having neither its own mining operations nor extensive storage
capacities, it will be possible to manage disruptions in the majority of the gas infrastructure throughdemand-side measures. These demand-side measures may be limited to industrial customers, thereby
guaranteeing the supply of protected customers. At the same time, it is not possible to rule out negative
economic implications in the event of disruptions to network connection points over the longer term.
The widespread installation of smart meters will also make a useful contribution to security of supply. The
switching relays of the new smart electricity meters enable grid operators to switch off loads in a targetedmanner for system security purposes. National law provides for a smart meter rollout of 95% in theelectricity sector and 90% in the gas sector by the end of 2020. Regular stocktaking indicates that
implementation is on schedule, which is also backed up by current statements from the distribution
network operators. There is currently a debate about the extent to which these technical possibilities
should be flanked by an expanded regulatory framework. Work is also under way to establish how further
use can be made of these technical possibilities through an energy data platform.

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In addition to the above, it should also be noted that the implementation of the Clean Energy Package inthe revised Electricity Market Organisation Act of 1 August 2007 will further increase cross-bordercompetition between suppliers, which in turn has a positive impact on security of supply.
With regard to the oil sector, the measures set out in Section 3.1.3 aimed at increasing efficiency and reducing
CO2 emissions will contribute to reducing the consumption of fossil fuels and therefore to improving security ofsupply. Despite the large number of initiatives planned and implemented with a view to making mobility
sustainable and free of CO2 in the future, it is also necessary to ensure in parallel to this that the current andfuture supply of fossil fuels, which are currently still necessary, is secure, whether by diversifying the sources or
supply routes or by providing sufficient stocks of mineral oil products to overcome potential supply bottlenecks.
Since Luxembourg does not have any refineries in its national territory and therefore imports no crude oil
but only mineral oil products, the scope for diversifying the countries of origin is very limited. Regarding
the imports of mineral oil products by country of origin, it must be taken into account that the majority by
far comes from Belgium, followed by Germany, France and the Netherlands. In terms of the security ofsupply, it is important that the diversification of the countries of origin is also maintained in the future.
It is also important for the security of supply, particularly in Luxembourg’s situation, to diversify the supply
routes. Since the airport in Luxembourg is supplied with fuel directly via an underground pipeline (CEPS),
the diversification of supply routes relates primarily to the mineral oil products diesel, petrol and fuel oil.
The majority of imports are via road, with only around one fifth being handled by rail. The remainder of theimports are carried out by inland waterway via the Moselle. Owing to the limited opportunities to influence
the transport routes, it is necessary for Luxembourg to keep sufficient stocks of mineral oil products in its
national territory to be able to compensate for any disruptions to the supply routes.
As a member of the European Union (EU) and the International Energy Agency (IEA), Luxembourg is obliged tokeep stocks of mineral oil equivalent to, on average, 90 days of the previous year’s imports. In practice, Luxembourg
has consistently fulfilled its international obligations regarding the stockpiling of mineral oil in recent years. The
importers of mineral oil products have fulfilled the national legal obligation of the compulsory storage of eight daysin the national territory, while the other amounts must be kept either in the regional territory outside Luxembourg(37 days) or elsewhere in the EU.
Although access to the stocks accounted for in Luxembourg is guaranteed in the event of a crisis, it can also be
assumed, given Luxembourg’s limited size, that the stocks kept in neighbouring countries can be transported to

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Luxembourg in the event of a local crisis. In the case of stocks kept further away from Luxembourg, the prompttransport of these stocks to Luxembourg in the event of a crisis is likely to be associated with relatively large logistics
expenses (transport capacities, expenditure of time, etc.). If, in future, there is a clear and consistent downward
trend in the consumption of the transport sector, the need to construct new tank farms would have to be modified.
In order to reduce the dependency on oil as far as possible and limit the environmental impact of transport,
Luxembourg is pursuing a multidimensional strategic plan. The primary focus is on traffic avoidance andpublic transport. In addition, Luxembourg is promoting the introduction of e-mobility and alternative fuels,
each of which must be based on renewable energy sources.
3.3.ii. Regional cooperation in this area
In the electricity sector, the regional cooperation within the ‘Security of Supply’ working group of the Pentalateral
Energy Forum (PLEF) is the most important mechanism for the early recognition of problems with the security ofsupply from the perspective of Luxembourg. The Luxembourg government is working together with the
Luxembourg transmission network operator, Creos, to actively support the drafting of the PLEF Adequacy
Assessment, which was last updated in February 2018. The inclusion of the flow-based capacity calculation method
for the first time, in particular, has further increased the validity of the monitoring. Based on this monitoring, which
is based on a probabilistic approach, no critical energy security risks can be identified for Luxembourg at present.
Further development of the methodology, analyses and reports is planned or already under way.
Joint exercises will also be organised in this same working group to improve emergency procedures andcooperation in a regional crisis. In this context, the active participation and cooperation with the Regional
Security Center, TSCNet, should also be mentioned in order to prepare and coordinate activities relevantto the security of supply (‘Coordinated Security Analysis’, ‘Outage Planning Coordination’, ‘Short andMedium Term Adequacy forecasts’ and ‘Consistency check of TSOs’ system defence and restoration plans’)at regional level. As provided for in Article 37 of Regulation (EU) 2019/943 on the internal market forelectricity, regional cooperation in the field of security of supply will be further deepened by means of‘Regional Coordination Centres’. In this regard, mention should be made of all of the activities defined andimplemented under Regulation (EU) 2019/941 on risk-preparedness in the electricity sector, in particular:Monitoring the security of electricity supply in the Union through the Electricity Coordination
Group



Defining an electricity crisis and developing a common methodology for risk identification
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 113Regional approach to identifying risk scenarios and to developing preventive, preparatory andmitigating measures

Drawing up and regularly updating risk-preparedness plans, including national, regional and, whereapplicable, bilateral measures



Agreeing on coordinated measures and technical, legal and financial arrangementsComplying with transparency requirements

At European level, the Luxembourg transmission system operator Creos is a member of ENTSO-E and isactively involved in the annual Mid-Term Adequacy Forecast. In addition to the reports mentioned above,
this is used to assess and ensure security of supply in the electricity sector.
In the gas sector, regional cooperation takes place in the Gas Forum of the Pentalateral Energy Forum. This
forum brings together the Benelux countries with Germany and France. The Gas Forum consults nationaland regional risk assessments and ensures consistency between national preventive action plans andemergency plans established in accordance with Regulation (EU) 2017/1938 of 25 October 2017
concerning measures to safeguard the security of gas supply.
The Gas Forum sets out a common approach to ensuring security of supply in the event of an emergency
and reduces the risk of adverse effects that purely national measures could have.
In the gas sector, the Member States are also obliged to conclude bilateral agreements on terms andconditions in order to be able to provide solidarity in accordance with Article 13 of Regulation (EU)2017/1938 in the case of demand from neighbouring Member States. To this end, preliminary discussions
have been held with neighbouring countries with a view to launching the relevant steps and agreements.
In the oil sector, the Member States coordinate their supply and stockholding activities in the Oil
Coordination Group, of which Luxembourg is a member.
3.3.iii. Any financing measures in this field at national level, including Union support and the use ofUnion funds
In the electricity sector, relevant network expansion measures are planned over the next few years,
particularly at transmission grid level, to ensure energy security in Luxembourg. The financing of projects
will be ensured through network charges.

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In the oil sector, since importers of mineral oil products have a national legal obligation to hold mandatory
stocks, they are also responsible for financing these obligations in accordance with market conditions.

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3.4. ‘Internal energy market’ dimension
A key building block for the overall strengthening of the European Single Market will be the swift
implementation of the entire ‘Clean Energy Package’. Individual elements that are of relevance are
discussed below, but a full recap is not required.
3.4.1.

Electricity infrastructure

3.4.1.i. Strategies and measures to achieve the targeted level of interconnectivity as set out in point(d) of Article 4
On account of its high dependency on imports, Luxembourg already has electricity interconnection
capacities that are able to sustainably safeguard the security of supply. This can be seen in particular fromthe high load interconnection rate, which is well above the 2030 objectives set out in the European Council
Decision, but is also indispensable for Luxembourg and only comparable to a limited extent withinterconnection levels in other EU Member States. While the target size for Member States has recently
been increased from 10% to 15%, Luxembourg is already exceeding this many times over with a loadinterconnection rate of 270% (see also 4.5.1). The level of interconnection will continue to increase until
2030 in line with the planned network expansion projects. Among other things, the transmission system
operator, Creos, is actively promoting the reinforcement and upgrading of the high and medium voltage
levels to enable and support the transition from fossil fuels to renewable energies. In particular, the aim isto enable the production of electricity (especially wind and photovoltaics) to be continually increased in
the north of the country and to allow for high consumption in the centre and south of the country. Due toits dependence on imports, a further expansion of the existing interconnectors is also planned in order tocontinue to guarantee the security of supply for Luxembourg. For example, the upgrade/reinforcement of
the existing 220 kV line towards Germany is already part of the network development plans of both
Luxembourg and Germany.
The planned network development projects on existing corridors are being implemented in line with theexisting procedures and are intended to improve the situation for the population as a whole. In order toensure the necessary public acceptance, the public will be involved through a broad consultation process.

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3.4.1.ii. Regional cooperation in this area
There will be close cooperation with neighbouring countries for the implementation of cross-borderelectricity infrastructure projects. In addition to the respective bilateral cooperation, coordination shall also
take place at regional level (in particular in the framework of the Pentalateral Forum) and at European level(within the respective ENTSO-E working groups, in particular the Ten Year Network Development Plan).
As has already been described in more detail in Section 1.4, the Pentalateral Energy Forum has adopted
the common plan to further develop the internal energy market through coordinated activities in thefollowing areas:Market integrationoElectricity market couplingoImplementation of the Clean Energy PackageoRedispatching

FlexibilityoDemand-side managementoSector coupling and Power-to-XoRole of hydrogenoRole of storage technologies

oE-mobility

3.4.1.iii. Any financing measures in this field at national level, including Union support and the useof Union funds
The electricity infrastructure is financed by corresponding network charges, which are set and monitoredby the regulatory authority (Institut Luxembourgeois de Regulation, ILR). Separate funds are available at
European level, which can be distributed within the framework of the Projects of Common Interest.
However, there are no projects currently planned for Luxembourg that depend on this financing measure.

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The Pentalateral Energy Forum will discuss possible regional approaches to increasing energy efficiency andexpanding renewable energies. For example, common approaches could be sought with financial
institutions, such as the European Investment Bank, in order to reduce financing risks.
3.4.2.

Energy transmission infrastructure

3.4.2.i. Strategies and measures related to the elements set out in point 2.4.2, including any specificmeasures to enable the delivery of Projects of Common Interest (PCIs) and other key infrastructure
projects
The decommissioning of the TwinErg GuD power plant has considerably reduced the peak demand for gas.
Therefore, even in the case of further expansion of biogas plants (see Section 4.4.2), it can be expectedthat the current and foreseeable supply task can be adequately met by the existing gas infrastructure.
Accordingly, no further measures are envisaged for extending the gas infrastructure. The import capacity
will be increased by other measures, such as improving the use of these capacities through cross-bordercooperation.
3.4.2.ii. Regional cooperation in this area
Although no further development activities are foreseen, close cooperation will be pursued withneighbouring countries in order to optimise the use of existing gas infrastructure, particularly in crisis
situations. This coordination will take place bilaterally, regionally (especially in the gas platform within thePentalateral Energy Forum) and at European level (ENTSO-G).
3.4.2.iii. Any financing measures in this field at national level, including Union support and the use ofUnion funds
The gas infrastructure is financed by corresponding network charges, which are set and monitored by theregulatory authority (Institut Luxembourgeois de Regulation, ILR). There are no plans at present to use
European funds.
3.4.3.

Market integration

A key building block for the overall strengthening of market integration will be the swift implementation of
the entire ‘Clean Energy Package’. Individual elements that are of relevance are discussed below, but a fullrecap is not required.

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3.4.3.i. Strategies and measures related to the elements set out in point 2.4.3
The introduction of the ‘BeLux’ joint gas market with Belgium in 2015 was an essential measure for
improving Luxembourg’s market integration in the gas sector. Through this joint gas market, it is easier for
suppliers active in Luxembourg to access the liquid trading hub at Zeebrugge as well as LNG terminals andgas reservoirs. This promotes competition in the whole of the joint market and offers gas customers highsecurity of supply at more affordable prices.
In the electricity sector, Luxembourg’s market integration has already significantly improved from atechnical perspective due to the construction of a phase-shifting transformer in Schifflange and theintegration of the Luxembourg grid interconnection into the European transmission network that this has
made technically possible, with permanent connections to Germany and Belgium. Commercialisation ofthis interconnector is not planned in the short term. However, the issue will be closely monitored in thecourse of the further development of congestion management (especially in the context of the Capacity
Calculation Region ‘Core’, see below).
Within the Pentalateral Energy Forum, the close integration of electricity markets in the region will befurther developed in the ‘Market Integration’ working group. In this respect, this Forum is a European
pioneer that fully exploits the potential of transmission capacity by calculating capacity allocation methods
using a flow-based approach. This will further improve market liquidity and ensure efficient congestion
management and an overall efficient market on a regional basis. Possibilities for cross-border participationin the capacity markets in France and Belgium are also being discussed.
As part of the joint market area with Germany, Luxembourg is actively supporting the coalescence of theelectricity markets. For the day-ahead market, the further development of capacity calculation andcongestion management in the core region is a top priority. As regards the intraday market, both the active
participation in the integrated XBID platform and the harmonisation of the conditions for Luxembourg
network users with the German framework conditions (in particular Gate Closure Times) should be
mentioned. The same applies to balancing markets: the transmission system operator CREOS is currently
investigating ways of opening up access to the German and European balancing market for network
customers in Luxembourg. A particular challenge here is posed by the fact that the Creos transmission
network is a separate ‘scheduling area’, while load-frequency control is handled by the German Amprion
for the joint ‘load-frequency control’ (LFC) area. At the same time, access to the German and European
electricity balancing markets for Luxembourg network customers offers the potential to stimulate theLuxembourg’s integrated national energy and climate plan for the period 2021-2030 | 119

decentralised production of electricity in Luxembourg and to open up new marketing opportunities in thearea of demand-side management for household and business customers, as well as the industrial sector.
Consequently, Luxembourg is also actively participating in the relevant European balancing reserve
platforms (MARI, PICASSO). In this context, reference should also be made to the pumped storage power
plant in Vianden, which is directly connected to the German transmission system and provides a significant
contribution to the stability of the system and security of supply in the Greater Region (see Section 4.4.1.).
Due to the specific configurations of the transmission network operators Creos and Amprion, the extent towhich cooperation in the common wholesale price zone should be further regulated by contract, inter alia
with a view to dealing with crisis situations, e.g. through contracts between network operators orintergovernmental agreements under Regulation (EU) 2019/941 on risk-preparedness in the electricity
sector, is currently being examined.
3.4.3.ii. Measures to increase the flexibility of the energy system with regard to renewable energy
production such as smart grids, aggregation, demand response, storage, distributed generation,mechanisms for dispatching, re-dispatching and curtailment, real-time price signals, including therollout of intraday market coupling and cross-border balancing markets
To enable electricity consumers to actively participate in the market, Luxembourg has legally obliged the
network operators to convert at least 95% of all electricity meters to smart meters by the end of 2020. This
would create the conditions, in particular, for the introduction of time-variable tariffs.
Smart meters also provide a technical basis for improving transparency, service quality and efficiency, as
well as opportunities for innovative energy services. Examples include transparent access to own
consumption data, improved market communication processes, activation of flexibility on the consumer
side, or more efficient network operation. However, further development of the data infrastructure isnecessary in order to take full advantage of these opportunities. A current legislative proposal therefore
provides for the development of an energy data platform, in particular to enable access to relevant
electricity consumption data for authorised users (i.e. in particular the end consumers themselves), taking
into account all aspects of data protection, which must be given high priority at all times. The design phaseis scheduled for completion by the end of 2020. Depending on the cost-benefit ratio of the proposed
options, the implementation phase will then follow.

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The design of network charges is closely linked to the issue of additional flexibilities and fair allocation of
costs in the electricity sector. This is currently being investigated by the Luxembourg regulatory authority,
ILR, as part of a study. In this regard, it is also being checked that the applicable rules do not constitute any
obstacles to consumers actively participating in the market and that the possibility is open for selfsufficiency with appropriate sharing of the network costs of all consumers.
The regulatory authority, ILR, prepares annual reports on the electricity and gas markets. These reports
deal, in particular, with the competitive situation on the markets, for example based on the number ofsuppliers active in Luxembourg and the rates of switching for customers in different segments. ILR also
prepares an annual report on whether the prices for supplying electricity and gas are in conformity withthe public service obligations (‘obligations de service public’).
The implementation of the ‘Clean Energy Package’ in the revised Electricity Market Organisation Act of
1 August 2007 reinforces the potential for flexibility of consumers. An amendment to this law, which wasintroduced in 2018 and, with some adjustments, in 2019, will regulate and also promote own consumption
based on renewable energies. Renewable electricity consumed individually or in a community shall be
exempted from electricity taxation and network use in terms of consumption volume. Network charges forconnection services shall be levied on a cause-related and non-discriminatory basis. These measures create
an important condition for easing the burden on the electricity networks and enabling them to operate ina smarter and safer manner.
3.4.3.iii. Measures to ensure priority access and dispatch of electricity from renewable sources orhigh efficiency cogeneration and avoidance
The revised Law of 1 August 2007 on the organisation of the electricity market guarantees a feed-in priority
for renewable energy. It also obliges network operators to minimise security of supply measures restricting
the supply of electricity from renewable energy sources.
However, the aim is to further integrate renewable energy into the market. In the case of larger plants, thesupport was changed to a market premium model, which stimulates a more efficient optimisation of useon the basis of efficient price signals.

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3.4.3.iv. Strategies and measures to protect consumers, especially vulnerable and, where applicable,energy-poor consumers, and to improve the competitiveness and contestability of the retail energy
marketTo provide consumers with a clearer overview of electricity and gas tariffs and to evaluate the potential
savings of switching suppliers, the regulatory authority runs the comparison portal www.calculix.lu. In its
report, the authority also gives recommendations on how to improve the competitive situation on theelectricity and gas markets, for example through transparency measures.
3.4.3.v. Description of measures to enable and develop demand response, including those addressing
tariffs to support dynamic pricing
Corresponding measures have already been described in Section 3.4.3.ii. and are therefore not listed again
here.
3.4.4.

Energy poverty

3.4.4.i. Any strategies and measures to achieve the objectives set out in point 2.4.4
Low-income sections of the population are being hit particularly hard by climate change and the healthimpact of fossil energy sources. Climate action therefore also provides a tangible contribution to social
justice. However, climate action must also be socially embedded in order to prevent energy poverty.
Luxembourg has a comprehensive strategy for tackling poverty in general (minimum wage, social inclusion
income (REVIS), etc.). In addition, there is a series of measures in Luxembourg offering targeted help topeople affected by energy poverty. The acts of 1 August 2007 on the organisation of the electricity market
and on the organisation of the natural gas market stipulate that household customers who are unable to
pay their electricity or gas bills can receive social assistance from the responsible social welfare office.
For its part, the act of 18 December 2009 on the organisation of social assistance stipulates that, when
applying the procedures established in the above-mentioned acts on the organisation of the electricity andnatural gas markets, the responsible social welfare office must investigate whether the household
customer is able to pay his or her energy bills and is entitled to social assistance.
Particular attention must be paid to tackling energy poverty in the housing sector: in Luxembourg, risinghouse prices have become a major social challenge. Low-income population groups can often only haveaccess to poorly maintained rented housing in old buildings with low energy standards. The government is
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 122therefore targeting the creation of affordable housing. Energy efficiency measures in the housing sector
will be designed in a way that simultaneously improves the national energy balance and the living
conditions of low-income groups.
At the same time, targeted programmes will also be put in place which, in the face of rising CO2 prices, will
provide significant financial incentives for homeowners to switch from fossil to renewable energy sources.
This change should also be affordable for people on low incomes. Among other things, a ‘heating oil
replacement programme’ aims to simplify the changeover both technically and financially.
The government will also work with all relevant stakeholders to develop innovative programmes to provide
incentives for the renovation of old housing while providing housing for low-income groups as part of thenational long-term renovation strategy to be prepared next year.
It should also be mentioned that there is already a programme in place through the cost-of-living allowance(‘Allocation de vie chère’), which also counteracts energy poverty. At the same time, the state rent subsidy
can help those in need to face a possible increase in the cost of housing. It should also be pointed out thatthe current social assistance legislation stipulates that any person who satisfies the conditions forentitlement to social assistance is entitled, under defined conditions, to a minimum provision for domesticenergy if he or she is unable to cover the costs of domestic energy.
The huge volume of investment in infrastructure development and the introduction of free public transport
from 2020 are certainly not just transport policy measures, but also clearly social measures.

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3.5. ‘Research, innovation and competitiveness’ dimension
3.5.i. Strategies and measures related to the elements set out in point 2.5
In 2015, the Chamber of Commerce of Luxembourg, IMS Luxembourg and the Ministry of Economic Affairscommissioned the sociologist, economist and journalist Jeremy Rifkin to study the development of a new
vision for the Luxembourg economy, taking account of his reflections on the ‘Third Industrial Revolution(TIR)’. The study was carried out as part of a collective process using the concept of ‘Open Societal
Innovation’. This approach aims to identify solutions to the challenges faced by the state and society, andseeks to exploit the collective intelligence of the stakeholders involved, in the form of group intelligence.

The TIR process was therefore conceived as an open, inclusive, collective intelligence-based and futureshaping process, targeting a common ambition to understand an increasingly complex world, to identify
megatrends, to draw the necessary conclusions and to bring them into the democratic institutions in an
appropriate manner. Last but not least, the TIR process should also break up the traditional silo thinking,which is widespread in both the private and the public sector.

The TIR strategy study, which covers the areas of energy, mobility, buildings, food, industry, finance, smart
economy, circular economy and prosumers & social model, was organised in thematic platforms covering
the individual areas and involving over 300 participants from business, politics and civil society.

Based on the conclusions of the study, the Government Council decided to use the results as a general
guide for the design of national future policy. In the energy and climate field, the Government Council
identified as priorities the development of a national energy internet, the promotion of e-mobility, theintroduction of the concept of ‘Mobility as a Service’ and the implementation of a flagship project todemonstrate the socio-economic contribution of sustainable neighbourhoods/cities with sustainably
constructed healthy buildings that take account of the principle of ‘circularity’.

The above-mentioned priority projects and the approaches outlined in the TIR strategic study, which are
based on the significant development of renewable energies and their integration into the energy network,
the development of decentralised energy storage, the digitalisation of energy networks, the use of moresustainable means of transport and the energy efficiency of the building stock, are therefore thecornerstones and an appropriate basis for greater prioritisation of research and innovation policy in thefield of energy.
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It should be noted in this regard that Luxembourg, as a small country, can of course only make acorrespondingly small contribution to the necessary global energy turnaround. On the other hand, the very
fact that it is a small country means that Luxembourg has the potential to become a pioneer at country
level to illustrate how certain key technologies and innovations associated with the energy transition canbe scaled up at country level and how they affect a country’s energy balance. In this way, Luxembourg could
become a pioneer in key technologies and innovation in the energy transition, thereby achieving a transfer
value that would be extremely valuable from an international perspective and that would be
disproportionately higher than the direct contribution of a small country to the global energy balance. In
this sense, and as a consequence of the developments outlined above, Luxembourg will focus on a numberof key areas of research and innovation, selected on the basis of the following criteria: (1) they build on
existing skills developed in recent years in the Luxembourg research landscape (2) they build on existing
infrastructures that Luxembourg has built up in recent years and has already scaled up at country level, and(3) they are suited to ensuring that research competencies combine with infrastructures to form the basis
for a workshop for key technologies and innovations for the energy transition. (4) In addition to these more
technical innovations, research is also being conducted into spatial planning and socio-political processesof climate-friendly transformation.

As far as existing research competencies are concerned, Luxembourg can build on an internationally highly
successful and visible research landscape in the field of computer science, in which energy-related topics
such as ‘smart grid’, ‘smart mobility’, ‘smart buildings’ and the ‘Internet of Things’ have also developed very
well. Following on from these themes, Luxembourg has also increased its investment in the fields of ‘data
science’ and ‘data modelling’ and has recently acquired the necessary IT infrastructure with aninternationally visible HPC infrastructure, which can also handle larger data processing and data modelling
projects. Appropriate and successful research stakeholders are also available to shed light on the social
aspects of an energy transition.

As far as national, energy-related infrastructure is concerned, the Luxembourg government has launched
a whole series of highly relevant initiatives in recent years. For example, electricity and gas system
operators were required by law to replace current metering systems with smart meters and to manage therelevant data through a national central system by 2020 and 2021 respectively. Luxembourg is therefore
one of the first countries in the world to have comprehensive and integrated smart meters for electricity
and gas, with the possibility of extending them to other media such as water and district heating. In
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addition, electricity distribution network operators have also been required by law to set up a common
national infrastructure of public recharging points for electric vehicles, which by 2020 foresees a total of
800 recharging points in public spaces and in park & ride parking areas. Luxembourg’s guidelines on energy
efficiency for buildings, which are highly progressive when compared with those of other countries, arealso worthy of note as are its extensive approaches in the areas of ‘indoor pollution’, ‘sustainable building
materials’ and even ‘circularity of buildings and whole districts’ (éco-quartiers made in Luxembourg).

The above considerations lead to the conclusion and aspiration that Luxembourg intends to become apioneer for the successful implementation of a large-scale nationwide energy transition. Sustainable andenergy efficient buildings with local flexibility options and/or energy storage capacity, as well as sustainablemobility components (smart grids) will form the main pillars of this system. Sensor technology and datainteroperability open up possibilities for overall monitoring and modelling, which in turn can be used to
optimise the system components.

Luxembourg will therefore also become a highly attractive location for suppliers and start-ups in the fieldof smart energy management, which will find an attractive testing and experimentation environment in
Luxembourg for the (further) development of their products.

The cross-border dimension of spatial and mobility planning is also particularly important for Luxembourg.
More than in other cross-border metropolitan areas (Copenhagen, Basel, Geneva), Luxembourg is a magnet
for a border area with three different countries (France, Germany, Belgium) and commuter flows, as wellas the cross-border housing and labour market, which is unique in Europe on this scale. For Luxembourg,
it is essential to promote research and innovation in this area.

Luxembourg therefore intends, among other things, to continuously increase the volume of investment inresearch and development in the energy sector and hopes to focus in particular on the following thematic
priorities:
1. Sustainable buildings and building materials – energy efficiency and circular economy,
decentralised renewable energy, ‘indoor pollution’
2. Éco-quartiers made in Luxembourg – plus energy systems, car-free mobility, socially inclusive urban
planning
3. Integration of renewable energies and e-mobility in digital power networks, energy-internet andsector coupling
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4. Territorial and cross-border transformation processes in the areas of mobility and spatial planning
5. Social transition processes and social innovation aimed at ‘climate positive lifestyles’

In order to address the above-mentioned issues in a structured, clustered and targeted way, the abovementioned thematic areas will be grouped together in a new research infrastructure that is to beestablished, involving all relevant stakeholders: the University of Luxembourg, the Luxembourg Institute of
Science and Technology (LIST) and the Luxembourg Institute for Socio-Economic Research (LISER), in orderto take a mission-based approach to research that will shed light on the social and societal aspects of thetargeted pioneer. The national research fund, ‘Fonds National de la Recherche’ (FNR), will be able to takeover the necessary financing aspect and the indispensable quality control.

As regards innovation, Luxembourg is a strong supporter of sustainable development in economic,
environmental and also social terms. Luxembourg is also developing a growing community of clean
technology start-ups and SMEs, addressing issues such as energy transition, smart cities, smart mobility
and also recycling. It is also important to highlight that Luxinnovation’s vision is to be a trustworthy partner
for entrepreneurs and to find pragmatic solutions for their innovative business development projects thatare in line with the government’s objectives and that develop the Luxembourg economy in a sustainable
way through innovation and research.
Luxembourg‘s national innovation agency, Luxinnovation, currently plays a crucial role in supporting theabove-mentioned enterprises. It encourages and supports companies to innovate and grow, while
facilitating collaboration with public research stakeholders. This applies in particular to the area of clean
technologies and the transition to a circular economy.

Luxinnovation’s portfolio of services for companies and public research institutions will be expanded andstreamlined around the topics of energy system transformation and the associated digitalisation of this
sector. It will also seek to improve the attractiveness of international investors, companies andprofessionals to ensure that companies and activities attracted from outside are compatible with thegovernment’s objective of developing the economy in a sustainable manner.

Financing the energy transition and ‘green finance’
Luxembourg is one of the world’s leading financial centres, particularly in the area of investment funds.
Luxembourg is also home to the world’s largest investment bank, the European Investment Bank (EIB),
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which is currently being transformed into a climate bank. In its current legislative programme, thegovernment has committed to transforming Luxembourg’s financial centre into a ‘green finance’ centre.

Research priorities currently include the creation of a research team for ‘green finance’ and ‘impact
finance’. Luxembourg will also develop a research priority on ‘Financing the Energy Transition’, notably due
to its geographical proximity to the EIB, where new financial instruments such as ‘de-risking instruments’for energy efficiency, renewable energy and energy infrastructure will be explored and taught, as well as
the interfaces with the insurance industry based in Luxembourg. Further strategies and measures are
outlined in Section 3.1.3.ii.

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Stimulating behavioural changes in lifestyles
In addition to the regulatory and financial framework of the state, there is also a need to change lifestyles
within society. Climate and energy policies require the participation and acceptance of citizens. In order toachieve a sustainable stimulation of behavioural changes in lifestyles, an attractive environment should becreated that motivates permanent changes in everyday routines:•

Enhancing public transport and accessibility for all citizens•

Promoting the concept of the sharing economy•

Encouraging responsible travel and nutrition•

Setting an example of climate protection through public institutions•

Increasing the supply of alternative means of transport, such as bike sharing, cargobikes, carsharing or carpooling•

Cross-border integrative urban (neighbourhood) and spatial planning

An additional measure to raise citizens‘ awareness and encourage behavioural change is the appointment
and promotion of a ‘neighbourhood administrator’ within the municipalities. The intention is to provide adecentralised approach to sustainable living and the ecology and circular economy within theneighbourhood through, for example, the promotion of the sharing economy and urban farming projects,
the organisation of an exchange platform or a repair café.

3.5.ii. Any regional cooperation with other Member States in this area; this includes any information
on how the objectives and policies of the SET-Plan are applied to national situations.
The steps and institutional developments mentioned in the previous sections will be further developed incooperation with other European research and innovation institutions. European programmes are
particularly appropriate here, as well as doctoral students, etc.
3.5.iii. Any financing measures in this area at national level, including Union support and the use ofUnion funds
In recent years, the Luxembourg Government has made considerable efforts to support technologicaldevelopments and the research and innovation of new technologies. Environmental technologies areamong the priorities of Luxembourg’s economic diversification strategy.

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As provided for in the 2018-2023 government programme, Luxembourg will focus even more in the coming
years on innovation and research in the fields of ‘renewable energy’, ‘energy efficiency’, ‘sustainable cities’and ‘neighbourhoods and buildings’. Existing efforts and skills at the national research institutes should be
increased. In addition, the connection between energy and climate policies and the economic developmentof the country in general should be strengthened.
By bringing the national legal framework for the promotion of research, innovation, energy and theenvironment into line with European State aid guidelines, Luxembourg has already equipped itself with thenecessary tools to best assist the private sector in implementing forward-looking innovations. In the future,
it will be important to use these instruments in the most targeted way possible in order to ensure thecompetitiveness of national companies on the one hand and to achieve national climate, energy andenvironmental goals on the other.

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4. Current situation and projections with existing policies and measures
In order to analyse the current situation with regard to energy and climate policy in Luxembourg and toprepare projections based on the current policies and measures, the Luxembourg government
commissioned a consortium of consultants from the Fraunhofer Institute for System and Innovation
Research (Fh-ISI), Consentec GmbH, the Institute for Resource Efficiency and Energy Strategies (IREES) and
TU Wien – Energy Economics Group. The consortium supplemented and adapted the models alreadyapplied in previous projects concerning energy demand and energy supply to the given requirements inorder to establish an analytical basis that is as robust as possible.

Two scenarios have emerged from the model-based assessment of policies and measures. The reference
scenario includes the projections based on current policies and measures and is described in Section 4. The
impact assessment of the planned policies and measures described in Section 3 resulted in the target
scenario presented in Section 5.

In general, it should be noted that such modelling and the resulting projections do indeed serve as
guidance, but are always subject to uncertainty. This is especially true in the case of small open economies,
such as that of Luxembourg. As a result, individual decisions or decisions taken abroad or at European levelcan bring about significant changes when compared with the scenarios presented in this plan.

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4.1. Projected evolution of main exogenous factors influencing energy system and GHG emission
developments
For both scenarios (reference and target) a very similar set of assumptions was applied in terms of key
exogenous factors. On the one hand, these parameters stem from national and European sources and, on
the other hand, they are based on the expertise of the consortium of consultants. They are presented in
brief below.

Macroeconomic forecasts and sectoral changes
According to projections by the national statistical institute, Statec14, the population of Luxembourg is
expected to increase from around 626,000 inhabitants in 2020 to around 752,000 inhabitants in 2030 and
to around 869,000 inhabitants in 2040. This corresponds to average growth of 1.85% per year until 2030,
decreasing to around 1.45% per year between 2030 and 2040. Overall, the population of Luxembourg will
increase by about 20% by 2030 when compared with 2020.

Table 4: Population growth and gross domestic product
Unit

2020

2025

2030

2035

2040

Thousand inhabitants

626

690

752

812

869

Annual growth rate in %

3.8

3.0

3.0

3.0

3.0

Population
Gross domestic productSource: Statec (2019)

The above-mentioned projections by Statec show that the annual growth rate for gross domestic productwill be 3.8% in 2020, falling to 2.5% by 2023, before finally settling at around 3%.

Global/Europe-wide energy trends
As regards the assumptions on price trends on the global and European energy markets, the Commission’s
recommendation was followed. Accordingly, the model-based analysis of the Luxembourg energy system

14Long-term macroeconomic and demographic projections 2017-2060 (November 2017) updated with medium-term projections 2019-2023(March 2019). The population figures correspond to the situation on 1 January of the respective year.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 132

was based on assumptions and results of the impact assessment of the EU climate and energy targets for203015. Table 5 allows a comparison to be made of the specific energy prices of fossil fuels.

Table 5: Assumptions on energy price trends

Key price trends for fossil fuels
Unit

Oil
Natural gas (net calorific€/toevalue)

Hard coal

2020

2025

2030

2035

2040

502.3

589.8

649.8

677.8

717.7

323.1

361.6

393.3

420.0

434.2

95.8

118.4

142.1

150.5

156.8

Source: European Commission (2016)

Assumptions on cost developments for renewable energy technologies
Table 6 shows the assumptions on cost developments for renewable energy technologies that were used
for modelling. As can be seen, previous trend developments are expected to continue for all technologies,
which will trigger a steady decrease in specific costs. This assessment and the assumptions made specificallyfor technologies such as photovoltaics can nevertheless be classified as conservative.

15

European Commission, 2016, SWD(2016) 410 final: Impact Assessment. Supplementary to the following documents: COM(2016) 861 final,
SWD(2016) 411 final, SWD(2016) 412 final, SWD(2016) 413 final. Brussels, 30 November 2016

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 133

Table 6: Assumptions on cost developments for renewable energy technologies
Unit

2020

2025

2030

2035

2040

Electricity sector
Biogas3,830 3,558 3,359 3,181 3,005

Biomass

4,900 4,530 4,336 4,194 4,134

Hydroelectric power€/kW

3,754 3,697 3,668 3,642 3,618

Photovoltaic

1,045

906

817

716

688

Wind energy

1,459 1,405 1,344 1,298 1,241

Heat sector
Biomass, decentralised
Solar thermal energy
Heat pumps

€/kW

699

651

640

611

604

670

642

677

700

743

786

762

743

627

719

Source: Green-X Model, Vienna University of Technology (Resch et al, 2019)

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4.2. ‘Decarbonisation’ dimension
4.2.1. GHG emissions and removals
Table 7 shows the development of the annual greenhouse gas emissions in the period from 2005 to 2017.
The values and the definition of the sectors have been taken from the GHG inventory of 2019. 16 In
accordance with international conventions, the total sum of the LULUCF emissions is not included. In 2017,a total of 10.2 million t CO2eq was emitted. This is a 21.4 per cent reduction when compared with 2005.

Table 7: Greenhouse gas emissions by sector for 2005 to 2017, in kt CO2eq
Total emissions
Energy-related emissions
Energy sector
Industry
Transport
Private households
Trade, commerce and services
Others*Diffuse emissions
Non-energy-related emissions
Industrial processes
Agriculture
Waste
LULUCF

2005
13,025
11,552
1,243
1,407
7,188
1,216
419
27
53
1,472
726
641
105
-601

2010
12,18010,737
1,206
1,268
6,517
1,161
502
29
54
1,443
676
672
95
-88

2011
12,062
10,613
1,004
1,242
6,893
1,064
336
28
47
1,449
692
666
91
-220

2012
11,781
10,410
1,043
1,185
6,585
1,083
439
28
48
1,371
633
649
89
-313

2013
11,239
9,872
686
1,146
6,439
1,075
463
24
41
1,366
617
660
90
-500

2014
10,787
9,388
669
1,147
6,139
973
398
24
38
1,399
633
675
91
-416

2015
10,295
8,896
458
1,106
5,706
1,086
483
24
35
1,399
625
688
85
-362

2016
10,052
8,614
252
1,142
5,533
1,119
512
24
32
1,438
650
704
83
-452

2017
10,236
8,778
244
1,141
5,639
1,116
583
24
31
1,458
662
712
84
-344

* Other emissions relate to combustion in construction and agriculture

Source: GHG Inventory 2019v1 (March 2019)

For the period 2005 to 2017, the annual GHG emissions can be broken down by emissions in the sectors
subject to the ETS and those in other, non-ETS sectors (see Table 8). Due to the change to the scope of the
ETS from 2013 onwards, additional activities and installations have been included in the ETS. The
corresponding GHG emissions are therefore no longer accounted for in the non-ETS sector (non-ETS
emissions for industry in 2012: 563 kt CO2eq and non-ETS emissions for industry in 2013: 274 kt CO2eq).
The GHG emissions from the non-ETS sectors amounted to 8.7 million t CO2eq in 2017, of which only about
10% were non-energy-related GHG emissions.

16 https://cdr.eionet.europa.eu/lu/eu/mmr/art07_inventory/ghg_inventory/envxitkwg/

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Table 8: Greenhouse gas emissions by ETS and non-ETS for 2005 to 2017, in kt CO2eq
ETS emissions excl. internat. air transport
Total non-ETS emissions
Energy-related non-ETS emissions
Energy sector
Industry
Transport
Private households
Trade, commerce and services
Others*Diffuse emissions
Non-energy-related non-ETS emissions
Industrial processes
Agriculture
Waste
LULUCF2005
2,603
10,421
9,608
232
474
7,188
1,216
419
27
53
814
68
641
105
-601

2010
2,253
9,926
9,070
201
605
6,517
1,161
502
29
54
856
89
672
95
-88

2011
2,052
9,998
9,144
208
570
6,893
1,064
336
28
47
854
97
666
91
-220

2012
1,990
9,798
8,960
215
563
6,585
1,083
439
28
48
838
100
649
89
-313

2013
1,847
9,391
8,536
221
274
6,439
1,075
463
24
41
855
106
660
90
-500

2014
1,931
8,855
7,982
174
236
6,139
973
398
24
38
873
108
675
91
-416

2015
1,661
8,634
7,753
175
245
5,706
1,086
483
24
35
882
108
688
85
-362

2016
1,503
8,549
7,653
184
249
5,533
1,119
512
24
32
896
109
704
83
-452

2017
1,492
8,744
7,832
184
255
5,639
1,116
583
24
31
912
116
712
84
-344

* Other emissions relate to combustion in construction and agriculture

Source: GHG Inventory 2019v1 (March 2019) and EUA EU Emissions Trading System (ETS) data viewer.17

The projections for the sector-specific developments by ETS and non-ETS for the reference scenario basedon current policies and measures are shown in Table 9 .

Table 9: Greenhouse gas emissions by ETS and non-ETS for 2020 to 2040, in the event of the reference
scenario (without additional measures), in kt CO2eq
ETS emissions excl. internat. air transport
Total non-ETS emissions
Energy-related non-ETS emissions
Energy sector
Industry
Transport
Private households
Trade, commerce and services
Others*Diffuse emissions
Non-energy-related non-ETS emissions
Industrial processes
Agriculture and forestry
Waste
LULUCF

2020
1,393
8,394
7,502
163
196
5,453
1,144
489
25
31
892
112
701
79
-390

2025
1,308
8,379
7,530
163
206
5,549
1,131
426
25
31
849
106
671
72
-393

2030
1,202
8,554
7,736
163
205
5,844
1,099
370
25
30
817
80
669
68
-401

2035
1,138
8,822
8,016
163
223
6,167
1,058
349
26
29
806
70
668
68
-399

2040
1,068
8,967
8,168
163
236
6,352
1,042
321
26
29
799
64
667
67
-397

* Other emissions relate to combustion in construction and agriculture

Source: Own illustrations, 201917 https://www.eea.europa.eu/data-and-maps/dashboards/emissions-trading-viewer-1

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4.2.2. Renewable energy
The contribution made by renewable energy to energy production in Luxembourg is steadily increasing. As
can be seen from the target scenario in Section 2 of this report, a consistent continuation of the trend
established in the recent past is being sought. The following section explains the starting position in respectof the use of renewable energy, followed by a consideration of the future development – in this case purely
in the event of a continuation of existing measures, both in terms of production and demand.

Status quo of renewable energy use in Luxembourg
In recent years, considerable growth has been achieved in renewable energies such as wind energy,
photovoltaics and biomass, i.e. the core technologies in the field of electricity production for Luxembourg.
Over the course of a decade, their contribution has increased significantly – both in the electricity sector(from 3.3% in 2007 to 8.1% in 2017), but also in connection with heat generation (from 4.4% in 2007 to
8.1% in 2017). In the transport sector, which is dominated by the use of biofuels and the transition toelectrically operated drive systems, this change was even more dramatic: In 2007, the renewable energy
share was around 2.2%; in 2017, Luxembourg achieved a renewable energy share of 6.4%.

Reference development in the event of a continuation of existing measures
In the following, a reference development or the expected development with continuation of existingmeasures, both on the supply and the demand side, is presented for the period up to 2040.

The renewable energy share in the gross final energy demand, in other words the total of the sectoralenergy demands for electricity, heat and fuels in the transport sector would increase accordingly from 6.4%
in 2017 to 12.9% by 2030, and finally to 13.5% in 2040.

Table 10 provides information on the sectoral decomposition of the overall balance and Table 11 provides
supplementary details on the potential underlying technology split. Compared to the target scenario of
25%, as depicted in Section 2 of this report, the underlying volumes only show comparatively minor
differences in terms of the energy-related contribution of specific renewable energy technologies.
Accordingly, a significant increase in renewable energy in the electricity sector is also expected in thereference scenario. This results in a share of approximately 26.5% for 2030 and around 34.7% for 2040.
Substantial contributions in terms of volume are expected here from wind energy and photovoltaics – thelatter, however, being considerably slower than in the case of the development compatible with the target
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 137

scenario (according to Section 2). Projects that are already in the implementation stage, for instance in thefield of biomass cogeneration, will also make substantial contributions.

Similarly to electricity, a significant expansion of renewable energy is also expected in the heat sector in
the event of a continuation of existing measures. In this case, the renewable energy share in the reference
scenario will increase from 8.1% in 2017 to 18.6% by 2030 and finally 21.9% in 2040.

In unison with electricity and heat, a huge increase in the use of renewable energy is also expected in thetransport sector in the reference case. In this specific case, it is assumed that there will be an increase in
the admixture of biofuels (with an admixture rate of around 8% in 2030). In addition, an expansion of emobility is expected, and it is also assumed that by the end of 2030 the biofuel mix will consist of no morethan 5% first-generation fuels. In total, an increase of the renewable energy share in the transport sector
to 15.1% will therefore be achieved by 2030 in the reference case.

Table 10: Sectoral shares of renewable energy in Luxembourg by 2040 according to the reference scenario

Renewable energy shares, sectoral

2017

2020

2025

2030

2035

2040

%

8.1%

11.9%

19.4%

26.5%

31.3%

34.7%

%

8.1%

12.1%

15.4%

18.6%

20.4%

21.9%

transport sector

%

6.4%

11.1%

13.5%

16.1%

15.1%

17.6%

Admixture rate for biofuels

%

5.4%

7.7%

8.0%

8.0%

5.6%

5.5%

%

6.4%

9.2%

11.2%

12.9%

12.8%

13.5%

%

6.4%

11.3%

17.4%

23.0%

22.7%

23.2%

Renewable energy share,electricity sector
Renewable energy share, heatsectorRenewable energy share,

Renewable energy share, total national production/consumption
Renewable energy share, total - incl.
renewable energy cooperation
Source: Own illustrations, 2019
In addition to national renewable energy production Table 11 also shows the volumes of renewable energythat are to be covered in the future through renewable energy cooperation with other countries. These are

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used in the reference scenario to achieve an overall renewable energy target of 23% in 2030 and amountto (already contractually agreed) 1 TWh in 2020 and 4.83 TWh in 2030 (and thereafter).

Table 11: Technology-specific energy production from renewable energy in Luxembourg by 2040 according
to the reference scenario
Energy production,technological details

2017

2020

2025

2030

2035

2040

Electricity sector
Biogas

GWh

72

56

65

68

63

62

Biomass

GWh

101

192

228

271

260

267

Hydroelectric power

GWh

104

93

97

100

104

107

Photovoltaics

GWh

108

201

476

616

687

729

Wind energy

GWh

185

211

383

676

958

1,167

GWh

570

752

1,249

1,731

2,071

2,332

GWh

302

589

623

667

649

656

Biomass, decentralised**

GWh

672

883

1,145

1,383

1,522

1,560

Solar thermal energy

GWh

25

58

113

188

302

453

Heat pumps

GWh

52

95

190

224

226

227

GWh

1,052

1,626

2,070

2,462

2,699

2,896

GWh

1,282

1,855

1,892

1,993

1,450

1,450

GWh

2,904

4,232

5,211

6,187

6,221

6,679

GWh

0

1,000

2,917

4,833

4,833

4,833

Renewable energy electricity, total
Heat sector
Biomass & biogas,
grid-connected*

Renewable energy heat, total
Transport sector
Biofuels, total
Renewable energy use, total(national)
Renewable energy cooperation
Renewable energy cooperationenergy* Central plants (fed into a heating network)** Decentralised plants (not fed into a heating network, all sectors)

Source: Own illustrations, 2019

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4.3. ‘Energy efficiency’ dimension
Various aspects need to be considered in the ‘energy efficiency’ dimension in order to paint the most
realistic picture possible.

Starting situation in terms of energy demand in Luxembourg
In 2016, Luxembourg’s final energy demand was just under 48 TWh (Statec 2018). The majority of the final
energy demand in Luxembourg, 59%, is accounted for by the transport sector (Figure 7). Of this, a majorityof around 34% is accounted for by foreign road transport. According to energy statistics, this includes therefuelling caused by all non-domestic vehicle owners. This includes through traffic of heavy goods andpassenger vehicles, as well as cross-border commuters with passenger vehicles not registered in
Luxembourg. At the same time, air transport accounts for about 12% of total final energy demand, whichmeans that domestic road transport accounts for about 13% of Luxembourg’s final energy demand. While
the agricultural sector accounts for the lowest share in the final energy demand at around 0.2%, theindustrial sector requires the greatest share of energy in Luxembourg at just over 17%.

Private Haushalte
Landwirtschaft 0,2 %GHD
Industrie
Transport (inkl. Luftverkehr)
Endenergiebedarf gesamt in 2016: 47.831 GWh

Private households
Agriculture 0.2%
Trade, commerce and services
Industry
Transport (including air transport)
Total final energy demand in 2016: 47,831 GWh

Source: IREES according to Statec 2018
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 140

Figure 7:

Luxembourg’s final energy demand in 2016, broken down by industrial; household; trade,
commerce and services; transport and agricultural sectors

Luxembourg’s energy demand in 2016 is dominated by the need for mineral oil products (63%). The energy
demand was also covered by natural gas (17%), electricity (13%) and biomass (4%) (see Figure 8).

Endenergieverbrauch (GWh)
Total
Feste Brennstoffe
ErdgasStrom
Wärme
Mineralölerzeugnisse
Biomasse

Final energy consumption (GWh)
Total
Solid fuels
Natural gas
Electricity
Heat
Mineral oil products
Biomass

Source: IREES according to Statec 2018
Figure 8: Final energy demand in Luxembourg in 2016, broken down by energy source
Note: In terms of electricity consumption, this presentation does not take account of the fact that larger
electricity consumers could settle in Luxembourg in the near to medium term.

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Existing potential for using high-efficiency cogeneration and efficient district heating and coolingIn 2015, just under 326 GWh of electricity and 527 GWh of heat were produced in Luxembourg using
cogeneration technology. It should be noted here that cogeneration plants are able to provide heat at
temperatures up to 500 °C. (Klobasa, Steinbach & Pudlik 2016).

Further potential for the use of high-efficiency cogeneration can be found in the following areas:

Decentralised cogeneration plants in buildingsUse of cogeneration in industry



Heating network supply and centralised cogeneration

The economic potential of the use of cogeneration plants and supply based on heating networks depends
largely on the development of renovation activities in the building sector and therefore on the developmentof the heat demand of buildings as a whole. In the field of the decentralised supply of buildings, the use ofcogeneration in the power range below 500 kW of electric power is well-established. On account of thebuilding-specific heating or cooling demand values, there is still untapped economic potential for highly
efficient cogeneration or district heating, mainly in the area of multi-family buildings.

The economic potential of cogeneration in the building sector is currently being realised at about 50%
through existing local heating concepts. Therefore, in Luxembourg, there is currently an economic
cogeneration potential of around 1,170 GWh of useful energy in the building sector alone (Klobasa,
Steinbach & Pudlik 2016).

At the same time, a limited economic potential of around 500 GWh of final energy or 425 GWh of usefulenergy is seen in industry by 2030 (see Table 12). Relevant sectors here are the chemical industry, thetimber industry and the food industry. However, to realise this industrial potential, good site conditions
with long plant running times are absolutely essential (Klobasa, Steinbach & Pudlik 2016).

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 142

Table 12: Additional potential for the cogeneration of heat in industry by 2030 based on final energy use
in industry
Fuel demand in
GWh
SectorSteel
Stone/earth
Chemistry
TextilesTimberFoodConstruction
Mechanical engineering
Paper
Other
Total

2014
1 670
1 094
319
226
274
61
77
13
51
157
3 952

Cogeneration suitable(<500 °C) in GWh

2030
2014
2030
1 422
67
57
589
164
88
295
316
292
208
226
208
253
274
253
57
60
56
71
0
0
12
13
12
47
50
46
154
145
134
3 107
1 315
1 146
Cogeneration heat*
Cogeneration electricity**

Cogeneration
existing in
GWh
2014

Expansion
potential in
GWh
2030

210
65

150

122
187

115
500
425
255

Source: Klobasa, Steinbach & Pudlik 2016

Energy demand development in Luxembourg by 2040
The energy demand developments of the reference scenario and the target scenario from 2015 to 2040
are modelled using a bottom-up model. This model takes account of a number of very different drivers
depending on the sector under consideration (private households; trade, commerce and services sector;
industry and transport). In the model, these drivers are linked to corresponding specific energy demandparameters in both the reference and target scenarios. The annual energy demand development is thencalculated by mathematically linking drivers with the associated energy demand characteristics and otherinfluencing factors. As a basis for the data and a source of information, wherever possible, the model draws
on existing accessible data sets or other sources of information (inventory, reports from research projects,
previous projects, etc.) for the relevant factors and influencing variables. These come, for example, fromStatec or other institutions. If no relevant data are available, assumptions and expert estimates must be
used. However, as a result of this, the project is unable to reflect the real situation in Luxembourg in all
sectors and sub-sectors in such a way that the modelled results can always be reflected in exactly the same
way as the results of other projects or data sets. The large number of influencing factors taken into accountdemands a certain degree of abstraction or generalisation for the individual control variables. As a result,all project results may differ to some extent from data or data sets that are already available.
Understandably, this applies not only to the demand side, but also to the supply side calculations.

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The following sectors contribute to Luxembourg’s total final energy demand: private households; trade,
commerce and services; industry and transport It is possible to draw a distinction here between non-ETS(private households; trade, commerce and services; industry) and ETS (industry, aviation). In the case of
the reference development, the final energy demand of Luxembourg’s non-ETS sector will rise by 15% in
the period from 2015 to 2040; from just under 36 TWh per year to around 42 TWh. The final energy
demand of the transport sector will show the largest percentage increase here, growing to around26.5 TWh in 2040 (+ 19.5%). At the same time, the electricity demand will increase by around 8% to reach
6.4 TWh and the final energy demand for heat generation will show minor growth of 2.9% (fromapproximately 10.5 TWh to just under 10.9 TWh).

During that same period, the electricity demand of the non-ETS sector of industry will increase by approx.
180 GWh to just over 1.2 TWh in 2040 (+ 17%). At the same time, the fuel required by non-ETS industry will
also increase by just over 21% from 0.9 TWh in 2015 to approximately 1.1 TWh. By contrast, after a slightincrease in 2020, the electricity demand of ETS industry will decrease by almost 6% to 1.9 TWh in 2040.
(see Figure 9).

It should also be noted here that a further increase in electricity consumption seems possible, as thisinformation does not take account of the fact that larger electricity consumers could settle in Luxembourg
in the near to medium term.

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GWh
7.000

6.000

3.113

3.191

3.246

3.485

3.635

4.000

3.809

5.000

3.000

2.054

2.026

1.931

1.918

1.905

1.000

2.018

2.000

2015

2020

2025

2030

2035

2040

0

Strombedarf Industrie ETS

GWhStrombedarf Industrie ETS
Brennstoffbedarf Industrie ETS

Brennstoffbedarf Industrie ETS

GWhElectricity demand industry ETS
Fuel demand industry ETS

Source: Own illustration 2019
Figure 9: Electricity and fuel required by industry (ETS sector only) in the period from 2015 to 2040 in theevent of the reference scenario
The final energy demand for heat generation (excluding electricity) in the non-ETS sector shows a slightincrease of 8% overall over the entire study period (+ 1.0% compared to 2030), i.e. the final energy demandfor heating (excluding electricity) will increase from around 9.4 TWh to just under 10.1 TWh. This increaseis based on the increased use of wood and other renewable energies (+ 263% in 2040 when compared with2015) and other fuels (+ 18% in 2040 when compared with 2015), while the use of the fossil energy sources,
natural gas, fuel oil and coal, will see a significant drop. This increase in the final energy demand for heatgeneration is due, on the one hand, to the ‘households’ sector, which will be 21.5% larger in 2040 than in
2015; most of the increase will be seen in the period up to 2030, while the final energy demand of thesector will only grow by just under 2% in the period from 2030 to 2040 (see Figure 10). On the other hand,the final energy demand of non-ETS industry will also increase at a near-identical rate (+ 21.3%) from
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 145

0.9 TWh to approximately 1.1 TWh. In contrast to private households and non-ETS industry, the ‘trade,
commerce and services’ sector shows a decline of just under 26% in the use of final energy for heatgeneration in 2040 when compared with 2015 (see Figure 10). The final energy demand in the transport
sector, which will see strong growth by 2040 (+ 19.5%) and which is based on a growing number of vehicles
and ever increasing distances driven, is covered almost exclusively by the conventional fossil energy
sources, petrol (+ 2.0 TWh when compared with 2015) and diesel (+ 1.8 TWh when compared with 2015)(see Figure 11). In the same period, biofuels will see an absolute increase of just under 0.5 TWh.
GWh
12.00010.000

954

952

1.035

1.094

2.340

2.174

2.088

2.022

6.386

6.693

6.862

6.909

6.976

2020

2025

2030

2035

2040

908
901
8.000

2.534
2.718

6.000

4.000

5.740
2.000

0
2015

Private Haushalte (ohne Stromanteil)

Gewerbe, Handel, Dienstleistungen (ohne Stromanteil)

GWh
Private Haushalte (ohne Stromanteil)
Gewerbe, Handel, Dienstleistungen (ohne Stromanteil)
Industrie (ohne Stromanteil)

Industrie (ohne Stromanteil)

GWh
Private households (excluding electricity share)
Trade, commerce, services (excluding electricity share)
Industry (excluding electricity share)

Source: Own calculations 2019
Figure 10: Sectoral development of the fuel required for heat generation by households; trade, commerceand services, and industry (without ETS share) in the period from 2015 to 2040 in the eventof the reference scenario

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 146GWh35.000
730

521
355
195

56

30.000

5.936

2

5.936
5.936
5.936

5.936
25.000

1.450

5.936

1.450
1.993
1.892

1.237
962
20.00015.00019.41718.89417.94718.02217.525

3.537

4.046

4.296

2015

2020

2025

17.64810.000

5.000

5.039

5.360

5.562

2030

2035

2040

0

BenzinDieselGWh
BenzinDieselErdgasBiokraftstoffe
Informell: Kerosin für Flugverkehr
Informell: Strom für E-Mobility

ErdgasBiokraftstoffe

Informell: Kerosin für Flugverkehr

informell: Strom für E-Mobility

GWh
PetrolDieselNatural gas
Biofuels
Informal: Jet fuel for air transport
Informal: Electricity for e-mobility

Source: Own calculations 2019
Figure 11: Development of the final energy demand (broken down by energy source) of the transport sector
in the period from 2015 to 2040 in the event of the reference scenario
Table 13 below gives a brief overview of common primary energy factors. With the exception of electricity,
the primary energy demand and the final energy demand are identical, due to a primary energy factor of
1.0. Therefore, separate designation of the primary energy demand is dispensed with here. Figure 12
provides an overview of the ratio of primary energy demand to final energy demand only in the case ofelectricity. Due to improved efficiency in the production of electricity, the primary energy factor will
decrease by 26% between 2015 and 2040. In absolute terms, Luxembourg’s electricity demand (final
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 147

energy) will increase by just under 8% between 2015 and 2040 despite improved efficiency (on averagearound 1% per year), partly because of economic developments, the increasing resident population andtechnical developments (increasing digitalisation, more applications of electricity, etc.). At the same time,
the primary energy demand for electricity production will sink by just under 21% (see Figure 12).

Table 13: Primary energy factors used for the various energy sources in the period from 2015 to 2040

Natural gas
Fuel oilTimberCoal
Other fuels
PetrolDieselBiofuels
Jet fuel (airtransport)
Electricity

2015
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0

2020
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0

2025
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0

2030
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0

2035
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0

2040
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0

2.4

2.1

2.1

2.0

1.9

1.8

Source: Own illustration 2018

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 148GWh
16.00014.61914.00013.03812.84912.56812.12812.00011.61210.000

8.000

6.000

5.980

6.141

6.260

6.314

6.367

6.441

4.000

2.000

0
2015

2020

2025

Endenergiebedarf Strom

GWh
Endenergiebedarf Strom
Primärenergiebedarf Strom

2030

2035

2040

Primärenergiebedarf Strom

GWh
Final energy demand electricity
Primary energy demand electricity

Source: Own calculations 2019
Figure 12: Development of electricity demand (final energy demand and primary energy demand) for theperiod from 2015 to 2040 in the event of the reference scenario

The share of the specific sectors in the electricity demand will vary on account of continuing efforts toimprove efficiency and various trends and technological developments in electricity applications andproduction technologies in trade, households, industry or the transport sector. While the share of thetransport sector in the total electricity demand will considerably increase by 2040 when compared with2015 (share of transport 2040: just over 11%), the shares of the remaining sectors (trade, commerce andservices; private households; industry) will decrease to a greater or lesser extent (see Figure 13). Whenlooking at the absolute electricity demand (final energy) of the individual sectors, it is noticeable that,
despite the increasing population, the absolute electricity demand of households will decrease by around
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 149

220 GWh between 2015 and 2040 due to improved energy efficiency, while that of the transport sector will
increase strongly due to the growth in e-mobility (+ 0.7 TWh). Demand in the trade, commerce and services
sector will fall by 0.1 TWh, while electricity demand in the industrial sector will see a minimal increase.

GWh

120%

100%

80%

0%

33%

1%

33%

3%

6%

33%

8%

32%

11%

31%

29%

60%

40%

51%

51%

51%

49%

49%

49%

13%

12%

11%

20%

15%

15%

14%

2015

2020

2025

0%
Private Haushalte

GWh
Private Haushalte
Industrie
GHD
Verkehr

2040

2035

2030
Industrie

GHD

Verkehr

GWhPrivate households
Industry
Trade, commerce and services
Transport

Source: Own calculations 2019
Figure 13: Sectoral breakdown of the electricity demand for the period from 2015 to 2040 in the event of
the reference scenario

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 150

4.4. ‘Energy security’ dimension
4.4.1. Analysis – electricity sector
Reliability of supply
The quality of the electricity supply in Luxembourg is very high, even when compared to Europe. The
average outage duration per point of use and per year was 21.8 minutes in 201718.

Gross electricity production
The data on gross electricity production based on (small-scale) gas-powered cogeneration plants in the past
were gathered from the monitoring conducted by ILR19. The expected electricity production from gas was
updated to 220 GWh/year in accordance with the status quo. Other data are from the reference scenario.

Table 14:Gross energy production in Luxembourg by 2040

[GWh]

2016

2020

2030

2040

Biogas

74

56

68

62

Gas

220

220

200

180

Biomass/biowaste

67

192

271

267

including 104

93

100

107

Water

(not

pumped-storage power
plants)
Wind

127

161

676

1,167

PV

100

251

616

729

Total

692

973

1,931

2,512

Source: Reference scenario, ILR

Domestic energy sources
Electricity production on the basis of renewable energy is a domestic energy source. Together with thedomestic electricity production on the basis of decentralised gas-fired power plants, it amounted to around
690 GWh in 2015. In 2020 to 2040, an increase of around 2.55 TWh is expected according to the reference
scenario. In addition to the types of production listed in Table 14, the Vianden pumped storage power plantis also worth mentioning. With a production capacity of 1.3 GW and a storage capacity of around

18 ILR, Chiffres Clés du Marché de l’Électricité, Année 2017 - Partie I
19

ILR, Chiffres Clés du Marché de l’Électricité, Année 2017 - Partie I

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5,000 MWh, it is one of Europe’s largest pumped storage power plants and it makes a significant
contribution to system flexibility and security of supply in the wider region. It serves, inter alia, as a valuable
compensation tool for production ratios and forecasting errors in renewable energy production, as well as
for network stabilisation measures.

Import dependency
The import dependency is the result of gross electricity consumption minus domestic production. Table 15
shows the projections regarding gross electricity consumption, both in ktoe and TWh20. Since it is expectedthat there will be a considerable increase in renewable energy production in Luxembourg by 2040, with
only a minor increase in gross electricity production, the import dependency is expected to reduce
accordingly from just under 90% in 2015 to 60% in 2040. Luxembourg mainly imports electricity from
Germany; more than 75% of its electricity is sourced from there.
In terms of electricity consumption, this presentation does not take account of the fact that larger
electricity consumers could settle in Luxembourg in the near to medium term.

Table 15: Electricity import dependency of Luxembourg

Gross electricity

2016

2020

2030

2040

560

528

543

554

6.52

6.14

6.31

6.44

0.69

0.97

1.95

2.55

89%

84%

69%

60%

consumption [ktoe]
Gross electricity
consumption [TWh]Domestic production[TWh]
Import dependency [%]Source: Own calculations based on ILR and reference scenario

Relevant risks
Luxembourg’s dependence on energy imports over the long term will be lower than it is today, although it
will remain high. The security of supply in Luxembourg therefore also depends on the security of supply inthe rest of Europe. Various studies, such as the Generation Adequacy Assessment (GAA) of the Pentalateral20

In principle, the EU Commission templates stipulate ktoe as the unit.

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Energy Forum or the Mid-Term Adequacy Forecast (MAF) of the ENTSO-E (see Section 3.3.ii.), are currently
under way, which draw conclusions about security of supply not only for individual countries but also forthe entire model region. Since the security of supply in Luxembourg depends in particular on the available
production capacities of neighbouring countries, this approach can also be used to directly predict the
security of supply in Luxembourg. This involves mapping probabilities, including the availability of
renewable energy production installations, unplanned failures of equipment or lines or the temperaturedependency of the demand. One key result is the determination of country-specific LOLE (Loss Of Load
Expectation) values. The LOLE values indicate the number of hours in a year that supply cannot be coveredby capacities and imports. Depending on the scenario and the model, low, although positive, LOLE values
have been calculated for Luxembourg. This positive starting point is linked in particular to the fact thatmeasures are also planned in Germany in the medium to long term to ensure security of supply (e.g.
through the development of renewable energy and, if necessary, reserve capacity). In contrast, the recent
situation has been rather tense for France and Belgium, but this has had comparatively less impact on
Luxembourg. When comparing the results of these studies, no considerable risks are expected for
Luxembourg in terms of security of supply over the short term. In the long term, too, the expected LOLE
values are below the limit values normally set in Europe, but this situation should be kept under close
observation. This is particularly the case since the security of supply situation in the region as a whole could
become more critical during this time than it is at present. This is because it is not possible to entirely ruleout problems with covering the load for Luxembourg’s direct neighbours or for Luxembourg itself.
However, it should be noted that state measures for safeguarding the security of supply (in particular thecapacity market that has been introduced in France and the recently announced capacity market in
Belgium) may have an impact in the period up to 2023 or 2025. It should also be noted that thedevelopment of renewable energy will also contribute to security of supply, for example through relatively
stable offshore wind injections in the North Sea region. In addition, an actual scarcity of options to coverdemand is also likely to be met with market reactions such as the tapping of load flexibility potential. Since
the tapping of such potential is possible over the relatively short term, it is not yet or at least not fully
included in the studies mentioned above.

4.4.2. Analysis – gas sector
Gas extraction and storage
Luxembourg does not extract any of its own gas. It covers its gas demand via the transport networks of the
upstream network operators in Belgium and Germany, which in turn provide access to the production sites
in the North Sea, Russia, Qatar, the Netherlands, etc. The supplies are handled via the network operators
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 153

and/or via trading and supplying companies. Precise details on the commercial fulfilment of demand are
not available.
Luxembourg likewise has no domestic gas reservoirs. Therefore, the required working gas volume and thecorresponding injection and withdrawal capacities in other countries are used, in particular in the supply
and transit countries from which or via which the gas is also procured.

Import dependency
Since Luxembourg does not extract or store any gas, it is completely reliant on imports. The amountimported depends exclusively on the gas consumption. While in 2014 Luxembourg procured the gas innearly equal shares from Germany and Belgium, in 2017 the majority, at 81%, was imported from Belgium
as a result of the introduction of the joint ‘BeLux’ market21.

Table 16: Gas import dependency of Luxembourg
2017

2020

2030

2040

Gas consumption [ktoe]

770.2

773.5

784.5

795.6

Gas consumption [TWh]

8.96

9.00

9.12

9.25

Import dependency [%]

100%

100%

100%

100%

Source: Creos; Creos’s projection as of 2030 updated to 2040

Relevant risks
The high import dependency means that security of supply in Luxembourg is highly dependent on theneighbouring European countries. Supply bottlenecks in neighbouring countries and Europe as a whole
therefore also directly affect Luxembourg. In the neighbouring countries of Belgium, Germany, theNetherlands and France, there are, in principle, sufficient gas storage capacities to also cover the storage
requirement for supplying the customers in Luxembourg, at least in the event of short-term supply
bottlenecks. By contrast, the line capacities are of a sufficient size to maintain the supply of particularly
protected customers even in the event of a disruption to the largest network connection point. On accountof the currently low demand for natural gas, in particular due to the decommissioning of the GuD power
plant, the technical capacities – at least at the German border – are not being fully booked by Creos andare therefore available as guaranteed, uninterruptible capacities. According to Creos, however, it is possible

21; ILR, Chiffres Clés du Marché du gaz naturel, Année 2017 - Partie I

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that these capacities may need to be booked again in the event of changes to gas demand in order tosafeguard security of supply. The reduction in gas consumption by 2040 and beyond will also implicitly
improve the security of supply situation.

On the basis of Regulation (EU) 2017/1938 of the European Parliament and of the Council, Luxembourg
forms regional partnerships with its direct neighbours in order to safeguard security of supply and draws
up risk assessments and prevention and emergency plans on a rolling basis. In addition, the regulation
provides for coordination and solidarity measures beyond the mechanisms of the gas market on the basisof bilateral intergovernmental agreements in the event of supply crises. Although Luxembourg is alreadypursuing close intergovernmental coordination through the joint gas market with Belgium, additional
intergovernmental agreements could further increase security of supply by means of coordinatedemergency measures.

Since gas, like other fossil fuels in Luxembourg, is also used extensively for heating and cooling, Luxembourg
is pushing for an increase in energy efficiency as well as the increased use of renewable energy for heating
and cooling. Among other things, this should also reduce the import dependency of third countries.

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4.5. ‘Internal energy market’ dimension
4.5.1. Electricity interconnectivity
Existing and expected interconnections
Luxembourg currently has direct network connections to all three of its neighbouring countries:Creos’s transmission network is connected to the neighbouring German transmission network(Bauler and Trier switching stations) via two 220-kV double-circuit lines with a nominal totaltransmission capacity of 1,960 MW.



Sotel’s industrial network is connected to Elia’s Belgian transmission network via a 220-kV doublecircuit line, which has a nominal total transmission capacity of 720 MW.



In addition, Sotel operates a further interconnection towards RTE’s French extra-high voltage
network, with a transmission capacity of 450 MW.

At the end of 2017, the commissioning of the phase-shifting transformer in Schifflange and the possibility
for Creos to use a branch of the 220-kV line towards Aubange created the conditions for Luxembourg’s
integration into the European transmission network, which also enables a permanent connection of the
Creos network to the Belgian transmission network from a technical perspective. The control of the phaseshifting transformer in Schifflange by the network operators Elia and Creos makes it possible to coordinate
the flow of electricity between Belgium and Germany via the Luxembourg transmission network. The
stronger connection to the Belgian supply network is already contributing in particular to greater securityof supply. A transition to commercial operations under the European Market Coupling is not foreseen in
the short term, but will be re-examined as part of the further development of congestion management.

Creos is currently envisaging the following cross-border network expansion and enhancement measures:

Targeted replacement of existing lines with high-temperature conductors (HTC) using existing masts



Equipping/strengthening of the 220-kV line towards Germany, with a prospective maximum
increase of around 2,600 MW in nominal transmission capacity in existing corridors.

Interconnection level
Three different calculations are used to determine the interconnection level. This involves relating the (n0) interconnector capacity to the following:

peak load

total installed production capacity

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 156total installed production capacity from renewable energy

Regardless of the specific definition of the interconnection level, however, Luxembourg exceeds the targets
for 2020 and 2030 many times over. As mentioned above, this scenario does not take into account theadditional peak load of around 300 MW resulting from the establishment of a large consumer. If such a
consumer were to be connected to the network, Luxembourg’s level of interconnection would be slightly
lower than the values listed below.

Table 17: Luxembourg’s interconnection level
2016

2020

2030

2040

N-0 Interconnector- 3,130

3,130

6,546

6,546

1,220

1,320

1,720

565

1,225

1,600

465

1,125

1,500

255

495

380

555

535

410

675

580

435

capacity [MW]Peak load [MW]1,150

Production capacity 390
total [MW]Production capacity 290
renewableenergy[MW]Interconnection level 270
load [%]
Interconnection level 805
gen. [%]
Interconnection level 1,080
renewableenergy[%]Source: Own calculation in accordance with Creos/Sotel, ILR and reference scenario
4.5.2. Energy transmission infrastructure
Analysis – gas
Luxembourg currently has network interconnection points with all three of its neighbouring countries,
which are shown inBras (BE)Luxemburg
Pétange (BE)Bras (BE)Luxembourg
Pétange (BE)Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 157

Remich (DE)
Esch/Alzette (FR)Remich (DE)
Esch-sur-Alzette (FR)Figure 14. The transport network consists of approximately 290 km of high-pressure pipelines and a totalof 63 distribution stations (pressure control stations) to downstream networks. In recent years, there have
only been minor extensions of the transport network, since the expansion of the main lines is complete
and, according to Creos, only occasional densification measures are planned at distribution network level,
both now and in the future. Therefore, no considerable changes to the aggregated pipeline lengths are
expected in the coming years.

Bras (BE)Luxemburg

Pétange (BE)Remich (DE)

Esch/Alzette (FR)Bras (BE)Luxemburg
Pétange (BE)Remich (DE)
Esch/Alzette (FR)Bras (BE)Luxembourg
Pétange (BE)Remich (DE)
Esch-sur-Alzette (FR)Figure 14: Cartographic representation of Luxembourg’s supply situation
Source: Creos

Table 18 contains details of the existing developments of capacities at the network interconnection points
and those anticipated by Creos.

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Due to a lack of demand for capacity, the cross-border interconnection in Esch-sur-Alzette (FR) was closed
in 2013, but could be reactivated if needed. However, this network interconnection point only supplies asmall region and is not connected to Creos’s transmission system.
The uninterruptible entry capacity at the Remich interconnection point is currently limited to
100,000 Nm³/h.

The (n-1) transmission capacity that is available on a reliable and uninterruptible basis is therefore
170,000 Nm³/h at present. According to Creos, the current peak load of the protected group of customers
is around 140,000 Nm³/h. The infrastructure standard applying to Luxembourg in accordance with
Regulation (EU) 2017/1938 would therefore have been met. However, due to the low number ofinterconnection points, Luxembourg is not bound by this obligation, but should attempt to fulfil it, with it
still being necessary to safeguard the gas supply of the protected customers.

On account of the decommissioning of the Twinerg power plant and the associated dramatic decrease ingas demand, Creos does not see any need to expand the capacities.
Creos also assumes that no industry will move into the area that will act as a major demander of gas.

Table 18: Existing and future capacities of the network interconnection points.
Esch-sur-Alzette

20,00020,00020,00020,000

Remich (DE)

150,000

150,000

150,000

150,000

Bras (BE)110,000

110,000

110,000

110,000

Pétange (BE)70,00070,00070,00070,000Total

350,000

350,000

350,000

350,000(FR)

Source: Creos

4.5.3. Electricity and gas markets, energy prices
Section 4.4 presents the annual electricity and gas consumption.

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For the Luxembourg electricity market, 26 suppliers are currently authorised, of which 14 were active on
the market last year. On the gas market, the number of authorised distributors is 14 – 9 of which areactive22.
The current electricity and gas prices for end consumers are presented below.
The electricity prices indicated include network costs, but not tax or duties. The projection for 2020 to 2040
is based on the Primes Reference Scenario. Primes does not draw any conclusions on the characteristics ofthe end consumers, such as annual consumption, voltage level, etc.
The gas price in Luxembourg for an average-sized household was €13.77/GJ (or 13.3 (€2013/GJ) in 2015,
including taxes, duties and network costs. The energy price alone was around 55% of this amount.
Luxembourg currently has no precise projections on the future development of the gas price. Assuming thedevelopment in the gas wholesale price estimated by the European Commission and a constant exposure
to other price components, gas prices will increase by around 62% by 2040.

Table 19: Development of electricity and gas prices for end consumers.
2015

2020

2030

2040

Average electricity 116

126

137

148

16.6

19.5

21.5

price

for

end

consumers[€13/MWh]
Average gas price 13.3
for end consumers[€13/ GJ]
Source: Primes Reference Scenario, own calculations

22 ILR, Chiffres Clés du Marché de l’Électricité, Année 2017 - Partie I ILR, Chiffres Clés du Marché du gaz naturel, Année 2017 - Partie I

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4.6. ‘Research, innovation and competitiveness’ dimension
4.6.i. Current situation of the low-carbon technology sector
Research and development in Luxembourg has traditionally focused on the steel, aviation and automotive
sectors. In recent years, the Government has made significant efforts to develop further priorities in theareas of information and communication technologies, logistics, health technologies, materials, energy andenvironmental technologies (‘Clean Technology’). Environmental technologies are among the priorities of
the national economic diversification strategy. Luxembourg has made specific advancements in the areasof sustainable building, sustainable mobility and the circular economy. Initiatives in these areas are in linewith EU policy and the various directives on issues such as the energy efficiency of buildings, smart
transport systems or ecodesign requirements.

Thanks to its steel industry, Luxembourg has a long-standing tradition of materials-based research. Today
it is working, among other things, on the development of sustainable building materials. In addition,
Luxembourg now has three research teams in the field of solar photovoltaic material research to further
develop resource-optimised thin film PV.

In addition, Luxembourg also has innovation clusters that are dedicated to the issues mentioned above.
The Luxembourg CleanTech Cluster23 or even the Wood Cluster24 deserve special mention. Public researchstakeholders, including the University of Luxembourg, play a key role in this context. The same applies to
Luxinnovation, the national agency for promoting innovation and research, which offers personalised
consultancy and support for the stakeholders and the government in the areas of research and innovation(access to funding opportunities, finding partners, business creation, etc.), thereby playing an importantrole in this area in terms of the European networks.

23 https://www.luxinnovation.lu/cluster/luxembourg-cleantech-cluster/
24 https://www.luxinnovation.lu/cluster/luxembourg-wood-cluster/

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4.6.ii. Current level of public and, where available, private research and innovation spending on lowcarbon technologies, current number of patents, and current number of researchers
The key public research stakeholders in the field of low-carbon technologies are the Luxembourg Institute of
Science and Technology and the University of Luxembourg. Their total expenditure on research andinnovation in this field currently amounts to around €20 million. Both institutions currently employ about 160
researchers in this field and together they hold 22 patents or patent families that are assigned to the field.

4.6.iii. Breakdown of current price elements that make up the main three price components (energy,
network, taxes/levies)
Figure 15 and Figure 16 show the electricity and gas prices for household customers in Luxembourg, broken
down into energy, networks and taxes and levies.

STROMPREISKOMPONENTEN FÜR HAUSHALTSKUNDEN IN
LUXEMBURG [€ / KWH]
Energie

Netze

Steuern und Abgaben

Steuern und Abgaben
23%
Energie
32%

Netze
45%

STROMPREISKOMPONENTEN FÜR
HAUSHALTSKUNDEN IN LUXEMBURG [€ / KWH]

ELECTRICITY PRICE COMPONENTS FOR
HOUSEHOLD CUSTOMERS IN LUXEMBOURG[€/KWH]
Energie
EnergyNetze
Networks
Steuern und Abgaben
Taxes and duties
Figure 15: Electricity price components for household customers

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 162

Gaspreiskomponenten für Haushaltskunden in
Luxemburg in [€ / kWh]
Steuern und Abgaben
10%

Netze
33%

Energi e
57%

Energie

Netze

Steuern und Abgaben

Gaspreiskomponenten für Haushaltskunden in Gas price components for household
Luxemburg in [€ / kWh]customers in Luxembourg in [€/kWh]
Energie
EnergyNetze
Networks
Steuern und Abgaben
Taxes and duties
Figure 16: Gas price components for household customers

4.6.iv. Description of energy subsidies, including for fossil fuels
Luxembourg has well-established public funding instruments to promote energy efficiency and renewableenergy. These are explained in more detail in Section 3.1.1.iii. This also includes the feed-in tariffs for the
production of electricity from renewable sources (see Section 3.1.2.i).

As explained in Section 3.1.3.iv above, the Luxembourg Government has commissioned an analysis of thepossible impact of direct and indirect subsidies and tax advantages on sustainable development. The scopeof this study also includes tax breaks in the energy and transport sectors. The results of the ongoing study
will be used as a basis for any adjustments.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 163

5. Impact assessment of planned policies and measures
In order to provide an impact assessment of the planned policies and measures described in Section 3, theLuxembourg government commissioned a consortium of consultants from the Fraunhofer Institute for
System and Innovation Research (Fh-ISI), Consentec GmbH, the Institute for Resource Efficiency and Energy
Strategies (IREES) and TU Wien – Energy Economics Group. The consortium supplemented and adapted themodels already applied in previous projects concerning energy demand and energy supply to the given
requirements in order to establish an analytical basis that is as robust as possible.

The model-based impact assessment of the planned policies and measures resulted in the target scenariopresented in this section. In general, it should be noted that such modelling and the resulting projections
do indeed serve as guidance, but are always subject to uncertainty. This is especially true in the case ofsmall open economies, such as that of Luxembourg. As a result, individual decisions or decisions taken
abroad or at European level can bring about significant changes to the target scenario sought.

This reservation must also be applied to the results of the macroeconomic assessment of the present
energy and climate plan presented in Section 5.2.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 1645.1. Impacts of the planned policies and measures described in Section 3 on the energy system andgreenhouse gas emissions and removals
The measures planned in Luxembourg show a very high level of ambition in terms of energy efficiency andtherefore lead to a significant reduction in both final energy demand and CO2 emissions from the relevant
sectors or applications, as this is accompanied by a shift away from fossil fuels towards renewable energy
sources in addition to energy efficiency progress.
In the following, we look at the target scenario and discuss the resulting impacts on the energy system andgreenhouse gas emissions, broken down into changes on the energy demand side, the contribution ofrenewable energy and greenhouse gas emissions. The focus here is on the package of measures describedin Section 3. It should be stressed that it is always the full package of measures that is analysed here interms of the impacts caused, since an individual assessment would be methodologically inconsistent andwould not be considered appropriate. The impact is illustrated by a comparison with developments in thereference case.
Section 5.1.1 looks at the evolution of greenhouse gas emissions, Section 5.1.2 looks at the evolution ofenergy demand and Section 5.1.3 looks at the evolution of renewable energy.

5.1.1. GHG emissions and removals
Projections of greenhouse gas emissions and removals with the planned policies and measures for the years
2020 to 2040 are summarised in Table 20. Energy-related GHG emissions result from the interaction
between the development of energy demand and renewable energy.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 165

Table 20: Greenhouse gas emissions by ETS and non-ETS for 2020 to 2040, in the event of the target scenario(with additional measures), in kt CO2eq

ETS emissions excl. internat. air transport
Total non-ETS emissions
Energy-related non-ETS emissions
Energy sector
Industry
Transport
Private households
Trade, commerce and services
Others*Diffuse emissions
Non-energy-related non-ETS emissions
Industrial processes
Agriculture and forestry
Waste
LULUCF

2020
1,376
7,677
6,787
145
176
5,077
933
403
25
29
890
112
699
79
-390

2025
1,238
6,032
5,262
95
150
4,004
685
287
18
24
770
106
607
57
-393

2030
1,074
4,726
4,095
68
119
3,289
418
172
12
17
632
80
515
37
-401

2035
966
3,717
3,098
62
108
2,548
248
108
12
13
619
70
508
40
-399

2040
861
2,739
2,130
62
75
1,865
46
62
12
8
609
64
503
42
-397

* Other emissions relate to combustion in construction and agriculture

Source: Own illustrations, 2019

In 2030, a total of around 4.7 million tonnes of CO2eq will be emitted by the non-ETS sectors in the target
scenario. This corresponds to a reduction of around 55% when compared with the reference year 2005,
with emissions that are exclusively energy-related falling even more sharply by just over 57%. Non-energyrelated emissions from non-ETS sectors will decrease by about 22% by 2030 when compared with thereference year 2005. By 2040, total non-ETS emissions in the target scenario are expected to fall to
2.7 million tonnes of CO2eq.

Emissions from ETS installations based in Luxembourg in 2030 are estimated at around 1 million tonnes ofCO2eq, a decrease of almost 60% when compared with 2005.

In the land use, land use change and forestry (LULUCF) sector, removals are expected to stagnate at around
0.4 million tonnes of CO2eq.

In Table 21, the projections of the target scenario are compared with those of the reference scenario (seeTable 9 and Table 20). By 2030, the planned policies and measures therefore lead to a reduction inemissions in the non-ETS sectors of around 45% when compared with the reference scenario. The

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 166difference for the ETS sectors is -11%. It should be reiterated here that in the target scenario, the reductionin emissions by 2030 compared to the reference year 2005 is 55%.

Table 21: Comparison of the greenhouse gas emissions projections of the target scenario (with additional
measures) with the reference scenario (without additional measures) for the years 2020 to 2040

ETS emissions excl. internat. air transport
Total non-ETS emissions
Energy-related non-ETS emissions
Energy sector
Industry
Transport
Private households
Trade, commerce and services
Others*Diffuse emissions
Non-energy-related non-ETS emissions
Industrial processes
Agriculture and forestry
Waste
LULUCF

2020
-1%
-9%
-10%
-11%
-10%
-7%
-18%
-18%
0%
-7%
0%
0%
0%
0%
0%

2025
-5%
-28%
-30%
-42%
-27%
-28%
-39%
-33%
-27%
-23%
-9%
0%
-10%
-20%
0%

2030
-11%
-45%
-47%
-58%
-42%
-44%
-62%
-54%
-54%
-43%
-23%
0%
-23%
-46%
0%

2035
-15%
-58%
-61%
-62%
-52%
-59%
-77%
-69%
-54%
-56%
-23%
0%
-24%
-41%
0%

2040
-19%
-69%
-74%
-62%
-68%
-71%
-96%
-81%
-55%
-71%
-24%
0%
-25%
-37%
0%

* Other emissions relate to combustion in construction and agriculture

Source: Own illustrations, 2019

5.1.2. Energy demand
The planned energy efficiency measures reduce Luxembourg’s total final energy demand between 2020
and 2040 by just under 40% (18.2 TWh) to just under 27.4 TWh (see Table 22). In 2030, the final energy
demand of the various sectors in Luxembourg totalled 35,568 TWh (-22% when compared with 2020). The
trend in the impact of energy efficiency measures will continue until 2040, meaning that between 2030
and 2040 the total final energy demand for Luxembourg will be reduced by almost 8.2 TWh (-23% whencompared with 2030).
Within the target scenario, the reduction in final energy demand achieved in 2040 is accounted for byhouseholds with a decrease in final energy demand of almost 58% when compared with 2020 (3.7 TWh),industry with a decrease of 33% (2.4 TWh), the ‘trade, commerce and services’ sector with a decrease ofalmost 37% (around 1.5 TWh) and the transport sector with a decrease of around 48% or 10.5 TWh (seeFigure 17). In the target scenario, the final energy demand of the transport sector falls to just over 11.2 TWhby 2040; the projected decline in tank tourism also makes a significant contribution to this. The final energy

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 167

demand (kerosene) of air transport is maintained at a constant level throughout the period, even in thecase of the target scenario, in line with the assumed development in the case of the reference scenario.

Private Haushalte
Industrie
Gewerbe, Handel, Dienstleistungen
Verkehr – gesamt
Flugverkehr
GWh
Source: Own calculations 2019
Figure 17:

Private households
Industry
Trade, commerce and services
Transport – total
Air transport
GWh

Development of final energy demand in the period 2020 to 2040 in the case of the target
scenario, broken down by sector

The share of the specific sectors in the electricity demand will also vary in the target scenario on accountof continuing efforts to improve efficiency and various trends and technological developments in electricity
applications and production technologies in trade, households, industry or the transport sector. In contrast
to the reference scenario, the share of the transport sector is increasing at a significantly faster pace. In
2040, the transport sector will account for 29% of total electricity demand. Accordingly, the shares of the
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 168remaining sectors (trade, commerce and services; private households; industry) will decrease to a greateror lesser extent (see Figure 18).
The largest savings in absolute terms (-10.5 TWh when compared with 2020) are achieved by the transport
sector throughout the period, followed by household savings, savings in the trade, commerce and services
sector and reductions in energy demand in industry (see Figure 19).
GWh

120%

0%
100%

2%
10%

14%

22%
80%

33%

29%

33%
32%
31%

30%

60%

40%

29%

51%

50%
46%

43%
38%

34%

20%
15%

14%

13%

2015

2020

2025

12%

10%

9%

0%

Private Haushalte

GWh
Private Haushalte
Industrie
GHD
Verkehr2030

Industrie

2035

GHD

2040

Verkehr

GWhPrivate households
Industry
Trade, commerce and services
Transport

Source:own calculations 2019

Figure 18:

Sectoral breakdown of the electricity demand for the period from 2015 to 2040 according
to the target scenario

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 169GWh25.00020.00015.98815.00012.7299.649

10.000
5.477

5.000

-

2.263
530
302
849

751
728
2.028

2020

2025

986
1.225

1.167
1.830

1.346
2.408

3.078

4.011

4.943

2030

2035

2040

Verkehr - gesamt
Gewerbe, Handel, Dienstleistungen (ohne Stromanteil)
Industrie
Private Haushalte

Verkehr – gesamt
Gewerbe, Handel, Dienstleistungen (ohneStromanteil)
Industrie
Private Haushalte
GWh
Source:Own calculations 2019
Figure 19:

Transport – total
Trade, commerce and services (excluding
electricity share)
Industry
Private households
GWh

Reduction in final energy demand (fuels, electricity) within the target scenario broken down
by sector for the period 2020 to 2040

Table 22 summarises the impact of the planned strategies and efficiency measures in the field of final
energy demand, while allowing for a percentage assessment of the impact of the planned policies andmeasures in the target scenario (intensification of existing measures, further development of renovation
strategies in the building sector, adaptation of fuel taxation, reinforcement of regulatory requirements or
minimum standards, commitment, etc.) compared to the reference development, which only takes accountof existing policies and measures. The impact of all measures significantly reduces the final energy demandof the target scenario when compared with the reference scenario and, in the case of the target scenario,
amounts to a total of 35,568 GWh (see Table 22).

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 170

The last part of Table 22 presents the percentage deviations in final energy demand in the target scenario
compared to the corresponding development in the reference scenario. This will allow for a clear
presentation of the savings made possible by the planned policies and measures.
Finally, it should be noted that the future development of energy demand for both the reference and target
scenarios is based on comprehensive modelling and a subsequent discussion and reflection process.
National statistics on the energy consumption of households, the ‘business, trade, services’ sector, industry
and the transport sector formed the common basis for both scenarios, which, by their very nature, show
differences in future development. Accordingly, the target scenario shows a much stronger decline indemand, which essentially reflects the impact of the additional measures presented in Section 3 (whencompared with the reference case). With regard to recent developments in the years up to 2020, thedifferences indicated reflect the uncertainty inherent in the modelling process. Statistics on different typesof motor vehicles or different types of fuels (petrol, diesel, natural gas) were available for the transport
sector until 2016. Based on the emerging trend of demand for each type of fuel in the period 2012 to 2016,
the transport sector has modelled future demand for fuel up to 2040. Contrary to the weakening demand
trend derived from this period, the most recent figures for 2017 (slight increase) and, above all, the market
data for 2018 and 2019, which have not yet been statistically verified, indicate that demand for individualtypes of fuel in the transport sector is now rising strongly. If these trends prove to be correct, this should
be seen as a sign that further tightening of the planned additional measures would be necessary to achieve
the 2030 energy and climate targets.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 171

Table 22:Comparison of Luxembourg’s final energy demand between the reference scenario and thetarget scenario

Reference scenario
Unit

2020

2025

2030

2035

2040

Total final energy demand

49,48349,41250,506

51,27952,065

Private households

7,287

7,561

7,689

7,662

7,658

Industry

7,684

7,601

7,314

7,359

7,355

4,576

4,375

4,191

4,050

3,903

23,99923,94025,377

26,273

27,213

Transport – domestic transport

6,745

6,814

7,304

7,870

8,185

Transport – transit traffic

17,254

17,126

18,073

18,40419,029

2020

2025

2030

2035

2040

Total final energy demand

45,53840,42935,56831,54327,381

Private households

6,438

5,533

4,611

3,651

2,715

Industry

7,382

6,873

6,088

5,529

4,948

4,046

3,624

3,205

2,883

2,557

21,736

18,463

15,72813,544

11,225

Transport – domestic transport

6,115

4,604

3,832

3,305

2,753

Transport – transit traffic

15,621

13,85911,896

10,2398,472

Air transport

5,936

5,936

5,936

5,936

5,936

Sector

GWh

Trade, commerce and services
Transport – total

Target scenario Paris Article 2.1a
SectorUnit

Trade, commerce and services
Transport – total

GWh

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 172

Change from target scenario to reference scenario
Sector

Unit

2020

2025

2030

2035

Total final energy demand1

-8%

-18%

-30%

-38%

-47%

Private households

-12%

-27%

-40%

-52%

-65%

Industry

-4%

-10%

-17%

-25%

-33%

-12%

-17%

-24%

-29%

-34%

-9%

-23%

-38%

-48%

-59%

Transport – domestic transport

-9%

-32%

-48%

-58%

-66%

Transport – transit traffic

-9%

-19%

-34%

-44%

-55%

Trade, commerce and services
Transport – total

Source:%2040

Own illustration 2019

Table 23 summarises, in the same way as Table 22 in the case of final energy demand, the effects of theplanned strategies and efficiency measures in the area of Luxembourg’s total heat demand and electricity
demand, while at the same time allowing for a percentage assessment of the effects of the planned policies
and measures in the target scenario over the period 2020 to 2040.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 173

Table 23:

Comparison of the development of Luxembourg’s heat and electricity demand in the caseof the reference and target scenarios

Reference scenario
SectorUnit

Heat demand(excluding
electricity)

GWh

Electricity demand

2020

2025

2030

2035

2040

13,463

13,472

13,234

13,251

13,205

6,141

6,260

6,314

6,367

6,441

2020

2025

2030

2035

2040

11,868

10,223

8,371

6,961

5,544

6,112

6,457

6,416

6,553

6,568

Target scenario Paris Article 2.1a
SectorUnit

Heat demand(excluding
electricity)

GWh

Electricity demand

Change from target scenario to reference scenario
SectorUnit

Heat demand(excluding
electricity)
Electricity demand

%

2020

2025

2030

2035

2040

-11.8%-24.1%-36.7%-47.5%-58.0%

-0.5%

3.2%

1.6%

2.9%

2.0%

Source: Own illustration 2019

5.1.3. Renewable energy
Renewable energy is making and will continue to make a substantial contribution to the decarbonisationof the energy sector in Luxembourg. The target scenario presented in Section 2 shows a pathway towards
achieving a renewable energy share of 25% of gross final energy demand in 2030. This implies a significant
increase when comparing the quantities achieved today (6.4% in 2017) and the 2020 target (11%). In
addition to the massive expansion of renewable energy, this requires a clear increase in energy efficiency
as well as an accompanying reduction in demand, as outlined in the previous section. This section focuseson the impacts on the energy system of the additional measures aimed at further boosting thedevelopment of renewable energy and increasing its contribution to meeting demand. More specifically,
we look at the energy supply side and look at the contribution of renewable energy sources, which would
also result according to the target scenario when compared with the reference case.
Table 24 provides a comprehensive overview of this. For example, this table shows renewable energy
production for the years up to 2040, both for the reference and target scenarios, at sectoral level and as a
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 174total balance. The table also allows direct comparison, i.e. consideration of the induced change if the target
scenario is sought instead of the reference development. It also sets out the relative share of renewableenergy in terms of (sectoral) demand, in addition to absolute energy.
At first glance, it may seem surprising that there is only a slight difference in the total national balance interms of the amount of energy produced: if, for example, one compares the total national renewableenergy production in the focus year 2030 in absolute figures, an increase of only 1.6% (target vs reference
scenario) can be observed here. At sectoral level, however, there are significant differences: while
renewable energy production shows a significant increase in the electricity sector (+ 30% in 2030) and in
the heating sector an increase of + 3.6%, biofuels in the transport sector show a significant decrease(- 25.5%) despite an increase in the admixture rate (10% rather than 8%). This is due to the significant
decrease in demand for fuels in the transport sector according to the target scenario (when compared withthe reference case). However, if account is taken of the contributions of innovative solutions, such as emobility, a significant increase in the contribution of renewable energy can also be observed in thetransport sector as a whole (+ 6.9%).25
A comparison of the reported relative shares of renewable energy sources for the focus year 2030, i.e. theshares of renewable energy in relation to the respective energy demand (see Table 24), reveals the large
differences between the target and reference scenarios. Instead of the marginal increase of 1.6% in thenational total balance of absolute energy, when comparing the shares of renewable energy in the grossfinal energy demand26, an increase of 51.5% can be observed. The most significant changes are in theheating sector, with an increase of 63.8%. The share of renewable energy in the transport sector, according
to the total balance, also rises significantly by 59.3%, while developments in the electricity sector appear
somewhat more subdued (+ 26.4%). In general, it illustrates the significant changes on the demand side, as
discussed in the previous section. In summary, it can be said that a significant increase in the share of

25 It is important to note that multiple counting is used here with regard to the contributions of innovative solutions, as per the revised calculation

logic for determining the share of renewable energy in the transport sector.
26 Gross final energy demand is the relevant indicator for determining the renewable energy target. In simplified terms, it is derived from the final

energy demand values shown in Table 22, which, in addition to the final demand, which amounts to 35,568 GWh in 2030 across all sectors
according to the target scenario, also takes account of transmission losses and the energy sector’s own consumption in the case of electricity andgrid-connected heat – these amount to 291 GWh in the target scenario.
Furthermore, the EU’s regulatory framework imposes a cap on the extent to which the energy demand for air transport can be taken into accountto ensure that there is no distortion or penalisation in the case of smaller Member States. According to the target scenario, the energy demand
for air transport in 2030 is 5,936 GWh; however, due to the cap, only 2,216 GWh is taken into account for the calculation of the gross final energy
demand. In the case of Luxembourg, this therefore entails a noticeable reduction in the gross final energy demand used as a reference value forthe total share of renewable energy – without the air transport cap, which would be set at 35,861 GWh. When the cap is taken into account,
Table 18 shows 32,141 GWh in 2030 for the target scenario.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 175

renewable energy requires clear intervention on the energy efficiency side in addition to direct measures
to increase the expansion of renewable energy.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 176

Table 24:

Comparison of the expansion of renewable energy (energy production and shares of(sectoral) demand) between the reference scenario and the target scenario

Reference scenario
Renewable energy production, absolute energy
Unit

Renewable energy share measured by (sectoral) demand

Renewable energy –electricity
Renewable energy – heat

2020
752

2025
1,249

2030
1,731

2035
2,071

2040
2,332

1,626

2,070

2,462

2,699

Renewable energy – biofuels

1,855

1,892

1,993

1,450

Renewable energy –transport, total*
Renewable energy – total,
national
Renewable energy –cooperation needs
Renewable energy – totalincl.
cooperation

2,784

3,438

4,463

4,355

5,390

4,232

5,211

6,187

6,221

1,000

2,917

4,833

5,232

8,128

46,11946,717

Unit

2020
11.9%

2025
19.4%

2030
26.5%

2035
31.3%

2040
34.7%

2,896

12.1%

15.4%

18.6%

20.4%

21.9%

1,450

7.7%

8.0%

8.0%

5.6%

5.5%

11.1%

13.5%

16.1%

15.1%

17.6%

6,679

9.2%

11.2%

12.9%

12.8%

13.5%

4,833

4,833

2.2%

6.2%

10.1%

9.9%

9.7%

11,02011,054

11,512

11.3%

17.4%

23.0%

22.7%

23.2%

47,913

48,77349,650%GWh

Comparison: Gross final
energy demand**Target scenario Paris Article 2.1a
Renewable energy production, absolute energy
Unit

Renewable energy share measured by (sectoral) demand

Renewable energy –electricity
Renewable energy – heat

2020
748

2025
1,563

2030
2,251

2035
2,680

2040
3,150

1,626

2,030

2,551

2,495

Renewable energy – biofuels

1,632

1,563

1,485

1,738

Renewable energy –transport, total*
Renewable energy – total,
national
Renewable energy –cooperation needs
Renewable energy – totalincl. cooperation

2,581

3,755

4,769

4,006

5,156

1,000

GWh

Comparison: Gross final
energy demand**

Unit

2020
11.9%

2025
23.5%

2030
33.6%

2035
38.8%

2040
45.4%

2,609

13.7%

19.9%

30.5%

35.8%

47.1%

1,749

7.5%

8.8%

10.0%

14.4%

18.7%

7,391

9,587

11.3%

18.4%

25.6%

40.4%

54.3%

6,287

6,914

7,508

9.4%

13.9%

19.6%

24.8%

31.9%

1,374

1,748

1,748

1,748

2.3%

3.7%

5.4%

6.3%

7.4%

5,006

6,530

8,035

8,662

9,257

11.8%

17.6%

25.0%

31.0%

39.3%

42,587

37,20332,141

27,92623,526%

Change from target scenario to reference scenario
Renewable energy production, absolute energy
Unit

Renewable energy –electricity
Renewable energy – heat
Renewable energy – biofuels
Renewable energy –transport, total*
Renewable energy – total,
national
Renewable energy –cooperation needs
Renewable energy – totalincl. cooperation%
changebased on thereferencescenario

Renewable energy share measured by (sectoral) demand

2020
-0.5%

2025
25.2%

2030
30.0%

2035
29.4%

2040
35.0%

0.0%
-12.0%-1.9%-17.4%

3.6%-25.5%

-7.6%
19.8%

-9.9%
20.6%

-7.3%

9.2%

6.9%

69.7%

77.9%

-5.3%

-1.1%

1.6%

11.1%

12.4%

0.0%

-52.9%-63.8%-63.8%-63.8%-4.3%-19.7%-27.1%-21.6%-19.6%

Unit%,
changebased onthereferencescenario

2020
-0.1%

2025
21.1%

2030
26.4%

2035
24.0%

2040
31.0%

13.4%
-2.5%

29.2%
10.1%

63.8%
75.6% 114.6%
25.6% 155.2% 242.3%

1.9%

36.2%

59.3%

168.1%

208.9%

2.5%

24.2%

51.5%

94.1%

137.2%

8.3%-40.8%-46.1%-36.8%-23.7%

3.6%

0.9%

8.7%

36.9%

69.7%

*incl. multiplication factors according to the calculation logic regarding the share of renewable energy in the transport sector**Taking account of the cap on energy demand for air transport: the EU’s regulatory framework imposes a cap on the extent to which the energy demand for air transport canbe taken into account to ensure that there is no distortion or penalisation in the case of smaller Member States. In both scenarios, the energy demand for air transport in 2030 is5,936 GWh; however, due to the cap, only 2,216 GWh is taken into account for the calculation of the gross final energy demand. In the case of Luxembourg, this therefore
entails a noticeable reduction in the gross final energy demand used as a reference value for the total share of renewable energy – without the air transport cap

Source:Own illustration 2019
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 177

5.2. Impacts of the planned policies and measures described in Section 3 on the economy, employment
and social conditions, environment and health5.2.1. Estimation of macroeconomic consequences
The macroeconomic assessment of the present energy and climate plan shows slightly positive effects ofthe planned package of measures on the key economic indicators up to 2030. The effects are based on thetechnological and behavioural changes identified in the bottom-up demand and supply models for thetarget scenario (see Section 5.1.). Only the changes resulting from the planned policies and measures inthe target scenario that differed from the reference scenario were included in the assessment. The stimulus
in the form of additional, less avoided, energy efficiency and renewable energy investments, changes inenergy expenditure, changes in primary energy imports, support programmes and regulatory measures
were assessed using the system dynamic ASTRA model27. It examined both the direct effects of the stimulus(e.g. direct employment effects of investments in construction measures), the indirect effects (e.g. theeffects via the other industries linked to the direct activity via intermediate consumption) and induced
effects (the second-round effects of improved economic growth) on the national economy.

According to the model assessments, the planned policies and measures lead to an additional increase in
GDP of around €905 million2016 or 1.1% by 2030 when compared with the reference scenario. The positive
impact on the economy as a whole is mainly due to the kick-starting of investment in energy efficiency andrenewable energy, the reduction of household and business energy expenditure, and the avoidance ofimports of fossil fuels. There is a positive macroeconomic effect despite the fact that the financing of themeasures is taken into account, which is reflected in an increase in employment of 0.3% or 1,470 employees
by 2030 when compared with the reference scenario. It should also be borne in mind that the reduction inhousehold and business energy expenditure will of course continue to have a significant positive impact on
the economy as a whole after 2030.

The results of the macroeconomic impact assessment indicate that the introduction of a minimum CO 2
price from 2021 could also partly compensate for additional government expenditure through the support
programmes and subsidies under the target scenario. Therefore, only marginal new borrowings would haveto be accepted until 2030. It should be noted that the revenues generated by the CO2 minimum price areused in a balanced way (‘d’une manière équilibrée’) for specific climate measures and targeted social relief

27

Krail Michael, Sievers Luisa (2019), NECP Luxembourg – macroeconomic impact assessment. The report contains a description of themethodological approach and the ASTRA model, as well as a detailed presentation of the stimulus and results.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 178through fiscal (e.g. tax credit) and social measures in the sense of social justice (‘équité sociale’) for lowincome households.
In addition to the positive macroeconomic effects, substantial annual external climate costs saved by
Luxembourg will amount to as much as €700 million2016 in 2030 or cumulatively more than €6 billion2016 forthe period up to 2030 when compared with the reference value. These external costs are not integrated
into the macroeconomic analysis of impacts, but serve as guidance for the negative financial effects ofclimate change that have been avoided.

Development of key macroeconomic indicators
Figure 20 shows the changes in key macroeconomic indicators as a result of the planned policies and measureswhen compared with the reference scenario. Table 25 shows, for the years 2025 and 2030, the absolute

1,800

1,800

1,600

1,600

1,400

1,400

1,200

1,200

1,000

1,000

800

800

600

600

400

400

200

200

0

0

-200

[Delta in Beschäftigtem ggü. REF]

[Delta in Mio Euro 2016 ggü. REF]

development of key macroeconomic indicators, both in the reference and target scenarios, and the resulting delta.

-200
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

BIP
KonsumNeuverschuldung des Staates

Beschäftigung (Einwohner)
Handelsbilanz

Investitionen
Beschäftigung (Gesamt)[Delta in Mio Euro 2016 ggü. REF]
[Delta in €million 2016 vs REF]
[Delta in Beschäftigtem ggü. REF]
[Delta in employees vs REF]
BIP
GDP
KonsumConsumption
Beschäftigung (Einwohner)
Employment (inhabitant)Investitionen
Investments
Handelsbilanz
Trade balance
Beschäftigung (Gesamt)
Employment (all)Neuverschuldung des Staates
New borrowings by the State
Figure 20: Absolute change in key macroeconomic indicators when compared with the reference in€million2016 (source: Fraunhofer ISI)
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 179

Table 25: Change of key macroeconomic indicators when compared with the reference (source: Fraunhofer ISI)
Scenario

Reference

Objective

Indicator

2025

2030

Unit

Gross domestic product

71,82882,788 €million 2016

Employment (inhabitant)

244,966

252,945 Employees

Employment (all)453,186

467,949 Employees

Investments

13,51015,666 €million 2016

Household consumption

22,471

26,621 €million 2016

Disposable income of households

27,87333,021 €million 2016

Trade balance

23,35326,099 €million 2016

State consumption

11,772

13,568 €million 2016

Government debt (total)

15,167

17,328 €million 2016

Gross domestic product72,513

83,693 €million 2016

Employment (inhabitant)

245,723

253,741 Employees

Employment (all)454,588469,421 Employees

Investments

13,85815,878 €million 2016

Household consumption

22,824

26,835 €million 2016

Disposable income of households

28,31133,285 €million 2016

Trade balance

23,70826,719 €million 2016

State consumption

11,833

13,926 €million 2016

Government debt

15,166

17,408 €million 2016

Gross domestic product684

905 €million 2016

Employment (inhabitant)

758

795 Employees

1,401

1,471 Employees

Employment (all)Delta
Investments

348

212 €million 2016

Household consumption

353

213 €million 2016

Disposable income of households

438

264 €million 2016

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 180

Trade balance355

620 €million 2016

State consumption

61358 €million 2016

Government debt

-1

80 €million 2016

Annual new borrowings-17

60 €million 2016

Annual external costs saved-412-719 €million 2016

When compared with the reference scenario, the 2030 ASTRA estimates that Luxembourg’s GDP is around€905 million higher2016. In terms of annual real GDP growth rates, this means an increase in annual GDP
growth of about 0.08 percentage points by 2030. Over the period up to 2030, the NECP already allows for
an increase in GDP in 2025 of approximately €684 million2016.
GDP growth is driven, on the one hand, by increasing final demand but also by higher potential output inthe target scenario when compared with the reference scenario. In terms of final demand, household
consumption responds with growth of around €213 million2016 in 2030 when compared with the reference
level. This increase results from an increase in household income and direct investment stimulus forhouseholds. The disposable income of households increases due to the resulting GDP growth and the
additional subsidies and support granted in the target scenario (e.g. the premium for the purchase of zeroemission vehicles).
In 2025, the difference in household final consumption when compared with the reference level is slightly
higher than in 2030. This slight decline in consumption growth is due to the model’s assumption of counterfinancing of additional investment by households. This means that, after the investment, part of the income
previously available for the consumption of other products and services must be raised for the repayments
and interest payments of the loans. As a result of this effect and the investments continually stimulated
and initiated by the planned measures until 2030, the annual payments for counter-financing will increase
until 2030, thereby reducing the growth in consumption.
Due to the dependence of endogenous investments on consumption, which is anchored in the model logic,
a similar effect can be observed for investments. By 2030, the level of investment is €212 million2016 higher
than in the reference scenario. The increase in investment is therefore a combination of the direct stimulus
provided by the investment stimulated in the target scenario and the slight increase in household
consumption. The increase in investment of around 0.8% in 2030 is largely influenced by the increase inhousehold consumption.
The results of the macroeconomic impact assessment indicate that carbon pricing could partiallycompensate for the increased government expenditure due to the support measures in the target scenario
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 181

and the decrease in tax revenues. The annual new government debt in the target scenario therefore only
increases by around €60 million2016 in 2030 when compared with the reference scenario. Meanwhile,revenues from carbon pricing and additional government revenues from the improved economic situationeven exceed the increase in government expenditure. This results in a marginally higher cumulative public
debt until 2030 of around €80 million2016.
A major driver of GDP growth when compared with the reference is the decrease in imports of fossil fuels
due to the decrease in fossil fuel consumption. As a result, the trade balance up to 2030 increases by around€620 million2016 when compared with the reference value. This already takes account of the fact that theimport of technologies, for example in the field of renewable energy, results in an increase in imports inthe target scenario when compared with the reference scenario. On the other hand, the slightly higher
economic growth also results in a slightly higher export activity.

Employment Effects
The effects on gross value creation are the result of a combination of the changes brought about by thestimulus and the interaction effects caused by the interaction between investment, consumption andintermediate consumption. Since the development of labour productivity for each sector of the economy
does not differ between the target scenario and the reference scenario, the effects on employment result
directly from the changes in gross value creation. Gross value creation is calculated as the total output of asector less intermediate consumption purchased. This means, for example, that value creation can also
increase if energy or material efficiency measures mean that fewer inputs are needed for production. The
effects on employment are positive in line with the value creation effects. In the target scenario, the higher
gross value creation when compared with the reference results in an additional labour demand of about
1,400 employees in 2025 or 1,470 employees (total, including cross-border commuters) in 2030. This
represents a relative increase of 0.3% in 2030 when compared with the reference.

Analysis of external climate costs saved
External costs saved also play a role in the economic analysis; these are taken into account separately here.
A comprehensive cost-benefit analysis of energy and climate protection measures includes information on
the level of external costs saved, as these represent a benefit over inaction.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 182

UBA (2018)28 provides a set of detailed cost rates to quantify external environmental costs. The costs saved
are determined here solely in relation to avoided greenhouse gas emissions29. Based on a real discount rateof 1%, the Federal Environment Agency recommends cost rates for carbon dioxide emissions ranging from€1802016/t CO2 for 2016 to €2052016/t CO2 for the medium term (2030). If the discount rate is set lower, thecorresponding cost rates are significantly higher (from €640 to €6702016/t CO2 without discounting).
As data were only available for avoided CO2 emissions, the quantification of external costs saved is limited
to these. The resulting value should therefore be regarded as a lower limit, as it can be assumed that further
external environmental costs saved will be added. The distribution of emissions savings is also reflectedaccordingly in the distribution of external costs saved. The total cumulative CO2 savings by 2030 amount tojust under 32 Mt, which can be converted into external environmental costs saved (cumulative by 2030) of
just over €6 billion2016.

5.2.2. Environmental/health impact
A Strategic Environmental Assessment (SEA) has been carried out for the integrated national energy andclimate plan. The objective of the SEA is to avoid planning that could lead to significant environmental
problems. Its purpose is to identify, describe and assess the environmental impacts of the programme of
measures as a whole in advance of and in addition to the project-related environmental impact
assessments for the individual measures. The SEA considers the impacts (including possible interactions)on the following protected assets:


People, population and healthPlants, animals and biodiversity



Soil



Water



Climate and air

LandscapeCultural and material goods

The results of the SEA are compiled in an environmental report.

28 UBA (2018): Methodological convention 3.0 for the determination of environmental costs. Cost rates. Dessau-Roßlau.
29

Furthermore, saved costs may also arise in relation to other avoided external effects such as the avoidance of air pollutants, noise pollution or
waste, which cannot be taken into account here due to the lack of availability of information on these external effects.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 183

The impact of the planned policies and measures on emissions of air pollutants will be quantified in thecontext of the completion of the future national air pollution control programme under Directive (EU)2016/2284 on the reduction of national emissions of certain atmospheric pollutants. This will ensure thegreatest possible coherence between the integrated national energy and climate plan and the air pollution
control programme. Where necessary, the air pollution control programme will lay down specificimplementing provisions for the measures set out in this plan (e.g. for the use of biomass for energy).

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 184

5.3. Overview of investment needs
5.3.1. Investments in energy efficiency
The additional energy efficiency investments relevant for the implementation of the measures in 2020
amount to almost €530 million and increase by around 6% by 2040 to approx. €560 million (see Figure 21).
The total amount results from additional energy efficiency investments in the buildings sector (building
envelope, heating systems) and industry.

Euro
700.000.000

600.000.000

84.036.628

82.230.430

80.612.711

78.833.056

85.654.510

141.968.237

8.987.023

123.576.282

8.635.738

105.184.326

8.284.453

84.563.227

400.000.000

7.933.169

67.949.867

500.000.000

5.429.301

360.982.667

351.171.639

339.708.703

329.400.142

200.000.000

370.825.484

300.000.000

2020

2025

2030

2035

2040

100.000.000

0Zusätzliche Energieeffizienz-Investitionen im Bereich der Industrie

Zusätzliche Energieeffizienz- Investitionen für Förderung der Heizsysteme
Zusätzliche Energieeffizienz-Investitionen im Bereich der Gebäudehülle
Zusätzliche Energieeffizienz-Investitionen durch Ordnungsrecht im GebäudebereichEuro
Zusätzliche Energieeffizienz-Investitionen im
Bereich der Industrie
Zusätzliche Energieeffizienz- Investitionen fürFörderung der Heizsysteme
Zusätzliche Energieeffizienz-Investitionen im
Bereich der Gebäudehülle
Zusätzliche Energieeffizienz-Investitionen durch
Ordnungsrecht im Gebäudebereich
Source: Own calculations 2019

Euro
Additional energy efficiency investments in theindustrial sector
Additional energy efficiency investments for thepromotion of heating systems
Additional energy efficiency investments in thebuilding envelope
Additional energy efficiency investments via
building sector regulations

Figure 21: Investments to increase energy efficiency in the period 2020 to 2040, broken down by sector

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 185

The transport sector will also see further investment through the construction of charging infrastructure
for e-mobility (see Figure 22). A distinction can be made between investments for:

private charging stations (wallboxes) with average investments per charging station of €1,000public and semi-public charging points with an average investment per charging point of €10,000public fast charging points with an average investment of €150,000.

The expansion of charging points increases significantly between 2020 and 2040 and peaks in 2030. Duringthat year, just under 34,000 new recharging points will be installed. By 2040, the number of new charging
stations added each year will drop again to around 21,200 charging points or charging stations, as arelatively well-developed infrastructure network will by now exist. By way of comparison, the number of
new charging stations per year in 2020 will be around 5,200.
In 2020, the total public investment in the area of newly added charging infrastructure facilities for emobility will constitute around 6% of the total investment for the charging infrastructure, which amounts
to just under €6 million, so around €350,000. By 2030, this total will increase to just over €13.5 million
before slowly decreasing to around €7.5 million in 2040. By comparison, total investment will increase byjust over €61 million by 2030 before falling to just under €39 million by 2040.

Euro70.000.000
60.000.000
50.000.000
40.000.000
30.000.000
20.000.000
10.000.000
0
2020

2025

2030

2035

2040

Öffentliche SchnellladepunkteÖffentliche und halb-öffentliche Ladepunkte

Private Ladestationen / Wallbox

EuroÖffentliche SchnellladepunkteÖffentliche und halb-öffentliche Ladepunkte
Private Ladestationen / Wallbox
Source: Own calculations 2019
Figure 22:

Euro
Public high-power recharging points
Public and semi-public charging points
Private charging stations/wallbox

Investments in e-mobility charging infrastructure in the period 2020 to 2040 in euro
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 186

5.3.2. Investment and support requirements for renewable energy
This analysis focuses on the need for investment in renewable energy technologies and the need forsupport (where necessary) for the development and operation of renewable energy installations. Bothparameters are taken into account in the economic studies carried out since, on the one hand, in the caseof investments, a relevant stimulus is created in the complex economic fabric from a macroeconomic
perspective and, on the other hand, in view of the support requirements, there are often direct costs
associated with the performance of the measures implemented and those planned for the future. Table 26
provides a comprehensive overview of this. The investment and support requirements for energy
production based on renewable energy are given for the period up to 2040, broken down by energy sector(electricity, heat, transport (limited to biofuels)). This is presented for both the reference and target
scenarios. The table also allows direct comparison, i.e. consideration of the induced change if the target
scenario is sought instead of the reference development.
While the total annual investment requirement in new renewable energy plants over the coming decade(2021 to 2030) averages around €153 million according to the reference scenario, in the target scenario it
clearly exceeds the €200 million mark and comes to around €214 million – implying an increase of around40%.30 In the focus year 2030, the differences are smaller (+ 21.9%), while in 2025 they reach a peak of
93.4%. The electricity sector is dominant in terms of investment: on average, 64% of the total investments
are accounted for by the latter over the decade according to the target scenario, while the remainder (36%)
is accounted for by renewable energy installations in the heating sector. Biofuel refineries are located inneighbouring countries, so there is no investment in Luxembourg. The same applies to renewable energy
cooperation, as this involves renewable energy production abroad.
The annual support requirement for renewable energy, calculated on a net31 basis, is around €269 million
on average over the coming decade according to the target scenario. In the reference case, it would behigher (€297 million), since achieving the target in 2030, although lower (23% share of renewable energy
rather than 25%), would result in significant costs for renewable energy cooperation. In the target scenario,
expenditure for the electricity sector dominates – approx. 46% of the total renewable energy support

30 Cumulatively, in the reference case, the total investment requirement in the period 2021 to 2030 is €1,527 million, while cumulative investmentof €2,142 million is expected under the target scenario.
31 The need for funding characterises the necessary direct financial support from the company associated with the expansion or operation ofrenewable energy plants. Market revenues, e.g. from the marketing of electrical energy on the electricity market, are not included in this figure
on a net basis.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 187

requirements for the coming decade (2021 to 2030) are accounted for by electricity from renewablesources, while in the reference scenario, expenditure for renewable energy cooperation would make up
the lion’s share (31% of the total renewable energy support requirements for the decade).
Table 26:

Investment and support requirements for renewable energy – a comparison between thereference and target scenarios

Reference scenario
Renewable energy investment needs

Renewable energy support needs

Cumulative
Unit

Renewable energy –electricity
Renewable energy –heat
Renewable energy –biofuels
Renewable energy –total, national
Renewable energy –cooperation needs
Renewable energy –total incl. cooperation€million

Cumulative

2020

2025

2030

21-30

2035

2040

95.5

73.0

73.0

860.4

53.4

57.3

59.2

57.3

81.2

666.5

69.2

99.4

0.0

0.0

154.8

130.3

0.0

0.0

154.8

130.3

0.0

€million%,changebased onthereferencescenario

102.8

75.6

82.8

859.2

55.6

51.3

85.8

153.3

925.1

153.3

153.3

154.3 1,526.9

122.6

156.6

236.7

276.2

336.8 2,965.1

272.3

265.7

Renewable energy support needs

59.2

60.0

111.7

38.8

57.6

761.6

0.0

Unit

€million

Cumulative

2020

2025

2030

21-30

2035

2040

73.9

146.8

92.0 1,239.8

32.0

22.7

28.5

28.7

51.5

352.8

15.4

15.2

79.6

62.4

61.7

673.4

66.6

61.9

114.1

99.7

0.0

0.0

0.0

188.1 2,142.5

102.7

149.7

182.0

237.9

205.2 2,266.0

0.0

0.0

0.0

31.7

41.2

53.0

423.8

0.5

0.0

188.1 2,142.5

102.7

149.7

213.7

279.1

258.3 2,689.8

114.6

99.7

0.0

Renewable energy support needs

2025

2030

21-30

2035

2040

-6.2% 163.0%

4.5%

60.5%

19.9%

60.8%

0.0%

37.5%

14.3% -44.0% -42.0%

-3.8%

44.6

31.7

92.1

-3.8%

32.4

0.0

64.0

4.8%

263.2

0.0

Cumulative

Renewable energy –electricity
Renewable energy –heat
Renewable energy –biofuels
Renewable energy –total, national
Renewable energy –cooperation needs
Renewable energy –total incl. cooperation

33.8

0.0

0.0

76.3 1,380.9

2020

21.6

112.4

Change from target scenario to reference scenario
Renewable energy investment needs
Unit

28.5

119.0

191.9

252.0

16.5

183.5 2,040.0

89.6

148.9

31.0

190.4

2040

0.0

917.7

205.0

2035

0.0

2040

66.9

156.6

21-30

252.0

2035

93.2

122.6

2030

148.9

21-30

73.7

154.3 1,526.9

2025

0.0

2030

0.0

2020

0.0

2025

0.0

Cumulative

Renewable energy –electricity
Renewable energy –heat
Renewable energy –biofuels
Renewable energy –total, national
Renewable energy –cooperation needs
Renewable energy –total incl. cooperation€million

2020

0.0

Target scenario Paris Article 2.1a
Renewable energy investment needs
Unit

Unit

93.4% 21.9%

93.4% 21.9%

40.3% -16.2%

40.3% -16.2%

-4.4%

-4.4%

Unit
%,
changebased onthereferencescenario

Cumulative

2020

2025

2030

21-30

2035

2040

0.3%

57.5%

37.6%

35.1%

3.4%

37.4%

0.0%

33.0%

52.6%

34.1% -52.4% -65.9%-22.6% -17.4% -25.5%-21.6%

19.8%-11.2% 25.0%

11.1%-4.1% -11.3%

11.9%

20.6%

0.0% -52.0% -65.4%-54.2% -99.7%-9.7%-9.3% -57.9% -62.5%

1.1% -23.3%

100.0%

Source: own calculations 2019
5.3.3. Impact on network costs in the distribution network
The electricity network is of particular importance in the context of the energy transition and the associatedshift from fossil to renewable energy sources. Changes in the height and spatial distribution of loads andproduction installations connected to the distribution networks are the main drivers of the development
Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 188needs of distribution networks. In both the reference and target scenarios, there is large-scale expansionof renewable energy installations. At the same time, the load is largely increased by an increase in heatpumps and e-mobility, which can overcompensate for the efficiency-related reduction in load and cantherefore lead to some network expansion needs.
In total, renewable energy installations with a capacity of just over 300 MW were installed during the initialyear, 2017; PV installations with a capacity of around 185 MW and wind turbines with a capacity of around
75 MW make up the largest share of these. By 2040, the target scenario predicts an increase in renewableenergy production to a total of around 2,500 MW, with the contribution from PV installations expected to
grow to just over 1,800 MW and wind installations to around 550 MW. This means that the total installedcapacity of renewable energy installations is almost eight times higher than today (when compared with a
total of just 1,500 MW in the reference scenario due to lower PV plant capacities).
In addition to the installed production capacity, load increases are expected from electric vehicles,
connection of electric heat pumps, and also from the construction of new apartments. The biggest driver
for the peak load caused by consumers connected to the distribution network is the increase in electricvehicles, which could lead to an almost threefold increase in today’s peak load by 2040 in the target
scenario and to a doubling of peak load in the baseline or reference scenario. This development is reflectedin corresponding annuity distribution network costs, which increase by around 30% in the reference
scenario and by around 70% in the target scenario by 2030. At the same time, the total cost burden is
spread over a much larger number of end consumers and there is also a slightly higher demand forelectricity, which in turn reduces the specific costs accordingly.
In addition, the development of peak load depends crucially on flanking measures in network operationand market design, which could not be taken into account in their entirety in the quantification due to theircomplexity. For example, the planned further development of flexibility options (see Section 3.4.3.ii), suchas smart charging management for electric vehicles or market-based incentives for systemic demand,should significantly reduce peak loads. In principle, network expansion needs arising from an increase indemand can be dampened by a simultaneous increase in distributed production capacity, but only if loadand production are in close proximity and correlated over time or integrated via decentralised storage
solutions. It should also be noted that the network expansion requirement for PV installations is generally
higher than for wind turbines, as the latter are usually connected directly to higher network levels. This also
provides a plausibility check for the higher network expansion requirement in the target scenario, in which
considerably more PV installations are expected.

Luxembourg’s integrated national energy and climate plan for the period 2021-2030 | 189

5.4. Impacts of the planned policies and measures described in Section 3 on other Member States andregional cooperation
In a small open country like Luxembourg, climate and energy policy objectives also have a cross-borderdimension. Ultimately, only the implementation of the measures described in Section 3 will shed light on
their exact impact on neighbouring countries and other Member States. However, it should be noted that
this impact will remain manageable due to Luxembourg’s relatively small size.

Transport infrastructure projects designed to cope with commuter traffic will certainly have a cross-border
impact. The agreement between Luxembourg and France, which provides for such investments, amounting
to €120 million from Luxembourg and €110 million from France (Lorraine), will contribute to this. Currently,
as is well known, fuel exports to the border region have resulted in an increase in the GHG balance in
Luxembourg. The planned CO2 pricing, or the increase in excise duties on diesel and petrol, is expected tolead to a gradual reduction in the differential in fuel prices between Luxembourg and its neighbouring
regions.

As regards cooperation mechanisms, Luxembourg has stipulated in existing contracts with Lithuania andEstonia (see Section 3.1.2.ii.) that the financial compensation will be invested in specific new projects in thefield of renewable energy and energy efficiency. Luxembourg will continue to focus on the need forcooperation mechanisms to achieve its objectives. The planned future cooperation on specific projects,
whether in the framework of the Benelux area or in the existing platforms ‘Pentalateral Energy Forum’ and‘North Seas Energy Cooperation’ (see Section 1.4), will certainly have a positive economic impact in the
project areas.

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