"Energie- a Klimaplang fir Lëtzebuerg" Luxembourg's integrated national energy and climate plan for the period 2021-2030 (PNEC)

I. What is the PNEC?

Luxembourg's integrated national energy and climate plan (PNEC) is an important element of the Grand Duchy's climate and energy policy. It sets out the national climate and energy objectives for 2030, as well as the policies and measures needed to achieve them.

The measures apply to six sectors, namely:

• Residential and tertiary buildings,
• Transport,
• Energy and manufacturing industries, construction,
• Agriculture and forestry,
• Waste and wastewater treatment,
• "LULUCF" (Land use, land-use change and forestry)

The Energie- a Klimaplang fir Lëtzebuerg is also a strategic document enabling Luxembourg to make an active commitment to climate action and the energy transition, as well as to the development of a sustainable economy. It is a direct response to both the climate crisis and the energy crisis.

The PNEC is the result of an intrinsically collaborative approach between the ministries and administrations concerned, coordinated by the Ministry of the Environment, Climate and Biodiversity and the Ministry of Economy.

The ambitions and enhanced measures set out in the PNEC are also based on the results of various public consultation and institutional cooperation processes carried out in recent years.

Citizens and scientists alike have come out in favour of even more ambitious targets and measures for Luxembourg in the future:

• the "Luxembourg in Transition " (LIT) international consultation on spatial planning held in 2021,
• the Klima-Biergerrot in 2022 (KBR, Citizens' Council on Climate),
• the Climate Policy Observatory (OPC),
• the Platform for Climate Action and Energy Transition.

A public enquiry, open from 17 April to 16 May 2023, was also an integral part of the procedure, inviting citizens to submit their comments and proposals on the project.

II. The objectives of the PNEC

The PNEC defines the national climate objectives for the coming years, which are compatible with the objectives of the European Union.

The intermediate targets by 2030 are

• to reduce greenhouse gas emissions by 55% compared to 2005, excluding the European Emissions Trading Scheme and LULUCF,
• to achieve a 37% share of renewable energies in final energy consumption,
• to improve energy efficiency by 42%,
• to strengthen targets for renewable energy and energy efficiency (ambitious deployment of wind power, solar power, heat pumps and electromobility)

The long-term objective is to achieve climate neutrality, or  zero net emissions  in Luxembourg by 2050 at the latest.

III. The measures defined by the PNEC

The Energie- a Klimaplang fir Lëtzebuerg presents both reinforced and new measures. The plan includes a total of 206 different measures, and particular attention was paid during the review process to the "just transition".

These measures correspond to different types of instruments, are at different stages of development, have different deadlines for implementation and identify different players responsible. And some measures are proving to be the most important and/or innovative compared with the previous version of the plan:

1. CO2 tax 

Since 2021, fossil fuels, whether road or heating fuels, have been subject to a CO2 tax in order to curb and reduce their consumption. Initially set at €20/t CO2, the tax was increased by €5/t CO2 emissions in 2022, 2023 and 2024, reaching a level of €45/t CO2 in 2026, which corresponds to the price level targeted by the future EU Emissions Trading Scheme for buildings, road transport and fuels in certain industrial sectors, to be introduced in 2027. The Energie- a Klimaplang fir Lëtzebuerg is proposing the continuation of this annual increase of €5/t CO2.

The revenue generated by this tax will be used fairly:

• to finance climate measures and solutions,
• to finance social compensation measures for low-income households (tax credit for low-income households, cost-of-living allowance),
• to invest in the energy transition.

2. The continuous development of Klimapakt 2.0

Since local authorities are important partners in implementing climate objectives at local level, Klimapakt 2.0 encourages and supports them:

• strengthen their exemplary role in climate action and energy transition,
• contribute to efforts to adapt to climate change,
• to promote efficient resource management,
• stimulate sustainable local and regional investment.

3. The phase-out of fossil fuel heating

The "phase-out " aims to completely decarbonise heating systems in buildings. The final version of the PNEC favours a more voluntary approach, providing incentives and support for citizens and businesses, in particular through attractive aid schemes. According to Statec projections, only a partial replacement (50%) of end-of-life fossil boilers by renewable energies would not affect the achievement of the 2030 climate target. By 2050, the replacement rate is expected to rise gradually to 100%, which would make it possible to limit the number of fossil-fired boilers in residential buildings (to around 15,000 by 2050).

It should be noted that the " phase-out " does not entail any obligation to replace a (fossil fuel) heating system that is still working properly. The "phase-out " applies when an existing boiler that is out of service or no longer authorised under current regulations is replaced.

4. The national entity to support energy renovation for all low-energy-performance residential buildings

To extend support for energy renovation to all low-energy-performance residential buildings, a national entity to support energy renovation projects, decarbonisation and the installation of photovoltaic systems for residential buildings will be set up.

The aim is to provide comprehensive and structured assistance to owners of residential buildings with low energy performance, in terms of identifying potential for improvement, planning and financing.

5. The Klimabonus

The Klimabonus aid scheme provides increased financial support for the construction and sustainable energy renovation of homes, the installation of technical systems that make the most effective use of renewable energy sources in homes, for vehicles with zero CO2 emissions and energy advice.

The changes include:

• a simplified procedure for accessing grants, in particular by simplifying and digitising application forms,
• greater promotion of environmentally-friendly insulation materials,
• greater encouragement to replace old boilers fuelled by fossil fuels,
• the eligibility of air-to-water and air-to-water hybrid heat pumps in existing buildings,
• promotion of self-consumption for photovoltaic installations, with a higher subsidy and the inclusion of a battery in the eligible costs,
• the appropriateness of pre-financing mechanisms.

6. Promoting the electrification of the car fleet

With regard to the electrification of the car fleet, the PNEC provides for:

• the promotion of the private charging point network and public charging infrastructure,
• the introduction of financial subsidies for zero-emission vehicles,
• a strategy for decarbonising the sector,
• options for a zero-carbon strategy through the deployment of biofuels, electric motorisation, renewable hydrogen and IT and AI optimisations (Information Technology andArticial Intelligence).

The social leasing

Introduction of a social leasing system for electric cars with long-term leasing contracts to support low-income households in electrifying their individual mobility.

8. The Klimapakt fir Betriber (KPB)

The Klimapakt fir Betriber (KPB) is a new instrument designed to accompany and support companies in the energy transition and climate action. This is a strategic orientation platform that allows for the coordinated consultation and implementation of projects and activities by different actors, as well as the management of several new programmes.

Aimed at small and medium-sized enterprises (SMEs), the KPB is a voluntary commitment by companies that will enable long-term monitoring of their decarbonisation and energy transition efforts.

9. The national hydrogen strategy

The strategy includes seven key measures to promote the production, import and use of renewable hydrogen:

• defining the legal, regulatory and supervisory framework at EU level,
• cooperation with EU Member States and third countries,
• identifying opportunities in Luxembourg in the field of research and innovation,
• identifying flagship projects for study and implementation,
• prioritising the actions to be taken towards targeted decarbonisation using renewable hydrogen,
• the development of instruments for a renewable hydrogen market,
• implementation and continuous improvement.

A "Taskforce H2 Luxembourg" steering committee has been set up to monitor the strategy.

10. Accelerated roll-out of the agriculture council and promotion of "agrivoltaics".

In the agricultural sector, as well as continuing to develop and accelerate the deployment of agriculture council, the aim is to promote "agrivoltaics ", i.e. the combination of agricultural production and the production of photovoltaic energy.

11. Reinforcement of targets for net greenhouse gas removals and introduction of a Klimabonus Bësch aid scheme

Since forests have a significant natural carbon storage potential, the targets for net greenhouse gas removals in the LULUCF sector will be strengthened.

In addition, an aid scheme for the sustainable management of private forests, the Klimabonus Bësch, will be established. 

12. Update of greenhouse gas emission projections up to 2030

Taking into account economic developments since spring 2023 and the latest macroeconomic prospects, Statec has updated the basic data, models and impact of the measures proposed in the PNEC. According to Statec projections, GHG emissions will fall by 56% by 2030. This would meet the national climate target set by the Climate Act.

The cumulative balance of emissions in relation to annual emissions allowances by 2030 is improving marginally compared with the draft update of July 2023. Over the period 2021-2030, the Statec's work highlights a ‘bonus’ of around 2,000,000 tonnes of CO2 equivalent compared with the annual emissions allocation trajectory, which corresponds to around 3.4% of the total emissions budget (compared with 1% in the draft update). The annual emissions allocations would be respected by 2030.