On Friday 31 July 2026, local non-profit organisation Mouvement Ecologique urged the Luxembourg government to abandon its planned increase in tax incentives for plug-in hybrid company cars, warning that the measure would represent "yet another step backwards" for climate protection.
In a statement the organisation said Luxembourg is already falling well short of the targets set out in the National Climate and Energy Plan (PNEC). It noted that, under the plan, 70% of new cars purchased in Luxembourg from 2026 should be electric vehicles if the country is to meet its climate goals. However, electric vehicles accounted for only around 30% of new car registrations up to May 2026.
The organisation added that the recent heatwave underlined the importance of consistent climate action and argued that current policies should accelerate, rather than slow, the transition to zero-emission vehicles.
According to the Mouvement Ecologique, the government intends to introduce more favourable tax treatment from 2027 for plug-in hybrid vehicles used as company cars under Luxembourg's “avantage en nature” (benefit-in-kind) system. While acknowledging that the government also plans to improve the tax rules for fully electric vehicles compared with its original proposal, the organisation criticised the decision to narrow the tax advantage between electric and plug-in hybrid vehicles.
"There is absolutely no way to understand why this change is to be made," the organisation stated, noting that the range and performance of electric vehicles have improved significantly, charging infrastructure has expanded and there had been no apparent issues with the previous tax regime, which treated plug-in hybrids less favourably.
The organisation also cited studies indicating that plug-in hybrid vehicles, particularly company cars, produce three to five times more CO₂ emissions in real-world driving conditions than manufacturers' official figures suggest. It argued that such vehicles should not receive tax incentives comparable to those available for fully electric vehicles.
Referring to a 2025 study by Transport & Environment, Mouvement Ecologique said the gap between official and actual emissions has widened in recent years, with plug-in hybrids registered in 2023 producing real-world emissions almost five times higher than their certified figures.
The NGO noted that the planned changes are expected to be introduced through a Grand Ducal regulation, meaning they could, in principle, be adopted without a vote in the Chamber of Deputies.
Calling on the government to reconsider, Mouvement Ecologique stated: "In view of the urgent need for action on climate change – every further rise in temperature must be combated - the urgent need for an energy transition, the need to become less dependent on authoritarian states, and the need to protect people from rising energy prices, the Mouvement Ecologique calls on the government to withdraw the proposed amendment."
The organisation also urged Luxembourg’s Chamber of Deputies to examine the draft regulation and "take a clear stand against the proposed amendment".
It concluded that, without such action, "the government and MPs will lose all credibility on the issue of climate protection," adding that the opposite approach should instead be taken by removing tax benefits for plug-in hybrid company cars altogether.
