The report “Energy Policy Review Luxembourg 2026” published by IEA highlights that Luxembourg’s climate and energy goals are aligned with the European Union (EU) targets for a 55% reduction in greenhouse gas emissions by 2030 and a 90% reduction by 2040, and it has legally enshrined net zero emissions by 2050. Despite rapid population and economic growth, energy-related emissions have already fallen by 40% since 2005, reflecting the success of early measures. Public support for climate action is also robust, providing a strong foundation for the next phase of the transition. To meet its targets, however, Luxembourg will need to implement more ambitious decarbonisation policies while carefully managing energy security and affordability considerations.
Luxembourg faces unique challenges in its energy transition due to its small surface area and import-dependent economy. Heavy reliance on energy imports – covering all fossil fuels and nearly 80% of electricity demand – increases the vulnerability of the energy system. Addressing these challenges will require long-term, system-wide planning to guide investment across electricity, heating, hydrogen and digitalisation, alongside stronger communication and public engagement to boost uptake in clean energy choices. At the same time, Luxembourg’s small size and close integration with (neighbouring) European markets offer significant opportunities for regional co-operation on cross-border electricity and hydrogen infrastructure. Luxembourg should put in place support mechanisms to derisk hydrogen infrastructure development to enable robust trade.
Luxembourg’s buildings sector trails other sectors in emissions reductions and would benefit from more targeted regulatory and financial levers to support the low-carbon transition. As the largest contributor to both energy demand and emissions, the transport sector must ramp up efforts to lower oil consumption. Luxembourg’s electricity sector needs to accommodate growing electrification of end-use sectors. To meet rising demand for electricity, domestic renewable generation is projected to double by 2030, led by solar photovoltaics (PV) and wind, but limited surface area and permitting constraints mean imports will continue to play a dominant role. At the end of 2024 the government launched a public consultation named ESE to simplify and speed-up PV and wind projects, from which it identified and approved 51 concrete measures that are being implemented. Additional reforms to the grid connection process to prioritise viable projects would help clear a current backlog of connection requests and support faster connections of shovel-ready renewables projects.
Access the report here