Luxembourg Unveils Updated National Energy and Climate Plan

On Wednesday 17 July 2024, Luxembourg’s Minister of the Environment, Climate and Biodiversity, Serge Wilmes, and the Minister of the Economy, SMEs, Energy and Tourism, Lex Delles, presented the final version of the update of the National Integrated Energy and Climate Plan (PNEC) with the main changes compared to the draft adopted in July 2023.

According to Luxembourg’s Ministry of the Economy and the Ministry of the Environment, Climate and Biodiversity, the updated PNEC incorporates the European Commission's recommendations, the 2023-2028 government programme on climate and energy policy and developments since July 2023. The main change in the final PNEC update is an accelerated deployment of renewable energies, with a target of 37% of gross final energy consumption by 2030, matching the upper value of the previously indicated range (35-37%).

"Accelerating the development of renewable energies is one of the government's priorities: through a simplification of procedures and more exchanges with stakeholders in the field, blockages can be identified quickly," noted Minister Delles.

For the various renewable energy technologies, political developments, particularly those arising from the coalition agreement, have been taken into account. For photovoltaic energy, this includes a study on photovoltaic installations along motorways, the introduction of pre-financing and analyses of the tacit agreement on authorisations. In the wind energy sector, an analysis of safety distances aims to allow for closer installation to motorways and activity zones, alongside an obligation to offer citizens and municipalities affected by wind turbine installations a stake in the capital of developers/operators. Regarding hydrogen, Luxembourg must join the international hydrogen network, particularly to decarbonise heavy industry. Additionally, there is confirmation of the ambitious national indicative target for improving energy efficiency.

Luxembourg confirmed this target at -42% (compared to REF2007), equivalent to 36,949 GWh of final energy in 2030. This target for improving energy efficiency is still within the range (-40 to -44%) indicated in the initial PNEC (2020) and thus reiterates Luxembourg's high ambition in terms of energy efficiency, the ministries added.

The final version of the PNEC removes the ban on phasing out fossil fuel heaters and instead promotes a voluntary approach by providing incentives and support for citizens and businesses, particularly through attractive aid schemes. According to STATEC projections, replacing only 50% of end-of-life fossil boilers with renewable energy sources would still allow the country to meet the 2030 climate goal. By 2050, this replacement rate is expected to gradually increase to 100%, reducing the number of fossil boilers in residential buildings to around 15,000.

The PNEC update also promotes the development of heating networks at the municipal level, which in some cases constitute a better alternative to heat pumps to replace fossil boilers.

The renewal and partial revision of various aid schemes emphasises the importance of incentives for the energy and climate transition, encouraging participation from both citizens and businesses. For the "Klimabonus Wunnen" aid scheme, there will be a renewal of the top-ups allocated for energy renovations and the replacement of fossil fuel-fired boilers for the remaining duration of the support programme. Additionally, the scheme will progressively introduce pre-financing arrangements, aiming to make low-carbon solutions more accessible to all citizens.

The "Klimabonus Mobilitéit" aid scheme will be extended and adapted, with aid amounts adjusted based on environmental and social criteria, and from 1 October 2024, aid will be introduced for used electric cars. Business aid schemes will also be revised and extended to provide better financial support for businesses to succeed in the energy and climate transition, the ministries noted.

In the context of the Paris Climate Agreement and its implementation at European and national levels, the Integrated National Energy and Climate Plan (PNEC), adopted in May 2020, forms the basis of Luxembourg's climate and energy policy for the period 2021-2030. The PNEC addresses five key dimensions: decarbonisation (including renewable energies), energy efficiency, security of energy supply, the internal energy market as well as research, innovation and competitiveness.

Through its PNEC, each Member State of the European Union sets national targets for renewable energies, energy efficiency and greenhouse gas emission reductions by 2030 and presents its policies and measures to achieve these targets.

At its meeting on 21 July 2023, the Government Council approved the draft update of the PNEC after a consultation phase. This draft was then sent to the European Commission for evaluation. On 18 December 2023, the European Commission published recommendations about the draft update. The ministries noted that they analysed these recommendations in detail. Some recommendations led to changes in the draft update of the PNEC, but the overall level of ambition of the plan remained unchanged, the two ministries added.

The Luxembourg government adopted the draft update on 17 July 2024.

"With the update of the 'Energie- a Klimaplang fir Lëtzebuerg' (PNEC), the government is adopting an ambitious and pragmatic plan to support citizens, businesses and municipalities in their decarbonisation efforts. The PNEC brings together the main policies and measures needed to successfully transition to a decarbonised, resilient and competitive economy in the long term," emphasised Minister Wilmes.

Updated projections of greenhouse gas emissions to 2030

Luxembourg's national statistics portal, STATEC, taking into account economic developments since spring 2023 and the latest macroeconomic outlook, has updated the basic data, models and impact of the measures proposed in the PNEC. According to STATEC’s projections, greenhouse gas (GHG) emissions would decrease by 56% in 2030. The national climate objective prescribed by the climate law would thus be respected.

The cumulative balance of emissions compared to annual emissions allocations by 2030 improved slightly compared to that of the July 2023 update project. Over the period 2021-2030, STATEC’s work highlights a "bonus" of approximately 2,000,000 tonnes of CO2 equivalent compared to the trajectory of annual emissions allocations, which corresponds to approximately 3.4% of the total emissions budget (compared to 1% in the update project). Annual emissions allocations would be met by 2030.

Greenhouse gas emissions reduction target met in 2023

The provisional GHG emissions for 2023 allocated to Luxembourg under Regulation (EU) 2018/842, determined based on the approximate GHG inventory, were estimated at 6,908,000 tonnes of CO2 equivalent. They result from an initial estimate based on a provisional energy balance established by STATEC and supplemented, for non-energy-related emissions, by calculations carried out by the Environment Agency and the Rural Economy Department (SER).

According to this provisional assessment, GHG emissions for the year 2023 are significantly lower (more than 6%) than Luxembourg's emissions budget (7,373,000 tonnes of CO2 equivalent) for 2023. The emissions reduction target for the year 2023 is therefore met, as was the case for the years 2020, 2021 and 2022.

A decrease of almost 150,000 tonnes of CO2 equivalent, or 2%, compared to 2022, emissions for the year 2023 were 32% below the level of the reference year 2005. A more detailed provisional assessment will be shared by the MECB before the end of July, following the obligations of the law of 15 December 2020 on climate.

In summary, Luxembourg has met its greenhouse gas emission reduction targets since 2020. Projections showed that by implementing the PNEC update, the Grand Duchy is on track to achieve its climate targets by 2030, the ministries concluded.