On Friday 23 October 2026, local non-profit organisation Mouvement Ecologique issued a statement following the Luxembourg Government’s recent review of the implementation of the "Resilienzpak 2026" tripartite agreement.
In a press release, Mouvement Ecologique said that in view of high oil prices, the question of how to handle the fuel tax relief scheme has been looming for some time, and a decision on the matter is now expected to be taken under time pressure at the next Tripartite meeting.
“It is difficult for most people to understand why the past few months were not used more intensively to discuss possible solutions with all stakeholders — communicating transparently with the public — without time pressure, in an objective manner and on the basis of concrete calculations,” questioned the non-profit organisation.
It added: “At the very latest, the events of this summer have made one thing clear: action to combat the climate crisis must no longer be postponed! Luxembourg has committed to reducing its CO₂ emissions by 55% by 2030 compared with 2005. The state must therefore stop investing public funds in measures that run counter to this objective. Extending the fuel tax relief scheme would clearly do so. This is illustrated, not least, by statistics on the effects of the scheme being phased out: sales of both petrol and diesel are rising significantly again! Anyone wishing to fuel this upward trend and further exacerbate the climate crisis can, of course, support keeping the fuel tax relief scheme in place.”
Mouvement Ecologique believes it is long overdue for all stakeholders to consider how the need for climate protection can be reconciled with social objectives, namely preventing losses in purchasing power and excessive price increases, particularly for people on low incomes.
Ahead of the next round of Tripartite talks, Mouvement Ecologique stated the following considerations and arguments:
Targeted social compensation instead of blanket subsidies
Fuel tax relief is the opposite of targeted social policy: it also benefits people who have sufficient financial means to pay the actual cost of energy. Using taxpayers’ money to subsidise their energy consumption is inherently contradictory.
The primary objective must be to provide financial compensation when prices rise for households with fewer financial resources, which have so far received little support in the energy transition and are particularly affected by rising prices. One potentially useful measure would be to increase the crédit d’impôt (tax credit), as this form of compensation benefits only financially disadvantaged households, including cross-border commuters.
These households should be the main focus. Decisions should be based on modelling by STATEC, Luxembourg’s national statistics institute, but such modelling is currently unavailable.
Why focus on fuels — petrol and diesel?
There are surely other sectors beyond energy in which reducing a consumption tax would have no negative environmental consequences. This deserves open discussion.
If the focus remains on the energy sector, Luxembourg households spend roughly as much on the energy needed to heat and power their homes as they do on fuels. This means that, if the aim is to ease pressure on consumers, purchasing power and inflation, support for energy costs should also focus on housing.
Indeed, in the context of electrifying our energy supply, it would make more sense, given the current pressure, to provide short-term energy assistance for electricity rather than for fuel. Here too, the question remains: why have no STATEC calculations been made publicly available examining the impact of measures in this area?
Whether additional assistance for gas or heating oil would also be needed alongside electricity support to curb inflation would have to be assessed. On the one hand, we must succeed in phasing out gas and, even more so, heating oil. In this respect, providing energy assistance for these fuels would arguably be inappropriate.
However, to keep inflation under control, one could argue that many residents have not yet switched to alternatives such as heat pumps, either because they are unwilling or because they have been unable to do so. The development of public district heating networks, on which some people depend to escape reliance on gas, is also still in its early stages in Luxembourg.
There are therefore at least understandable arguments for state intervention in this area, even though it would represent further investment in fossil fuels and would consequently be problematic.
Such a measure could only be considered legitimate if it were accompanied by significantly stronger legislative action and support for phasing out gas and heating oil — in other words, a genuine transition in heating. This would mean introducing upfront financing for heat pumps in the short term, as well as social leasing schemes for heat pumps; expanding district heating networks by clarifying financing, the responsibilities of the parties involved and the legal basis; and putting forward solutions for tenants, multi-unit residential buildings and other affected groups.
Ultimately, an objective discussion is only possible on the basis of facts. STATEC should disclose how reductions in electricity prices for end consumers would affect inflation and whether additional measures in the gas and heating oil sectors would have a meaningful impact.
If fuel tax relief is continued, could security of supply be jeopardised?
In addition to climate policy considerations, the Ministry of the Economy raised another argument against maintaining fuel tax relief during the Tripartite discussions. When fossil fuels are in short supply, prices should reflect that scarcity. Artificial state intervention creates consumer behaviour that fails to reflect the actual value and availability of a resource.
The reduced prices are therefore very likely to increase fuel sales, both domestically and through fuel tourism, as has already happened in recent months. This could potentially exacerbate supply problems. Would the state itself become a driver of supply shortages?
Why not strengthen the state’s role in expanding electricity networks and invest in public infrastructure instead of simply subsidising consumption?
The state currently covers part of the network charges — the component of electricity prices paid for using the electricity grid. In this way, it subsidises electricity consumption.
An alternative would be for the state to help finance grid expansion directly instead of covering these costs. This would reduce the financing costs borne by network operators. These costs are also reflected in electricity prices, meaning that public investment in the grid could also help lower prices for end consumers.
This approach would also enable the state to make an important contribution to preparing the electricity grid for greater electrification across all sectors, which is essential for the expansion of heat pumps and electric mobility, as well as for managing renewable energy.
Put simply: instead of financing consumption, invest in infrastructure. Alongside reducing network charges, this would create wider societal benefits in support of the necessary energy transition.
Making decisions based on facts
The documents made available to the public for the Tripartite meeting on Tuesday 20 October contained no calculations or modelling of the measures under consideration.
Questions that remain unanswered include:
⁃ How significant would the expected increases in fuel prices be in terms of losses in purchasing power and the debate surrounding automatic wage indexation?
⁃ Which income quintiles would be affected by rising prices, and to what extent?
⁃ What would the consequences be for the business sector?
⁃ What impact would the various proposed solutions — increasing the tax credit, maintaining fuel tax relief or reducing energy prices — have on inflation?
⁃ What might targeted social compensation look like?
Given the importance of these issues and the absence of STATEC’s calculations, it would be downright irresponsible to make decisions within a week without having these facts available. Doing so would hardly strengthen public confidence in the way policy is developed in Luxembourg.
There is another important consideration: on 4 November, STATEC is due to publish definitive inflation forecasts, together with updated calculations concerning the next automatic wage index adjustments. Why should the Tripartite partners have to make a decision a few days earlier without these crucial facts? Is the time pressure so great that waiting a few more days is impossible?
Conclusion
In conclusion, Mouvement Ecologique’s view is, particularly in the wake of this summer, that climate protection must not once again be sidelined or subordinated to the otherwise legitimate objectives of protecting purchasing power and addressing rising prices. It said that extending fuel tax relief would represent a serious policy mistake in this respect.
“The government and social partners must demonstrate that the short-term decisions now being considered can address the key issues of the future — namely, the social and ecological transition, including climate protection and ensuring that people with fewer financial resources are not left behind — rather than playing these objectives off against one another,” stressed Mouvement Ecologique.
“In the medium to long term, however, a far more structured, evidence-based discussion is needed on how to reconcile the urgently required energy transition, prices that reflect actual costs, social compensation and inflation. It would be irresponsible to wait until the next round of Tripartite discussions before holding this fundamental debate. Such an exit strategy is not only an environmental and social necessity but also a matter of public finances.”
