Luxembourg''s energy policy aims to respond to climate and environmental challenges and to guarantee the country''s security of supply. Luxembourg complies with the climate ambition set by the international community through the Paris Agreement. In order to achieve this objective, it is imperative to aim for and reach the objectives of zero emissions by 2050 and the transition to 100% renewable energy.
The Integrated National Energy and Climate Plan (PNEC, Plan national intégré en matière d''énergie et de climat) provides the basis for Luxembourg''s climate and energy policy. It describes the policies and measures to achieve the ambitious national targets for the reduction of greenhouse gas emissions (-55%), renewable energies (25%) and energy efficiency (from 40 to 44%) by 2030. It constitutes the roadmap that will be put into practice through the adoption of regulations, programmes and projects in the specific areas between 2020 and 2030.
The main pillars are the massive development of renewable energies, their integration into the energy network in particular through the development of decentralised energy storage, intelligent energy networks that are digital and therefore much more efficient, the use of more sustainable means of transport, an intelligent building stock and a reduction in the grey energy contained in stocks and flows of materials.
Currently, energy is considered too cheap to drive behaviour towards more energy efficiency, e-mobility and fuel switching.
Scenarios should include expectations for regional renewable energy deployment, for the different end-use sectors, and for centralised and decentralised options.
Establish rules to evaluate alternatives to grid extension, and consider whether it would be necessary to establish rules for congestion management and curtailment compensation in relation to variable renewable energy.
This will support the active participation of consumers in the electricity and natural gas markets, facilitate new service providers, and enhance security of supply.
Consider further incremental increases that support the achievement of greenhouse gas emission reduction targets.
Formulate a set of coherent measures to achieve a sustained reduction in fuel demand.
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In the electricity sector, roper maintenance and development of the electricity market in Luxembourg and beyond will therefore be ensured. Because of its size and characteristics, interconnections with neighbouring countries are essential and will continue to be supported by a joint commitment at European and regional level. In fact, the interconnected electricity transmission network allows for the maintenance and even increase of the country''s security of supply and guarantees optimal integration into the European energy market.
With the new smart meters, self-consumption and the creation of energy communities will be important elements in the energy transition, as well as the participation in flexibility or energy efficiency programmes or the use of dynamically priced electricity contracts.
To further promote the development of electromobility, additional private charging infrastructure projects will be encouraged in the future.
In addition to the public charging infrastructure, it is also important that users of electric vehicles can benefit from a reliable and technically safe charging infrastructure at home. The Grand Ducal Regulation of 19 August 2020 on the introduction of a financial aid for the installation of private charging points for electric vehicles provides financial support to private individuals in their efforts to install a suitable charging facility.
Recharging solutions at work as well as the infrastructure dedicated to the recharging of company fleets complete the ecosystem necessary to achieve the objectives concerning electromobility in Luxembourg.
In the natural gas sector, maintaining security of supply remains paramount in a transition phase towards decarbonised energy use - whether through interconnections with the integrated European market or through the technical security of existing infrastructure. While the use of fossil natural gas is set to disappear by 2050, the existing gas infrastructure can play an important role in the energy transition, whether for the transport of decarbonised gas (power to gas) or green hydrogen. Thus, the innovative project of integrating the Luxembourg and Belgian markets into a single Belgian-Luxembourg gas market will continue to play an important role in the future.
In the field of petroleum products, a detailed analysis and evaluation of storage capacity needs on the national territory will be undertaken, while taking into account the national objectives for 2030 and the long-term perspective for 2050 retained in the PNEC. In this context, storage capacity developments at European level for 2030 and 2050 will also be analysed, with particular attention to capacity development in neighbouring countries.
This analysis should provide guidance for optimising the security of supply of petroleum products while taking into account the need to decarbonise the transport and heating sectors by 2050.
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The International Energy Agency conducts comprehensive reviews of energy policies of IEA/OECD member countries in a periodic cycle, of IEA accession countries and when possible, upon request from partner and other countries. These reviews cover all major forms of energy produced, imported and consumed in the concerned country. The review''s recommendations aim to guide the country''s energy transition and promote energy security. The assessment of energy policies covers climate change, energy efficiency, renewables, energy markets, prices and taxes, regulation and competition, as well as energy technology and innovation.
The IEA regularly conducts in-depth peer reviews of the energy policies of its member countries. This process supports energy policy development and encourages the exchange of best practices and experiences.
Luxembourg experienced strong economic and population growth between 2008 and 2018. For most of that decade, energy demand and carbon dioxide emissions fell significantly, but they started to increase again in 2016. The government has adopted ambitious energy sector targets, including a 50-55% reduction of greenhouse gas emissions by 2030. Luxembourg faces challenges achieving those targets. Low energy prices for consumers are creating a barrier to the investments needed in energy efficiency and renewables. And the country has a fossil fuel-intensive energy mix driven by a high demand for transportation fuels, notably from transiting freight trucks.
Luxembourg is embedded in the European electricity market, a sector that is transforming swiftly as rising shares of variable renewable generation, such as wind and solar PV, put increased attention on security of supply. In this context, Luxembourg plans to expand and upgrade its electricity grids, but the country would benefit further from the deployment of measures to increase energy storage and demand-side response in its power system. It is also important to ensure competitive markets that foster innovation and new energy services.
In this report, the IEA provides a range of energy policy recommendations to help Luxembourg smoothly manage the transition to a smart, flexible and sustainable energy system.
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