COMMISSION STAFF WORKING DOCUMENT Analysis of the recovery and resilience plan of Luxembourg Accompanying the document Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision (EU) (ST 10155/21 INIT; ST 10155/21 ADD 1) of 13 July 2021 on the approval of the assessment of the recovery and resilience plan for Luxembourg
Date: 2024-07-23
Institutions: European Commission, Secretariat-General
Subjects: EU aid, Luxembourg, digital transformation, economic and social cohesion, economic recovery, economic reform, energy policy, green economy, investment, structural adjustment

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.7.2024  SWD(2024) 197 final  COMMISSION STAFF WORKING DOCUMENT Analysis of the recovery and resilience plan of Luxembourg Accompanying the document Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision (EU) (ST 10155/21 INIT; ST 10155/21 ADD 1) of 13 July 2021 on the approval of the assessment of the recovery and resilience plan for Luxembourg {COM(2024) 347 final}  
 
 
Table of contents 
1.  Executive summary ............................................................................................................................... 2 

2.  Objectives of the modification of the plan ............................................................................................ 2 

3.  Summary of the assessment of the plan ................................................................................................ 5 

3.1.  Comprehensive and adequately balanced response to the economic and social situation ............ 5 

3.2. 

Link with country-specific recommendations and the European Semester .................................. 8 

3.3.  Growth potential, job creation, economic, institutional and social resilience,  European Pillar of 
Social Rights, mitigating the impact of the crisis, and social territorial cohesion and convergence ........ 8 

3.4. 

The principle of ‘do no significant harm’ ..................................................................................... 9 

3.5.  Green transition ............................................................................................................................. 9 

3.6.  Digital transition ......................................................................................................................... 10 

3.7. 

Lasting impact of the plan ........................................................................................................... 11 

3.8.  Milestones, targets, monitoring and implementation .................................................................. 11 

3.9.  Costing ........................................................................................................................................ 12 

3.10.  Controls and audit ....................................................................................................................... 13 

3.11.  Coherence ................................................................................................................................... 15 

3.12.  REPowerEU ................................................................................................................................ 15 

3.13.  Cross-border or multi-country dimension or effect .................................................................... 16 

ANNEX I: Climate tracking and digital tagging......................................................................................... 18 

1 

 
 
 
 
 
 
 
 
 
 
1.  EXECUTIVE SUMMARY  

In  2022,  Russia’s  invasion  of  Ukraine  led  to  a  surge  in  energy  and  commodity  prices  in 
Luxembourg. Economic growth slowed due to supply chain bottlenecks, rising prices, and supply 
shortages.  Despite  low  direct  exposure  to  the  disruption  of  energy  supply  from  Russia, 
Luxembourg᾿s  large  external  energy  dependence  resulted  in  high  energy  prices,  which  were 
moderated by a range of state support measures, limiting inflation to 2.9% in 2023. 

In this context, effective policies to promote green transition are even more necessary, notably to 
improve energy efficiency and decarbonisation, deploy renewable energy capacities, and ensure 
clean and sustainable mobility.  

Luxembourg submitted to the Commission, on 16 May 2024, a modified national Recovery and 
Resilience Plan (RRP), including a REPowerEU chapter, with the aim of taking into account the 
effects of those challenges in the implementation of its original RRP. For the modification of its 
RRP, Luxembourg has relied on Article 21 to amend the RRP due to objective circumstances. To 
support measures of its REPowerEU chapter, Luxembourg relied on both: (i) Article 21c of the 
RRF Regulation, requesting the allocation of the amount available from the Emissions Trading 
System (ETS) revenues; and, (ii) Article 21b(2), in order to use the resources transferred from the 
Brexit Adjustment Reserve (BAR) under Article 4a of Regulation (EU) 2021/1755. 

The modification submitted by Luxembourg affects four measures already in the RRP on the basis 
of Article 21 of the RRF Regulation: removing one measure and modifying three others.  

The REPowerEU chapter submitted by Luxembourg includes one reform on biogas production 
and  three  investments  in  energy  renovation  of  houses,  zero-emission  mobility  and  small  scale 
renewable energy installations, which contribute to the resilience, security and sustainability of the 
Union’s energy system. 

Based  on  the  assessment  of  the  submitted  modification  and  the  REPowerEU  chapter, 
Luxembourg’s  modified  RRP  receives  an  A-rating  on  all  criteria  (including  the  two  additional 
criteria  for  the  REPowerEU  chapter),  except  for  costing,  where  the  plan  receives  a  B-rating 
(unchanged from the assessment of the initial RRP). 

(1) 
Balanced 
Response 

(2) 
CSRs 

(3) 
Growth, 
jobs… 

(4) 
DNSH 

(5) 
Green 
target 

(6) 
Digital 
target 

(7) 
Lasting 
impact 

(8) 
M & T 

(9) 
Costing 

(10) 
Control 
Systems 

(11) 
Coherence 

(12) 
REPowerEU 

(13) 
Cross-
border  

A 

A 

A 

A 

A 

A 

A 

A 

B 

A 

A 

A 

A 

2.  OBJECTIVES OF THE MODIFICATION OF THE PLAN  

2.1. Main newly emerged challenges 

In  2022,  Russia’s  invasion  of  Ukraine  led  to  a  surge  in  energy  and  commodity  prices  in 
Luxembourg and the EU as a whole. The Luxembourg government’s measures helped cushion the 

2 

 
 
 
 
 
 
 
impact of the energy crisis on both households and businesses. However, economic growth slowed 
down. The 2024 Country Report1 for Luxembourg identified challenges related to the deployment 
of renewable energies, energy efficiency of residential  buildings, transport  decarbonisation and 
biodiversity among others.  

In the context of Luxembourg’s current challenges, the proposed revision of its RRP is twofold: 
(i) adding a new REPowerEU chapter to the original plan; (ii) modifying existing measures in line 
with the provisions of the RRF Regulation. 

Luxembourg’s modified RRP adds a new REPowerEU chapter pursuant to Article 21c of the RRF 
Regulation.  It  includes  a  reform  and  three  new  investments  to  deliver  on  the  REPowerEU 
objectives. This chapter will help advance Luxembourg’s green transition and address the current 
challenges,  in  particular  those  identified  in  the  ‘energy’  recommendations  addressed  to 
Luxembourg since 2022, in the framework of the European Semester. Pursuant to Article 21(1) of 
the  RRF  Regulation,  Luxembourg  requested  to  remove  one  and  modify  three  other  existing 
measures of the RRP, since they are no longer achievable based on objective circumstances. 

2.2. Main elements of the modified RRP and REPowerEU chapter 

The main elements of the modified RRP and REPowerEU chapter are listed below and summarised 
in Table 1. 

Component 1B: Reinforcement of resilience of health system 

Luxembourg proposes to modify Investment 2: Telemedicine solution for remote medical follow-
up of patients on the basis of Article 21 of the RRF Regulation, due to the change of owner of the 
company  offering  the  solution  mentioned  in  the  RRP,  and  the  subsequent  withdrawal  of  the 
product, the specific proprietary solution for a remote medical monitoring application is no longer 
available,  and  an  in-house  development  is  used  instead.  This  caused  delays,  and  the  proposed 
modification changes the timeline from the first quarter of 2022 to the second quarter of 2023. 
Moreover, with the end of COVID-10 pandemics and surge in the number of asylum seekers and 
people under international  protection, the demand for remote medical  monitoring  has changed, 
and, while the solution is ready to be deployed for general remote monitoring in case of a future 
health crisis, its current use is the creation and management of health files of asylum seekers and 
people under international protection to support their transition to the national health insurance 
system. The cost of the modified component is reduced accordingly, from EUR 0.83 million to 
EUR 0.26 million. Luxembourg proposes  to  transfer the amount  not  used for this  measure and 
funded by the RRF (EUR 0.57 million) to the REPowerEU measures. 

Component 1C: Increase of supply of affordable and sustainable public housing  

Luxembourg  proposes  to  remove  the  investment  of  this  component:  Project  “Neischmelz”  in 
Dudelange – renewable energy on the basis of Article 21 of the RRF Regulation. This renewable 
energy  project,  consisting  in  supplying  a  new  housing  district  (Neischmelz)  with  renewable 

1 SWD(2024) 616 final. 

3 

 
 
 
 
 
 
electricity and heat is facing unexpected delays – a rare habitat of birds and lizards is found on 
site, blocking construction works. There is a high risk of not being able to complete the project 
within the RRF timeline. Luxembourg proposes to transfer the related amount funded by the RRF 
(EUR 18.32 million) to the REPowerEU measures. 

Component 3B: Modernisation of public administration 

Luxembourg explained that two measures should be modified to implement better alternatives in 
order to achieve the original ambition of the measure. This concerns milestones 3B-5 and 3B-6 of 
“Investment 2: Development of MyGuichet – Project 1/3 – Virtual appointment” and 3B-11 and 
3B-12  of  “Investment  3:  eADEM”  under  component  “3B:  Modernisation  of  public 
administration”. The modifications remove unnecessary details of the measure descriptions, which 
do not contribute to reaching their objectives, in order to reduce unjustified administrative burden.  

Component 4A: REPowerEU chapter 

Under the REPowerEU chapter and based on Article 21c of the RRF Regulation, Luxembourg has 
proposed  measures  amounting  to  EUR  176.75  million  in  total  estimated  costs  for  three  new 
investments and a new reform. Reform “National biogas strategy” revises Luxembourg’s support 
scheme  for  electricity  and  biogas  production  and  contributes  to  the  objective  of  increasing  the 
production and uptake of sustainable biomethane. 

Investment  1 is  a financial support scheme  for energy renovation  and  construction projects  for 
housing.  It  contributes  to  the  objectives  of  boosting  energy  efficiency  in  buildings,  as  well  as 
increasing the share and accelerating the deployment of renewable energy. 

Investment 2 is a financial support scheme for the purchase of zero emission vehicles and bicycles, 
contributing to the objective of supporting zero-emission transport. 

Investment 3 is a financial support scheme for enterprises installing photovoltaic power plants for 
self-consumption, contributing to the objective of the deployment of renewable energy. 

Table 1 – New and modified components and associated costs 

Component 
1B:  Reinforcement of resilience of health system   Modified 
Modified 
1C:  Increase of supply of affordable and sustainable 
(removed) 
public housing 
Modified 
3B: Modernisation of public administration 
New 
4A: REPowerEU Chapter 

Status 

Costs (EUR million) 
0.262  
0  

12.73 
177.32 

2 Initial RRP: EUR 0.83 million 

4 

 
 
 
 
 
 
 
 
 
Other elements not covered by assessment criteria  

The  description  of  aspects  related  to  administrative  organisation,  gender  equality  and  equal 
opportunities  for  all  and  the  planned  communication  strategy  as  reflected  in  the  previous Staff 
Working Document (2021) 159 final remains valid. 

With  respect  to  the  consultation  process,  Luxembourg  carried  out  additional  consultations  of 
stakeholders  in  the  context  of  the  amendment  of  the  RRP  and  for  the  preparation  of  the 
REPowerEU chapter, in line with the Commission’s guidance in the context of REPowerEU (the 
“REPowerEU Guidance”)3 (See Section 3.12). 

State aid and competition rules fully apply to the measures funded by the Recovery and Resilience 
Facility. Union funds channelled through the authorities of Member States, like the RRF funds, 
become State resources and can constitute State aid. When this is the case and State aid is present, 
these measures must be notified and approved by the Commission before Member States can grant 
the aid, unless those measures are covered by an existing aid scheme or comply with the applicable 
conditions of a block exemption regulation, in particular the General Block Exemption Regulation 
(GBER) declaring certain categories of aid compatible with the internal market in application of 
Articles 107 and 108 TFEU4. When State aid is present and it requires notification, it is the duty 
of  the  Member  State  to  notify  State  aid  measures  to  the  Commission  before  granting  them,  in 
compliance  with  Article  108(3)  TFEU.  In  this  respect,  the  State  aid  analysis  carried  out  by 
Luxembourg in the recovery and resilience plan cannot be deemed a State aid notification. In as 
far as Luxembourg considers that a specific measure contained in the recovery and resilience plan 
entails de minimis aid or aid exempted from the notification requirement, it is the responsibility of 
Luxembourg to ensure full compliance with the applicable rules. 

3.  SUMMARY OF THE ASSESSMENT OF THE PLAN 

3.1. Comprehensive  and  adequately  balanced  response  to  the  economic  and  social 

situation 

The  modified  RRP,  including  the  REPowerEU  chapter,  reasonably  covers  the  six  pillars  that 
structure  the  scope  of  application  of  the  Facility  (Article  3):  (i)  green  transition;  (ii)  digital 
transformation; (iii) smart, sustainable and inclusive growth; (iv) social and territorial cohesion; 
(v)  health  and  economic,  social  and  institutional  resilience;  and,  (vi)  policies  for  the  next 
generation. All pillars are covered by at least one component, while a component may contribute 
to  several  pillars.  The  coverage  of  the  Luxembourg  RRP  components  across  the  six  pillars  is 
summarised in Table 2.  

3 Commission Notice, ‘Guidance on Recovery and Resilience Plans in the context of REPowerEU’, 2023/C 80/01. 
4 Commission Regulation (EU) 2023/1315 of 23 June 2023 amending Regulation (EU) No 651/2014 declaring 
certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty and 
Regulation (EU) 2022/2473 declaring certain categories of aid to undertakings active in the production, processing 
and marketing of fishery and aquaculture products compatible with the internal market in application of Articles 107 
and 108 of the Treaty, OJ L 167, 30.6.2023, p. 1–90, available at: https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX%3A32023R1315.  

5 

 
 
 
 
 
 
The range of actions of the modified RRP, including the REPowerEU chapter, corresponds to the 
objectives of the Facility, with an appropriate overall balance between pillars. The allocations to 
the green and digital transitions (respectively, 80.1% and 37.5%) exceed the requirements of the 
RRF  Regulation  (respectively,  37%  and  20%),  and,  therefore,  the  modified  RRP  significantly 
contributes to these pillars. 

Green transition 

Luxembourg’s modified RRP, including the REPowerEU chapter, continues to focus significantly 
on  supporting  the  green  transition,  with  80.1%  of  the  allocation  dedicated  to  this  pillar.  The 
REPowerEU chapter includes a reform and investments with estimated costs amounting to EUR 
177.32 million that Luxembourg intends to deploy in order to reduce its reliance on fossil fuels 
and increase energy efficiency. The investments will increase the energy efficiency and renewable 
energy use in housing, use of solar panels for self-consumption in enterprises, and electrification 
of  transport,  thus  achieving  energy  savings,  diversifying  energy  supply  and  accelerating  the 
deployment of renewables to replace the fossil fuels. 

Table 2 – Coverage of the six pillars of the Facility by the new or modified components of 
the Luxembourg RRP 

Green 
transition 

Digital 
transform
ation 

Smart, 
sustainable 
& inclusive 
growth 

Social and 
territorial 
cohesion 

COMPONENT 1B: 
Reinforcement of resilience 
of health system 
COMPONENT 1C: Increase 
of supply of affordable and 
sustainable public housing 
COMPONENT 3B: 
Modernisation of public 
administration 
COMPONENT 4A: 
REPowerEU 

● 

● 

● 

● 

○ 

● 

○ 

● 

● 

● 

Health, and 
economic, 
social and 
institutional 
resilience 
● 

Policies 
for the 
next 
generation 

● 

○ 

● 

○ 

Key: “●” investments and reforms of the component significantly contribute to the pillar; “○” the component 
partially contributes to the pillar 

The renewable energy investment in housing included in the original RRP (Component 1C) was 
removed  due  to  objective  circumstances  not  allowing  to  complete  the  project  within  the  RRF 
timeline.  However,  the  reform  in  this  component  remained,  and  the  allocation  of  the  removed 
investment was transferred to the REPowerEU chapter, which contains an investment to support 
housing renovation that increases energy efficiency and use of renewable energy. 

In conclusion, while the proposed modification of the RRP reduces the ambition of the initial RRP 
measures  regarding  the  green  transition,  with  the  inclusion  of  the  REPowerEU  chapter, 
Luxembourg’s modified RRP bolsters its green ambition and responds to REPowerEU objectives 
(see also 3.5 ‘Green Transition’). 

6 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Digital transformation 

The digital transformation still represents a significant part of Luxembourg’s modified RRP. One 
investment contributing to the digital transformation in the health sector – a telemedicine solution 
–  is  modified,  with  a  different  solution  provider  and  current  use  case,  but  does  not  reduce  the 
ambition of the measure and contribution to this pillar. The solution will be used for managing 
health files of asylum seekers and people under international protection, and will allow a broad 
remote medical monitoring in case of future health crisis.  

In sum, the digital contribution of the modified RRP remains similar to the one of the initial RRP. 

Smart, sustainable and inclusive growth 

The  RRP  continues  to  cover  this  pillar,  with  several  components  of  the  initial  plan  and  all 
components  of  the  new  REPowerEU  chapter  contributing  to  its  different  policy  areas.  The 
modifications of the measures do not affect the initial coverage of this pillar. The new measures 
are  promoting  sustainability  by  investing  in  renewable  energy  and  energy  efficiency,  and 
inclusiveness by providing support to households wishing to increase energy efficiency in their 
housing.  Support  to  enterprises  installing  solar  panels  will  strengthen  small  and  medium-sized 
enterprises among others. 

Overall, investments and reforms in the areas of green transition, innovation and digitalisation are 
set to bring about a positive effect on GDP growth. 

Social and territorial cohesion 

Strengthening  social  cohesion  continues  to  be  one  of  the  objectives  of  the  RRP,  in  particular 
addressed under the skills and housing components. While the investment in affordable housing is 
removed by the modification, the reform aimed at increasing access to housing remains, and is 
complemented by the support to households investing in energy efficiency and renewable energy 
in the new REPowerEU component. 

Territorial cohesion continues being strengthened with new ways of coordination between both 
levels of government in the reforms of the Housing Pact and the Nature Pact included in the initial 
plan and not subject to modifications. 

Health, and economic, social and institutional resilience  

The initial RRP includes several measures to address the vulnerability of Luxembourg᾿s health 
system.  While  the  measure  of  the  telemedicine  solution  is  modified,  with  a  different  solution 
provider and current use case, it does not reduce the ambition of the measure and contribution to 
this pillar.  

Economic resilience is  fostered by skills  and digitalization measures,  which remain unchanged 
from the initial plan. 

The initial measures related to skills and housing, as well as the newly added support to households 
investing in energy efficiency and renewable energy contribute to social resilience. 

7 

 
 
 
 
 
Digitalisation of public services continue fostering institutional resilience. 

Policies for the next generation 

The sixth pillar remains covered by the reform and investment intended to foster upskilling and 
reskilling in Luxembourg. 

Conclusion 

Overall, the measures proposed in Luxembourg’s modified RRP pursue the general objective of 
the Facility by promoting the Union’s economic, social, and territorial cohesion, structured in the 
six pillars of Article 3 of the RRF Regulation. 

Taking  into  consideration  all  reforms  and  investments  envisaged  by  Luxembourg,  its  modified 
RRP  –  including  its  REPowerEU  chapter  –  is  expected  to  represent  a  comprehensive  and 
adequately  balanced  response  to  the  economic  and  social  situation,  thereby  contributing 
appropriately to all six pillars referred to in Article 3 of the RRF Regulation, taking the specific 
challenges and the financial allocation of Luxembourg into account. This would warrant a rating 
of A under the assessment criterion 2.1 in Annex V to the RRF Regulation. 

3.2. Link with country-specific recommendations and the European Semester  

The  modified  RRP  continues  to  address  a  significant  subset  of  the  challenges  identified  in  the 
relevant country-specific recommendations (CSRs). 

Although the renewable energy investment in component 1C is removed, the CSR on affordable 
housing supply and sustainable buildings (2019.3, 2020.3) is still addressed by the reform in this 
component,  and  also  by  the  new  REPowerEU  investment  in  energy  efficiency  and  renewable 
energy in housing. 

As the maximum financial contribution allocated to Luxembourg has been adjusted downwards, 
the 2022 and 2023 recommendations not related to energy challenges are not considered in the 
overall assessment. 

New  measures  proposed  by  Luxembourg  in  the  REPowerEU  chapter  adequately  cover  the 
different subparts of the energy CSRs of 2022 and 2023, which are broadly similar. Luxembourg’s 
REPowerEU component contributes to these subparts: (i) reduce the reliance on fossil fuels (ii) 
invest in energy efficiency and (iii) promote electrification of transport. The subpart on renewable 
energy deployment was assessed as having achieved substantial progress at the time of submission 
of the modified RRP, therefore it was not considered. Given the size of the plan, the coverage is 
proportionate. 

Taking into consideration the reforms and investments envisaged by  Luxembourg, its modified 
RRP is expected to contribute to effectively addressing all or a significant subset of challenges 
identified  in  the  country-specific  recommendations,  or  challenges  in  other  relevant  documents 
officially adopted by the Commission under the European Semester, and the RRP represents an 
adequate  response  to  the  economic  and  social  situation  of  Luxembourg.  This  would  warrant  a 
rating of A under the assessment criterion 2.2 in Annex V to the RRF Regulation. 

8 

 
 
 
 
 
3.3. Growth  potential,  job  creation,  economic,  institutional  and  social  resilience, 
European  Pillar  of  Social  Rights,  mitigating  the  impact  of  the  crisis,  and  social 
territorial cohesion and convergence  

The proposed modifications to the Luxembourg RRP retain the overall ambition of the initial RRP. 
They do not have an impact on the previous assessment (Rating of A) of the RRP’s impact on the 
growth  potential,  job  creation,  and  economic,  social  and  institutional  resilience  of  the  Member 
State. Likewise, the modified RRP continues to contribute to the implementation of the European 
Pillar of Social Rights, including through the promotion of policies for children and youth, and on 
mitigating  the  economic  and  social  impact  of  the  COVID-19  crisis,  thereby  enhancing  the 
economic, social and territorial cohesion and convergence within the Union. This is reflected in 
the previous assessment  (rating of  A) of the plan and detailed in  the Staff Working  Document 
(2021) 159 under criterion 2.3 of Annex V to the RRF Regulation. 

3.4. The principle of ‘do no significant harm’  

The  modifications  of  the  measures  already  included  in  the  RRP  do  not  have  an  impact  on  the 
assessment of the revised RRP against the principle of ‘do no significant harm’, which remains 
identical to the assessment of the initial RRP.  

Luxembourg’s REPowerEU chapter includes a systematic assessment of each measure against the 
principle of ‘do no significant harm’ (DNSH), for each of the six environmental objectives within 
the meaning of Article 17 of the Taxonomy Regulation (EU) 2020/852. The assessments follow 
the  methodology  set  out  in  the  Commission’s  technical  guidance  on  the  application  of  ‘do  no 
significant harm’ under the Recovery and Resilience Facility Regulation (2021/C 58/01) (‘DNSH 
Guidance’), and apply a two-step approach. The first step assesses whether there is a risk that a 
measure could do significant harm to one or more of the environmental objectives. In cases where 
the analysis identifies  a  risk, a more detailed assessment  is  performed in  which the absence of 
significant harm is verified, or measure safeguards are provided to ensure the absence of significant 
harm. While Luxembourg’s assessment often stresses the environmental and climate benefits of 
measures  in  this  assessment,  it  also  provides  information  allowing  to  assess  that  measures  are 
expected to comply with the ‘do no significant harm’ principle. 

The  housing  renovation  measure  of  the  REPowerEU  chapter  (Investment  1)  does  not  include 
support for heating systems  based on natural  gas. Additionally, assurances were received from 
Luxembourg’s authorities that the wood boilers whose installation would be supported under this 
measure  will  comply  with  the  Renewable  Energy  Directive  2018/2001/EU  and  the  air  quality 
standards  set  by  Directive  2008/50/EU.  On  the  measure  promoting  zero-emission  mobility, 
Luxembourg  confirmed  that  only  zero-emission  vehicles  will  be  supported,  thus  excluding  in 
particular hybrid cars.   

The  national  biogas  reform  of  the  REPowerEU  chapter  will  comply  with  the  criteria  in  the 
Renewable Energy Directive 2018/2001/EU, the air quality standards set by Directive 2008/50/EU 
and  Directive  2015/2193/EU.  It  will  also  be  in  line  with  the  EU  Biomethane  Action  Plan 
(COM(2022) 230  final).  In addition,  the reform  includes  the upgrade  of  biogas to  biomethane, 

9 

 
 
 
 
 
unless for small-scale plants (less than 500 kWe) that use biogas for the stabilisation of the grid. 
Moreover, the measure does not target the transmission and distribution infrastructure for gas. 

Taking  into  consideration  the  assessment  of  all  the  measures  envisaged,  no  measure  for  the 
implementation  of reforms  and investments  projects  included in  Luxembourg’s modified RRP, 
including its REPowerEU chapter, is expected to do a significant harm to environmental objectives 
within  the  meaning  of  Article  17  of  Regulation  (EU)  No  2020/852  (the  principle  of  ‘do  no 
significant harm’). This would warrant a rating of A under the assessment criterion 2.4 of Annex 
V to the RRF Regulation. 

3.5. Green transition 

Although  the renewable  energy  investment  in  housing is  removed with  the modification of the 
RRP, the modified RRP continues to significantly contribute to the green transition through the 
remaining measures and especially through the new REPowerEU chapter. With the REPowerEU 
chapter, Luxembourg responds to the REPowerEU objectives and increases its ambition regarding 
the green transition, compensating for the withdrawn measure. This also includes a contributing to 
biodiversity, as well as to the achievement of the Union 2030 climate targets, while complying 
with the objective of EU climate neutrality by 2050 (see Annex). 

Specifically, the REPowerEU chapter provides an ambitious contribution to the green transition 
through its contribution to reducing the reliance on fossil fuels. The reform on sustainable biogas 
improves the framework conditions for this energy source and together with investment in housing 
renovations  and  photovoltaic  installations  for  self-consumption  in  enterprises  accelerates  the 
deployment of renewable energies. The investment in housing renovation in particular increases 
energy efficiency. 

The  allocation  of  the  removed  renewable  energy  investment  and  the  modified  telemedicine 
measure  with  the  reduced  cost  is  transferred  to  the  REPowerEU  chapter,  which  significantly 
contributes to the climate target. The climate contribution of the revised existing part of the RRP 
(without REPowerEU chapter) remains much higher than the minimum required, even if reduced 
compared to the one of the initial RRP, standing at EUR 32.90 million or 51.6% of the revised 
total allocation of the RRP part without REPowerEU of EUR 63.79 million, against 60.9% of the 
initial RRP. 

The climate contribution of the REPowerEU chapter is 90.3% (EUR 160.11 million) of the total 
estimated cost of the REPowerEU chapter of EUR 177.13 million, which is well above the 37% 
target set out in the RRF Regulation. 

In total, the whole RRP (including revised measures and the REPowerEU chapter) contributes to 
the  climate  target  at  80.1%  (EUR  193.01  million)  of  Luxembourg’s  maximum  financial 
contribution  (including  the  REPowerEU  allocation  amount  and  the  transfer  from  the  Brexit 
Adjustment Reserve) of EUR 241.10 million, which is also well above the target of 37% required 
by the RRF Regulation. 

Taking  into  consideration  the  assessment  of  all  the  measures  envisaged,  the  modified  RRP, 
including its REPowerEU chapter, is expected, to a large extent, to make a significant contribution 

10 

 
 
 
 
 
to the green transition or to address the challenges resulting from it and ensures that at least 37% 
of its maximum financial contribution contribute to the climate target. At least 37% of the total 
estimated costs of the REPowerEU chapter contribute to the climate target. This would warrant a 
rating of A under criterion 2.5 of Annex V to the RRF Regulation. 

3.6. Digital transition 

The modification of the RRP does not materially impact its ambition towards the digital transition, 
although  the  cost  of  the  telemedicine  measure  is  reduced.  The  modified  RRP  continues  to 
significantly  contribute  to  the  digital  transition  through  several  investments  digitalizing  public 
administration  and  healthcare,  and  through  development  of  ultra-secure  communication 
infrastructure based on quantum technology. The reforms and investments are expected to have a 
lasting impact. 

With the revised total  allocation, the contribution to  the digital transition  of the modified RRP 
(excluding the REPowerEU chapter) stands at 37.5% (EUR 23.93 million) of the total of EUR 
63.79 million, which is above the required target of 20% set out in the RRF Regulation. 

Taking  into  consideration  the  assessment  of  all  the  measures  envisaged,  the  modified  RRP  is 
expected, to a large extent, to make a significant contribution to the digital transition or to address 
the challenges resulting from it and ensures that at least 20% of its total allocation (excluding the 
measures  in  the  REPowerEU  chapter)  contributes  to  supporting  digital  objectives.  This  would 
warrant a rating of A under criterion 2.6 of Annex V to the RRF Regulation. 

3.7. Lasting impact of the plan 

In spite of removal of a measure, the modified RRP only marginally reduces the ambition of the 
initial RRP as a whole. The measures continue to focus on innovative and sustainable economic 
activities with significant exploitation potential. They strengthen the administration, in particular 
with digitalization measures, and support structural changes in policies, including reforms in the 
skills and health areas, or investments in transport decarbonization. The REPowerEU chapter, in 
addition to the existing measures, is also expected to have lasting positive effects on Luxembourg 
economy and further boost its green transition. Investments in renewable energy, energy efficiency 
and greening of transport are expected to have a lasting impact on the reduction of greenhouse gas 
emissions and reliance on fossil fuels. The reform will leave a long-lasting impact by improving 
the framework conditions for sustainable biogas facilities.  

The nature and extent of the proposed modifications to Luxembourg RRP do not have an impact 
on the previous assessment (rating of A) of the lasting impact of the RRP under criterion 2.7 of 
Annex V to the RRF Regulation. 

3.8. Milestones, targets, monitoring and implementation 

The milestones and targets of the modified Luxembourg RRP enable an adequate monitoring of 
its  implementation.  Each  of  the  new  reforms  and  investments  introduced  under  the  new 
REPowerEU chapter includes at least one target and/or milestone that contains the key elements 

11 

 
 
 
 
 
of the measure and allows for the assessment of the achievement of its objectives. This new chapter 
includes a set of seven new milestones and targets. For the reform taking the form of a new legal 
act, the milestone is the entry into force, thereby capturing the actual implementation of the new 
provisions. 

The performance of the investments included in the new REPowerEU chapter will be assessed on 
the basis of the achievement of several milestones and targets monitored by the public entity in 
charge of implementing the measures. The targets chosen are consistent with the objectives, cost 
estimates  and  implementation  schedule  of  each  measure,  and  quantified  by  specific  indicators 
reflecting  the  result  of  the  works  undertaken  (for  example,  the  number  of  completed  projects 
supported  by  the  housing  energy  efficiency  scheme,  or  the  number  of  zero-emission  vehicles 
purchased). 

The  initially  assessed  overall  organisational  arrangements  for  the  implementation  of  the  plan 
remain the same. 

The arrangements proposed by Luxembourg in its modified RRP are expected to be adequate to 
ensure effective monitoring and implementation of the RRP, including the envisaged timetable, 
milestones  and  targets,  and  the  related  indicators.  This  would  warrant  a  rating  of  A  under  the 
assessment criterion 2.8 of Annex V to the RRF Regulation. 

3.9. Costing 

Luxembourg has provided an explanation and has submitted documentation on the cost estimates 
for all the modified measures, the proportionality of the cost modifications was assessed based on 
the estimated unit costs in the original RRP. 

The assessment of these cost estimates and supporting documents shows that the majority of costs 
associated  to  the  new  measures  are  well  justified,  reasonable,  plausible,  do  not  include  costs 
covered by existing or planned EU financing and are commensurate to the expected economic and 
social impact of the envisaged measures. 

Reasonable costs 

Luxembourg  provided  actual  data  and  evidence  supporting  unit  cost  estimates,  together  with 
adequate explanations of the calculation methodology. For modifications under Article 21, any 
variation in unit costs due to objective circumstances was duly justified and supporting evidence 
was provided.  

For the REPowerEU chapter, the cost estimates for the new investments were justified using actual 
data. The cost-related information in the REPowerEU chapter was sufficiently exhaustive, with 
explanations related to the methodology used to derive cost estimates. 

The cost  information  and evidence  received is  in general  terms  considered to  be complete and 
understandable.  Luxembourg  has  provided  information  allowing  to  check  the  eligibility  of  all 
costs. Information has been provided to assure that the costs fall within the required time frame, 
that VAT is excluded from the cost estimates and no unjustified recurring costs were included.   

12 

 
 
 
 
 
The  General  Inspectorate  of  Finance  (IGF)  has  verified,  based  on  the  explanatory  documents 
provided by the line Ministries, all projects covered in the plan to ensure that the estimated costs 
are  reasonable  and  plausible.  However,  no  documentary  evidence  of  this  verification  was 
submitted. 

Plausible costs  

The estimated costs are in line with the type of investments envisaged. For modified measures 
under 21 of the RRF Regulation, actual data were provided, including tender data and national 
statistics. Overall, the cost estimates of the new and modified measures of the RRP are assessed 
as plausible. 

No double Union financing  

Luxembourg  has  indicated  that  the  modified  and  new  measures,  including  those  in  the 
REPowerEU chapter, funded under the RRF, will not be financed by other Union funding. 

Commensurate and cost-efficient costs  

The  size  of  the  investment  part  of  the  plan  for  Luxembourg  is  too  small  to  have  a  significant 
material  quantitative  economic  impact.  However,  when  including  the  reforms  in  the  plan,  the 
social and economic impact on areas such as the green and digital transition, affordable housing 
and skill development can be considered commensurate with the limited total costs. 

Conclusion  

The  justification  provided  by  Luxembourg  on  the  amount  of  the  estimated  total  costs  of  the 
recovery and resilience plan is to a reasonable extent plausible, in line with the principle of cost-
efficiency and is commensurate to the expected national economic and social impact. Luxembourg 
provided sufficient information and evidence that the amount of the estimated cost of the reforms 
and investments of the recovery and resilience plan to be financed under the Facility will not be 
covered  by  other  or  planned  Union  financing.  This  would  warrant  a  rating  of  B  under  the 
assessment criterion 2.9 of Annex V of the RRF Regulation. 

3.10. 

Controls and audit  

The  original  assessment  on  the  robustness  and  adequacy  of  the  control  system  and  other 
arrangements  included  in  the  Luxembourg  RRP  had  concluded  that  these  arrangements  were 
adequate  subject  to  the  timely  fulfilment  of  two  milestones  relating  to  a  repository  system  for 
monitoring the implementation of the RRF and the finalization of the implementation of further 
procedures for the protection of the EU's financial interests. This warranted a rating of A under the 
assessment criterion 2.10 of Annex V to the RRF Regulation. 

Luxembourg  authorities  have  confirmed  that  the  internal  control  system,  as  well  as  the 
arrangements to  prevent, detect  and correct  corruption, fraud, conflicts  of interest  and to  avoid 
double funding from the Facility and other Union programmes as previously assessed remain in 
place. In addition, as provided by the first relevant milestone included in the Annex to the original 
Council  Implementing  Decision,  a  repository  system  for  monitoring  the  implementation  of  the 

13 

 
 
 
 
 
RRP has been set up, including for the collection and storage of data required by Article 22(2)(d), 
points (i) to (iii) and for the monitoring of achievements of milestones and targets. In compliance 
with  the  second  milestone,  the  implementation  of  further  procedures  for  the  protection  of  EU 
financial  interests  has  been  confirmed.  The  adequacy  of  these  measures  has  been  assessed 
positively  by  the  Commission  in  the  context  of  the  first  payment  request,  including  through  a 
commitment to be fulfilled by the second payment request. 

The modification in four measures of the original plan and the introduction of the REPowerEU 
chapter as such do not affect the original assessment. However, in the context of the modification 
of the Luxembourg RRP, its audit and control system needs to be reassessed on the basis of criteria 
2.10 of Annex V of the RRF Regulation. Since the original assessment, the Commission has had 
access to information on its actual implementation. This includes the findings of the audit on the 
protection of the financial interests of the Union and the audit on milestones and targets performed 
by the Commission in Luxembourg. 

In  light  of  this  information,  the  Commission  considers  that  the  internal  control  system  of 
Luxembourg’s RRP is overall adequate. 

Robustness of internal control system and distribution of roles and responsibilities 

The arrangements previously assessed regarding the roles and responsibilities of control and audit 
actors, the separation of functions and the independence of audit actors remain adequate. 

Adequacy of control systems and other relevant arrangements 

The control system and other arrangements to prevent, detect and correct fraud, corruption and 
conflicts of interest when using funds provided by the Recovery and Resilience Facility continue 
to appear overall adequate. The implementation of an IT system for the monitoring and control of 
the measures, as well as for the collection of data in line with the requirements set out in Article 
22(2)(d), points (i) to (iii) of the RRF Regulation is confirmed. The control procedures have been 
updated to extend the use of the ARACHNE data mining and risk scoring tool, particularly for the 
ex-ante detection of potential fraud and conflicts of interest.  

Adequacy of arrangements to avoid double EU funding 

The  arrangements  for  the  prevention,  detection,  and  correction  of  double  funding,  as  initially 
assessed by the Commission, remain in place and have been improved by the integration of the 
use of ARACHNE as risk scoring tool, which facilitates access to data on other Union programmes 
and helps to identify potential cases of serious irregularities. 

Legal empowerment and administrative capacity of control function 

The previously assessed arrangements regarding the Ministry of Finance mandate (and therefore 
for the  managing  department within the Ministry) and the legal  mandate of the audit  authority 
remain in place as first assessed by the Commission. 

14 

 
 
 
 
 
 
 
Conclusion 

The nature and extent of the proposed modifications to Luxembourg’s recovery and resilience plan 
do not have a material impact on the previous assessment (rating of A) of the adequacy of the 
control  and  audit  arrangements  proposed  by  Luxembourg,  as  reflected  in  the  previous 
SWD(2021)159 final. 

3.11. 

Coherence 

The RRP of Luxembourg displays a mostly coherent set of reforms and investments. The modified 
RRP  presented  by  Luxembourg  is  structured  in  nine  coherent  components,  which  support  the 
common objectives of stimulating the recovery of Luxembourg economy, contributing to the twin 
transition and increasing Luxembourg’s resilience to face the challenges of the twenty-first century 
on the path to a sustainable and inclusive growth. The modification of the RRP amends three out 
of  eight  existing  components,  and  brings  an  additional  (ninth)  component,  the  REPowerEU 
chapter. The RRP does not present inconsistencies or contradictions between the content of the 
different components. Measures are mutually reinforcing, with components generally including a 
set of mostly balanced reforms and investments.  

Mutually reinforcing measures  

The modifications to the RRP do not materially alter the components’ coherence, nor the coherence 
of the plan as a whole. They do not alter the way in which they reinforce each other. The plan 
maintains  an  adequate  balance  between  investments  and  reforms.  The  additional  REPowerEU 
chapter is broadly consistent with the measures deployed under the initial RRP to support the green 
transition  and further reinforces  the ambition of  some of them, in  particular the investments  in 
housing energy renovation projects and transport electrification. The REPowerEU chapter is built 
around  a  consistent  combination  of  mutually  reinforcing  investments  and  a  reform  to  support 
energy  renovation  of  buildings,  solar  panels,  sustainable  biogas  facilities  and  electrification  of 
private road transport in Luxembourg.   

Complementarity of measures  

The modifications made to the existing components of the RRP do not negatively alter the way in 
which  these  components  complement  each  other.  The  additional  component  related  to  the 
REPowerEU’s  objectives,  in  turn,  brings  a  new  layer  of  complementarity,  as  it  builds  on  the 
measures of the initial RRP regarding sustainable housing and transport.  

At  the  level  of  the  modified  RRP,  all  components  pursue  complementary  aims,  with  no 
contradictory goals.  

Taking into consideration the qualitative assessment of all components of Luxembourg’s modified 
recovery and resilience plan, their individual weight (importance, relevance, financial allocation) 
and their interactions, the plan contains measures for the implementation of reforms and public 
investments which, to a high extent, represent coherent actions. This would warrant a rating of A 
under the assessment criterion 2.11 of Annex V to the RRF Regulation. 

15 

 
 
 
 
 
3.12. 

REPowerEU 

The measures included in the REPowerEU chapter (see Section 2.2) contribute to the objectives 
pursued by the RRF Regulation.  The implementation of the envisaged measures is expected to 
effectively  contribute  to  energy  efficiency,  renewable  energy  and  zero-emission  transport.  The 
reform  on  sustainable  biogas  strategy  addresses  the  objective  of  increasing  the  production  and 
uptake of sustainable biomethane (Article 21c(3), point (b) of the RRF Regulation). Investment in 
housing energy renovation aims to boost energy efficiency in buildings (Article 21c(3), point (b) 
of the RRF Regulation) and increase the share and accelerate the deployment of renewable energy 
(Article 21c(3), point (b) of the RRF Regulation). Deployment of renewable energy is also the 
objective  of  the  investment  in  solar  panels  in  enterprises  for  self-consumption  (Article  21c(3), 
point (b) of the RRF Regulation). Investment providing subsidies to people buying zero-emission 
vehicles aims to support zero-emission transport (Article 21c(3), point (e) of the RRF Regulation). 

Moreover, the measures in the REPowerEU chapter are part of Luxembourg’s broader efforts to 
reach greater energy sovereignty and reduce its greenhouse gas emissions, in view of the EU’s 
2030 climate reduction target of 55%. The measures are coherent with the National Energy and 
Climate Plan and its draft update of 2023. 

Finally, it must be noted that consultations with social partners were held in the preparation of this 
chapter. Luxembourg provided a summary of the stakeholder consultation process carried out in 
the context of the amendment of the RRP and for the preparation of the REPowerEU chapter. 

Taking  into  consideration  the  assessment  of  all  the  measures  envisaged  in  the  REPowerEU 
chapter, the chapter is expected, to a large extent, to contribute effectively to energy security, the 
diversification  of  the  Union’s  energy  supply,  an  increase  in  the  uptake  of  renewables,  energy 
efficiency, an increase of energy storage capacities, and the reduction of dependence on fossil fuels 
before  2030.  This  would  warrant  a  rating  of  A  under  criterion  2.12  of  Annex  V  to  the  RRF 
Regulation. 

3.13. 

Cross-border or multi-country dimension or effect  

Two  of  the  measures  included  in  Luxembourg’s  REPowerEU  chapter  have  a  multi-country  or 
cross-border dimension (Table 3). The REPowerEU chapter contributes to reducing dependency 
on fossil fuels and to reducing energy demand by improving the energy efficiency of buildings and 
developing  the  production  of  renewable  energy.  The  total  estimated  costs  of  these  measures 
account  for  a  total  of  EUR  93.95  million,  representing  53.0%  of  the  estimated  costs  of  the 
REPowerEU chapter, above the indicative target of 30%.  

Taking  into  consideration  the  assessment  of  all  the  measures  envisaged  in  the  REPowerEU 
chapter, the measures in the chapter are expected, to a large extent, to have a cross-border of multi-
country dimension or effect. This would warrant a rating of A under criterion 2.13 of Annex V to 
the RRF Regulation. 

16 

 
 
 
 
 
 
 
Table 3 - Cross-border or multi-country dimension or effect of REPowerEU measure 

REPowerEU measure with cross-border or multi-
country dimension or effect 

Costs 
million) 

(EUR 

Investment  1:  Energy  efficiency  and  renewable 
energy in housing 
Investment  3:  Construction  and  operation  of 
photovoltaic power plants 
Total 

43.79 

50.17 

93.95 

Contribution  to  the 
target  in  %  of  the 
REPowerEU  chapter 
estimated costs 
24.7% 

28.3% 

53.0 % 

17 

 
 
 
 
 
 
 
 
ANNEX I: Climate tracking and digital tagging  

Measure/ 
Sub-
Measure 
ID 

Measure/Sub-Measure Name 

Climate 

Digital 

Budget 
(EUR 
m) 

Int. 
Field 

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

1A.I1 

1B.I1 

1B.I2 

2A.I1 
2B.I1 

3A.I1 

3B.I1 

3B.I2 

3B.I3 

3B.I4 

3B.I5 

3B.I6 

4A.I1a 

4A.I1b 

4A.I2 

4A.I3 

“Futureskills” 
Single digital register of health 
professions 
Telemedicine solution for remote 
medical follow-up of patients 
Support scheme for charging points 
‘Naturpakt’ 
Development and deployment of 
testing infrastructure and ultra-secure 
connectivity solutions 
Electronic Document Management 
and Case Management 
Development of MyGuichet — 
Project 1/3: Virtual appointment 
Development of MyGuichet — 
Project 2/3: Various C2G and B2G 
approaches 
Development of MyGuichet — 
Project 3/3: APP Mobile 
MyGuichet.lu 
‘eADEM’ 
National platform for the 
management of public surveys 
Promotion of energy efficiency and 
renewable energy in housing: solar 
Promotion of energy efficiency and 
renewable energy in housing: other 
Promotion of zero emission and 
active mobility 
Construction of photovoltaic power 
generation units in business premises 

1.5 

0.34 

0.26 

30.5 
6 

10 

5.04 

0.17 

0.36 

0.33 

6.41 

0.41 

077 
050 

100% 
40% 

016 

095 

40% 

100% 

095 

100% 

021 

100% 

011 

100% 

011 

100% 

011 

100% 

011 

100% 

011 

011 

100% 

100% 

15.1 

029 

100% 

28.7 

025 

40% 

83.4 

n.a.* 

100% 

50.2 

029 

100% 

*The ‘Methodology for climate tracking’ annexed to the Recovery and Resilience Facility Regulation 
does not set out intervention fields that would allow for climate or environmental tracking of electric 
vehicles, except for vehicles for urban transport falling under intervention field 074. According to Article 
18(4)(e) of the Regulation, the methodology should however ‘be used accordingly for measures that 
cannot be directly assigned to an intervention field listed in Annex VI’. In this context, the Commission 
has applied a 100% climate contribution coefficient for zero-emission vehicles of all categories (this 
includes battery electric and fuel cell/hydrogen-powered vehicles). 

18