EUROPEAN COMMISSION Brussels, 23.11.2017 SWD(2017) 402 final COMMISSION STAFF WORKING DOCUMENT Energy Union Factsheet Luxembourg



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Third Report on the State of the Energy Union

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Luxembourg

Energy Union factsheet 1.Macro-economic implications of energy activities Energy and transport are key sectors for the overall functioning of the economy as they provide an important input and service to the other sectors of the economy. Together the activity in these two sectors accounted for 5.5 % of the total value added of Luxembourg in 2015. Their share in total employment was 6.5 % in 2015, of which 6.1 % in the transport sector and 0.4 % in the energy sector. The decarbonisation of the energy and transport sectors will require significant investments and economic activity beyond the remit of these sectors themselves. The energy transition implies a structural shift in economic activity. Energy-related investment and jobs will in part migrate from traditional fossil fuel based activities towards construction, equipment manufacturing and other services related to the deployment of low carbon and clean energy technologies. At the moment, the efforts related to the low-carbon and clean energy transition in sectors beyond energy can only be partially quantified and are therefore not included in this analysis. (source: Eurostat) In the case of renewable energy sector, both the direct as well as the indirect effects on employment are being estimated. According to EurObserv'ER, in 2015, the share of renewable energy related employment in total employment of the economy in Luxembourg was at about 0.84 %, above the EU average of 0.54 %. The turnover of the renewable energy industry in the same year was estimated at around EUR 145 million, the biggest part being attributed to biofuels (EUR 80 million), followed by photovoltaic (EUR 25 million), biomass (EUR 15 million) and wind (EUR 10 million) industries. (source: EC based on EurObserv'Er and Eurostat) An indication of the level of efforts and challenges encountered by Luxembourg in the energy sector is given by the Gross fixed capital formation (GFCF) . Investments in the electricity and gas sectors, which are taken as reference sectors, have been on a decreasing trend since 2012. They represented around 0.6 % of the country's GDP in 2015, the lowest level since 2007. (source: Eurostat) In terms of trade, Luxembourg is a net importer of fossil fuels. No data are available for electricity, where Luxembourg is also a net importer. The trade deficit in fossil fuels products has fallen from about 4.4% of GDP in 2006 to 2.4% in 2015. The decrease is almost fully accounted for by a decrease in the trade deficit of petroleum products. (source: Eurostat. No available data for electricity)





2.Energy security, solidarity and trust 2.1.Energy Mix Luxembourg's energy mix differs from the average energy mix in the EU in one important respect: more than two-thirds (71.3 %) of the country's energy mix are made up by oil (petroleum products). In comparison, the EU's oil share is close to one third (34.4 %). The predominance of oil can be explained by different factors: first, there is an important number of inbound commuters. Moreover, the taxation of transport fuels is relatively advantageous, which incentivises motorists from neighbouring countries to purchase fuel in Luxembourg. In addition, Luxembourg's energy mix is notable for the absence of nuclear energy and for a lower than average share of renewable energy sources (5.5 %). The EU's average share of renewable energy sources is 13.0 % (unless specified otherwise, all figures are for 2015). (source: Eurostat) 2.2.Import dependency and security of supply Luxembourg is one of the Member States with the highest energy import dependency. In 2015, the EU covered on average 54.1 % of its gross inland consumption with imported energy carriers, but for Luxembourg, the figure was nearly double (95.9 %), with only a slight improvement as compared to twelve years earlier (-1.5 percentage points). Luxembourg's import dependency can be attributed to the absence of domestic natural resources (a situation no different for many other Member States). Also, the number of adequate sites for wind and solar energy installations may be limited, given the country's relatively small size. In 2015, Luxembourg's biggest non-EU suppliers for gas imports were Norway (63.9 %) and Russia (25.3 %). For hard coal, they were South Africa (84.9 %) and Russia (8.2 %). Luxembourg improved the diversification of hard coal imports; and presumably also for gas. However, in 2005, gas imports were reported as "not specified", so the extent of supply diversification is difficult to verify. There are no imports of crude oil, but only of refined petroleum products. (source: Eurostat) The EU Regulation on the security of gas supply sets the so-called "N-1 rule for gas": if the single largest gas infrastructure fails in one Member State, the capacity of the remaining infrastructure needs to be able to satisfy total gas demand during a day of exceptionally high gas demand. This condition is met if the value of the N-1 indicator is equal to or above 100 %. Luxembourg does not meet the N-1 requirement, but in fact, the country has a derogation from complying with the rule. 3.Internal market 3.1.Interconnections and wholesale market functioning 3.1.1.Electricity (source: EC services based on ENTSOE) (source: EC services based on Eurostat)

Luxembourg's electricity grid is interconnected with Belgium, France and Germany. In fact, it is the EU Member State with the highest electricity interconnection rate. The interconnection target set at EU level is 10 %, which means that, by 2020, the electrical interconnection capacity with neighbouring Member States should equal at least 10 % of the Member State's installed production capacity. In 2017, Luxembourg's interconnection level was 109.2 %. Luxembourg is currently involved in one electricity interconnection project with Belgium, between Aubange (in Belgium) and Bascharage / Schifflange (in Luxembourg). This project has an expected commissioning date of 2020. The concentration of the power generation market is above EU average; only slightly lower than ten years ago. 3.1.2.Gas In contrast, the concentration of wholesale gas supply is below EU average and was reduced significantly in comparison with 2011 (the drop in the Luxembourg's gas market concentration index in 2011-2015 was -37.5 %, whereas for the EU, it was -1.5 %). In 2015, Luxembourg was one of only five Member States that had a concentration index below ACER's gas target model threshold indicating a well-functioning market. (source: ACER) 3.2.Retail electricity and gas markets 3.2.1.Electricity In 2015, according to the national regulatory authority, the leading supplier totalled almost 75 % of market shares on the retail market for household customers, as well as 58 % on the market for business customers. In 2016, households' electricity prices in Luxembourg were below the EU average. Between 2013 and 2016, average band retail electricity prices for households increased by 3.2 %. The energy component of electricity prices decreased between 2013 and 2015, but to a lesser extent than the wholesale prices. Retail prices in Luxembourg are non-regulated. Annual switching rates by household customers in electricity retail markets are very low. The share of taxes and levies in household electricity prices is below the EU average, but it increased substantially between 2013 and 2016. The national regulatory authority reported an increase in levies for the financing of renewable energy sources and cogeneration (mécanisme de compensation) and an increase in VAT. According to an analysis of electricity supplies in European capitals, the network charges in Luxembourg City constitute 39 % share of the total offer price for electricity (one of the highest in Europe). Thanks to a lower share of the energy component in the retail price, increased network charges were partially off-set. Following a positive cost-benefit analysis, Luxembourg opted for a large-scale roll-out of smart electricity metering by the end of 2019. The expected diffusion rate is set at 95 %. The roll-out is to be financed through network tariffs.

(source: ACER) (source: Eurostat) (source: Eurostat) 3.2.2.Gas The average band household gas prices in Luxembourg are below the EU average, and they have decreased by 26.1 % between 2016 and 2013. As in electricity markets, the annual switching rates in gas retail markets are very low. While the share of taxes and levies in household gas prices increased between 2013 and 2016, the share remains considerably below EU average. The energy component of the retail gas price decreased between 2013 and 2015 to the greater extent than wholesale gas price. Gas retail prices are non-regulated. As mentioned above, Luxembourg has opted for a large-scale roll-out of smart meters; this also covers smart gas meters. The expected diffusion rate is set at 90 % by the end of 2020. As for electricity, the roll-out will be financed through network tariffs. (source: ACER) (source: Eurostat) (source: Eurostat) 3.2.3.Market performance indicators According to the periodical survey of the Commission, consumers in Luxembourg are slightly more satisfied than the EU average with the services received on energy retail markets. With regard to retail services in both electricity and gas, consumer satisfaction has increased between 2010 and 2015. For both electricity and gas, Luxembourg's consumer satisfaction appears among the highest across the EU. (source: DG JUST survey) 3.3.Energy affordability Energy affordability is understood as consumers' ability to pay for their energy needs without this negatively impacting their comfort and livelihood. Affordability can be measured by looking at how much people in the lowest income bracket have to pay for their energy needs (or, in other words, by calculating the share of energy expenditure in total household expenditure for the quintile of population with the lowest income). In Luxembourg, in 2014, the most modest households spent on average 5.6 % of their total expenses on their energy needs. For the EU-28, that share stood at 8.6 %. Another indicator for energy affordability is to calculate the share of the population that is unable to keep their homes adequately warm. In Luxembourg, 3.3 % of the people that are already below the at-risk-of-poverty threshold are also unable to keep their homes adequately heated. The EU's share is much higher (22.7 %). While some degree of energy poverty seems to persist, the situation in Luxembourg is less problematic than in other Member States. (source: ad-hoc data collection of DG ENER based on HBS with the support of Eurostat and national statistics)

4.Energy efficiency and moderation of demand Between 2005 and 2015, Luxembourg reduced its primary energy consumption by 13.1 % to 4.15 Mtoe. Over the same period, final energy consumption fell by 10.9 % to 3.99 Mtoe. At the same time, GDP increased by a total of 31.7 % from 2005 to 2015, showing that economic growth has decoupled from energy consumption. Luxembourg has set itself national indicative targets of reaching a primary energy consumption of 4.5 and a final energy consumption of 4.2 Mtoe in 2020. In other words, Luxembourg is on track to achieve its 2020 targets. However, in the years up to 2020, Luxembourg is also expected to step up the national energy efficiency actions and programs which are necessary to meet the cumulative saving requirements stemming from Article 7 of the Energy Efficiency Directive. (source: Eurostat) Between 2005 and 2015, the primary energy intensity of the economy (expressed by the ratio of energy consumption over GDP) has decreased annually by -4.0 %. The magnitude of the change is bigger than the EU average of -2.0 % annual change. In 2015, Luxembourg's primary energy intensity stood at 88.4 tons of energy (toe) per million euros of GDP. This figure is also below the EU average of 113.3 toe per million euros of GDP. This could reflect the strong focus of Luxembourg's economy on services, notably in the financial sector. The profile of Luxembourg's final energy consumption differs from the EU-28 average, mostly because of the larger share of the transport sector: the share of transport (60.7 %) is almost double the EU average (33.1 %), which is largely due to a large number of commuters and transit traffic. (source: Eurostat) A variety of energy efficiency policy measures are in place in order to reach the efficiency target. The following are identified as the most important measures: −High energy efficiency standards in all newly constructed buildings: this measure will be implemented in approx. 8000 new constructed residential units per year. It corresponds to more than 10 % of the total energy savings planned for 2020. −"Climate pact" initiative (Klimapakt): municipalities are obliged to introduce energy management system in order to receive financial and technical support from the state. 106 out of 106 Luxembourg's municipalities participate. −Energy efficiency obligation scheme: all electricity and gas suppliers of the households, service and industrial sectors are obliged to realise energy savings. −Increase of fuel and CO2 taxes for motor vehicles. For the industrial sector, the most important measure, implemented since 1996, is the voluntary agreement between the Government and the Fedil-Business federation Luxembourg with the aim of improving energy efficiency in the industrial sector. Mandatory energy audits and energy management systems are implemented. Between 2005 and 2015, the final energy intensity in industry has decreased on average by 1.0 % each year. It remains higher than the EU average. Over the same period, the final energy intensity in the services sector has fallen by an average of 2.0 % per annum and is well below the EU average. The final energy consumption per square meter in the residential sector, albeit still slightly higher than the EU average, was significantly reduced between 2005 and 2015 (by an average of 3.9 % per year). (source: Eurostat) (source: Eurostat) (source: Odyssee database)

Between 2005 and 2015, the final energy consumption in transport in Luxembourg recorded an average annual reduction of 1.3 %, while GDP increased annually by 2.9 %. This occurred in a context of steady increases in passengers transport activity (+19.9 %) and freight transport activity (+ 18.1 %) over a decade (2005–2015). It is worth mentioning that Luxembourg is a transit country for road transport; this may influence transport activity. The share of collective passengers land transport into total passengers' transport increased slightly between 2005 and 2015; it is now very close to EU average. The efforts in this respect are best exemplified by the works on a new tramway in the city of Luxembourg. (source: Eurostat) (source: Eurostat and DG MOVE pocketbook) (source: Eurostat) With the launch of the flagship Sustainable Mobility Strategy of 2012 (Mobilité durable, "MoDu"), the Government of Luxembourg set the objective to reduce the share of individual motorised traffic (from 72.5 % in 2009 to 56 % in 2020) and to increase the share of collective modes of transport on one hand (from 14.5 % in 2009 to 19 % in 2020) and of active modes (walking and cycling) on the other (from 13 % in 2009 to 25 % in 2020). Luxembourg is facing a large challenge from the road traffic that regularly congests the main traffic arteries in and around the capital city. Every day, the country with its 576,000 inhabitants welcomes approximately 176,000 commuters from Germany (43,000 commuters), Belgium (43,000 commuters), and France (90,000 commuters). Jobs continue to be predominantly situated in the capital (163,000 jobs) which only has 45,000 working residents. Economic growth and the concentration of jobs in the capital have resulted in increased traffic congestion and in longer commutes for residents and foreign commuters alike. As a result, traffic jams often extend across the borders of the Grand Duchy into neighbouring countries. In order to remedy this situation, Luxembourg is investing heavily in a more multimodal and sustainable transport network. Throughout the country, about twenty multimodal hubs are currently being built to enable commuters to easily switch between different modes of transportation. Nine of these multimodal hubs are located along the 16 kilometre track of the future tramline that will cross the entire urban agglomeration of the capital and thereby serve as the backbone of the public transportation network. In addition, new railway stations are being built on the outskirts of the city centre and regional bus lines are being reorganised to directly connect to the tram. In order to facilitate the transfer from cars to public transport, the capacity of park & ride parking lots is being doubled throughout the country (construction of an additional 13,100 spaces). A part of these will be equipped with charging stations for electric vehicles to promote low and zero-emission cars. Concerning active mobility, new cycle lanes, parking racks and bike sharing stations will further enhance multimodality. The majority of these projects are being implemented at the moment; in particular the tram with its nine multimodal hubs. The first section of the track will be completed by the end of 2017. Concerning private car ownership, Luxembourg carried out a tax reform which entered into force in 2017 and applies, inter alia, to energy products in transportation.



5.Decarbonisation of the economy 5.1.GHG emissions Luxembourg's greenhouse gas (GHG) emissions declined by 13 % between 1990 and 2016, which is significantly less than the reduction achieved at the level of the 28 EU Member States (-22.6 %). Under the Effort Sharing Decision (ESD), Luxembourg's target is to reduce by 20% its emissions by 2020 (compared to 2005). Between 2005 and 2016, Luxembourg's GHG emissions declined by 16 %, which is a bigger reduction than its 12 % interim reduction target for 2016. Luxembourg will comply with its emission reduction obligations as it will bank a surplus of AEAs over the period 2013-2020. However, according to the latest national projections, Luxembourg's existing domestic measures will not be sufficient to meet its ESD targets in the year 2020. Overall, GHG emission reductions are projected to be limited to 17.4% against the country's binding target of 20% (i.e. a gap of 2.6 pps). In contrast, the 28 Member States will, taken together, is expected to over-achieve their overall GHG emission reduction target in 2020 by 6.8 pps. (source: EC and EEA)

Luxembourg continues to decouple its economic growth from its GHG emissions. During the 1990–2016 period, Luxembourg's GHG emissions intensity of the economy, defined as the ratio between emissions and GDP, decreased by 66.1 %. This is a faster pace of reduction than the rate observed at the EU level over the same period (-49.5 %). In 2015, more than half (55.4 %) of Luxembourg's GHG emissions came from the transport sector, of which 70 % are linked to fuel exports. This is a much higher proportion than the EU's average (21 %). The main reasons for this phenomenon are Luxembourg's geographical situation as a transit country and, more importantly, the taxation of transport fuels at tax rates well below those of neighbouring Member States. (source: EC and EEA) Preliminary accounts under the Kyoto Protocol for Luxembourg show overall removals of 0.3 Mt CO2eq. as an annual average in the period 2013-2015. For comparison, the annual average of the EU-28 accounted for removals of 119.0 Mt CO2eq. It should be noted that in this preliminary simulated accounting exercise, removals from Forest Management did by far not exceed the accounting cap. Removals by Afforestation are notably higher than emissions by Deforestation. The removals by Forest Management were similarly high than Afforestation, but their relative importance decreased notably in 2015. Overall, there is a decreasing trend in removals, due to previously noted declining removals by Forest Management in 2015. Emissions by Deforestation and removals by Afforestation show no change over the course of the three-year period. Note: Forest Management credits are capped and presented as yearly averages when the total Forest Management credits of the considered period exceed the simulated cap over the same period. (source: EC and EEA) CO2 emissions in transport and alternative fuelled vehicles In Luxembourg, the CO2 emissions from road transport were, in 2015, 123 % higher than the 1990 levels, but they had decreased from 2005 onwards by about 21 %. Between 2005 and 2016, the average CO2 emissions of new cars in Luxembourg also fell by about a quarter; a similar reduction occurred at EU level. In 2016, it reached an average level of CO2 emissions of 126.1 g CO2 per kilometre, which is slightly above the EU average (118.1 g CO2 emissions per kilometre).

Since 1 January 2017, zero emission vehicles (battery electric and fuel cell electric vehicles) as well as bikes and pedelec25 bikes benefit from a tax allowance of 5,000 EUR and 300 EUR, respectively. The use of less polluting vehicles is also encouraged with a re-evaluation system that lowers the costs of less polluting cars for employers, incentivising employers to opt for those vehicles as a benefit in kind. Although the exact impact of this measure on greenhouse gas emissions is not known, it is meant to curb greenhouse gas emissions from road transportation. (source: European Environment Agency) The share of alternative fuel cars in total sales fell sharply between 2013 and 2015 and now is at a very low level (0.19 %). Over the three years between 2014 and 2016, the number of charging points in Luxembourg has been almost stable, reaching the amount of 212 points in 2016. (European Environment Agency) (European Alternative Fuels Observatory) National Policy Frameworks under Directive 2014/94/EU on alternative fuels infrastructure have to establish targets, objective and measures for the development of the market of alternative fuels in the transport sector and the deployment of the relevant infrastructure. Luxembourg has submitted its National Policy Framework as requested under article 3 of the Directive 2014/94/EU. A detailed assessment of Luxembourg's National Policy Framework in terms of its compliance with the requirements of Directive 2014/94/EU, its contribution to achievement of long-term energy and climate objectives of the Union and coherence of its targets and objectives in terms of cross-border continuity has been published as part of the Communication on Alternative Fuels Action Plans (COM(2017)652) and the related staff working document SWD(2017)365. 5.2.Adaptation to climate change Luxembourg's Council of Ministers adopted a National Adaptation Strategy on Climate Change in 2011, prioritising four sectors: biodiversity, water, agriculture and forestry. Currently a new, more comprehensive adaptation strategy is being elaborated. It will list concrete measures mostly in those areas that are the most impacted by higher and erratic rainfalls as well as by river flow regimes: drinking water, agriculture, viticulture, biodiversity, energy, buildings and infrastructure, navigation, health, tourism and other domains. No National Adaptation Plan has been adopted, nor has a Monitoring and Reporting Framework been developed. 5.3.Taxes on energy and transport and fossil fuel subsidies The overall tax burden on energy and transport in Luxembourg amounts to 2.0 % of GDP, nearly 0.4 percentage points (p.p.) lower than the EU average. It is particularly the tax burden on transport vehicles and on heat and electricity that is low. Revenues from fuel taxation in Luxembourg are still much higher than the EU-average, despite a decrease by 1.0 p.p. since 2005. The high level is primarily driven by "border shopping" of fuels as excise duties on petrol and diesel are lower in Luxembourg than in the neighbouring countries. In terms of vehicle taxation Luxembourg applies a circulation tax based on CO2 emissions, but there is no CO2 component in the tax framework for energy products. A key policy to increase efficiency in the transport sector is increasing fuel and CO2-taxes for motor vehicles. The increase of the fuel taxes is expected to result in energy savings in Luxembourg of 86 GWh in 2020. The CO2 tax increase for motor vehicles is in force since 2007 and aims to save 66 GWh of final energy by 2020. (source: Eurostat)

Since 2007, the Luxembourg has set preferential VAT rates and excise duties on mineral fuels and for certain sectors and users, leading to a sharp increase in fossil fuel subsidies. However, also in 2007, the excise rate on gasoline increased while those for diesel were adjusted in two stages: a first hike in 2007 and subsequently in 2008. (source: OECD Inventory of Support Measures for Fossil Fuels 2015) 5.4.Renewable energy On renewable energy in general, Luxembourg had so far been on track with renewable energy shares set above the indicative trajectory defined in the Renewable Energy Directive. In 2015, wind power and solar PV capacity grew by 6 MW each, and there was some growth in heat pumps, solar thermal and biofuels. However, in 2015, for the first time, Luxembourg’s share fell below the indicative trajectory (5.4 %), albeit by a small margin (the actual renewable share being 5 %). The share of renewables in electricity production continued to grow (from 5.9 % in 2014 to 6.2 % in 2015), but the share of renewables in heating and cooling declined (from 7.2 % in 2014 to 6.9 % in 2015). Luxembourg has different measures in place to promote the use of renewable energy. In 2016, the support scheme for renewable electricity production was reformed, with a view to integrate renewable electricity better in the market. The scheme consists of premium payments for operators of wind, solar, biogas, hydropower and biomass installations, to spur further investment in renewable electricity generation. The total budget of the measure will be approximately EUR 150 million, allocated between 2016 and 2020. Luxembourg is also one of the few Member States to already have a so-called "one-stop-shop", online application facilities, and a maximum time limit for procedures for renewable developers in order to facilitate the installation of renewable energy plants. Also, in April 2016, the government announced three new projects in public-private partnership (wind, biomass, and cogeneration partly converted to wood-pellet use), totalling EUR 131 million of investment and covering nearly a quarter of the country's renewable energy needs. In 2016, a set of measures was implemented in order to increase the share of renewable energies. Modifications in respect to the feed-in and the market premium scheme entered into force in order to promote renewable electricity production as well as the injection of biogas in the natural gas grid. Moreover, a reform of the subsidy scheme for private households continues to provide financial incentives for various renewable energy technologies (such as PV, thermal solar, heat pumps). But the indicative trajectory will become steeper (the 2020 target is more than double the indicative trajectory value for 2015). The government is considering statistical transfers of renewable energy from other Member States that are expected to achieve their target, but no final decision has been made yet. (source: Eurostat-SHARES) (source: Eurostat-SHARES) It is estimated that in 2015, Luxembourg avoided 4.2 % of fossil fuel in gross inland consumption and about 3.6 % of GHG emissions at national level by its renewable energy systems. This is considerably lower than the EU average, which for fossil fuel and GHG emission avoidance stood at 10.1 % and 9.1 % respectively. (source: EEA) 5.5.Contribution of the Energy Union to better air quality

Air quality in Luxembourg continues to give cause for concern. For the year 2013, the EEA estimated that about 280 premature deaths were attributable to fine particulate matter (PM2.5) concentrations and 80 to nitrogen dioxide (NO2) concentrations. For NO2, Luxembourg reported exceedances of the binding EU air quality standard. For 2015, Luxembourg reported exceedances of the limit value for NO2 in 1 out of the 3 air quality zones in Luxembourg as shown in the figure below.

(source: EEA) The health-related external costs from air pollution in Luxembourg have been estimated to be more than EUR 859 million/year (income adjusted, 2010), which includes the intrinsic value of living a healthy life without premature death as well as the direct costs to the economy such as healthcare costs and lost working days due to sickness caused by air pollution. The Energy Union can substantially contribute to addressing these air quality problems through measures reducing emissions of both GHG and air pollutants such as PM and nitrogen oxides (NOx) from major contributing sectors such as (road) transport, energy production, industry and residential heating (e.g. stoves and boilers) as shown in the figure below. (Source: EEA. This table reflects only sources of primary PM2,5 emissions.) 6.Research, innovation and competitiveness 6.1.Research and innovation policy The Luxembourg National Research Fund (FNR) is the funding agency for public research in Luxembourg. Luxinnovation (the national agency for innovation and research) has a supporting role by providing advice on R&I to all actors in the sector, including the government. Luxinnovation also drives the Luxembourg Cluster Initiative, which brings together several clusters and innovation networks. One of the networks established under this initiative is the EcoInnovation Cluster, which supports green technologies and renewable energy. Energy R&I has traditionally been a low priority in Luxembourg, with the exception of participation in specific programmes such as the European fusion research programme. Among renewable energy sources, wind has received the largest share of support, with some funding also going to solar thermal and bioenergy. Luxembourg is not an active contributor to the ongoing work of the Strategic Energy Technology (SET) Plan. It does not participate in any of the fourteen temporary working groups, which have been set up to implement the integrated SET Plan. Regarding the Horizon 2020 programme (for which Luxinnovation is the National Contact Point), Luxembourg has received so far 0.1 % of the EU contribution devoted to the 'secure, clean and efficient energy' part of the programme. As of September 2017, 17 participations from national organisations have been awarded EUR 2.6 million in Horizon 2020 energy projects. This includes a grant of almost EUR 0.5 million to the University of Luxembourg for its participation in project Sharc25 (thin-film solar cells). 6.2.Investments and patents in the Energy Union R&I priorities In 2012, public (national) investments in the Energy Union R&I priorities reached EUR 71 million, almost three times the amount reported in 2011. The largest share of these investments (71%) was attracted by the Sustainable Transport R&I priority of the Energy Union, followed by the Smart System (20%). For the same year, 2012, public investment per GDP was over five times the EU average. Private investment in the Energy Union R&I priorities in 2013 was estimated at EUR 46 million (0.3% of the private R&I investment in Energy Union R&I priorities in the EU). The focus was on Sustainable Transport, which received 42% of these investments, followed by the Efficient Systems priority with a share of 36%.

In 2013, the most recent year for which complete patent statistics are available, 13 companies and research organisations based in Luxembourg filed 18 patents in low-carbon energy technologies (0.3% of the EU total). The focus was on Sustainable Transport (42%), followed by Efficient Systems (36%) and Renewables (14%). In 2013, private R&I investments in Energy Union R&I priorities were lower than the EU average when normalised by GDP. On the contrary, the number of patents in Energy Union R&I priorities normalised by population was much higher than the EU average. In the period 2007–2013, both private R&I investments and the number of patents in Energy Union R&I priorities have increased on average by 16 % and 27 % per year, displaying higher rates of increase than same indicators at EU level (6% and 15% respectively). Note: Public investment data are only available for the years 2011 and 2012. (Data sources: Public investment as available in the International Energy Agency RD&D Statistics database for codes relevant to Energy Union RIC priorities. Patent data based on the European Patent Office PATSTAT database. Private investment data estimated by JRC SETIS. Detailed methodology available from the JRC.) 6.3.Competitiveness In 2014, the real unit energy costs (RUEC) in Luxembourg (19.4 % of value added) were above the EU average (15.3 %), significantly higher than those in the US (7.5 %), but below those in Japan (23.8 %), China (44.6 %) and Russia (37.7 %). In 2011, Luxembourg’s RUEC had been much higher (59.0 %), topping all the countries mentioned. The average (IEA) electricity prices paid by industrial customers in Luxembourg are below the EU and OECD averages. These prices compare favourably to Switzerland or Japan and are on par with prices in the United States, but higher than average prices in Norway. There is a significant gap between average electricity prices and prices for median consumption in Luxembourg. The latter are still below EU level, but above the price for median consumption in Norway or Turkey. Conversely, average (IEA) gas prices for industrial consumers are above OECD averages. They are lower than prices in Korea and in Switzerland, but higher than in the United States, New Zealand, Canada and Turkey. Gas prices for median consumption are slightly higher than the average prices and top median prices for the EU. (source: ECFIN) (source: Eurostat and IEA) Regarding the competitiveness in wind and solar energy, Luxembourg is performing quite well in the solar sector notably in the manufacturing of modules and cells, having improved considerably since 2005. As indicated by the revealed comparative advantage indicator below 1, the Luxembourg economy is not specialised in wind energy. The relative trade balance indicates that Luxembourg is a net importer of wind components and, to a lesser degree, of solar energy, although the net imports of the latter have decreased considerably since 2005. (source: UN comtrade)