Climate change mitigation - National Responses (Luxembourg)

Given the challenges described in the ‘Outlook 2020’ chapter, the main areas for which there is potential for deploying mitigation policies are road transportation and buildings. These two sectors are identified as focus areas in the National CO₂ reduction Action Plan (‘Plan d'Action en vue de la réduction des émissions de CO₂’) and a variety of appropriate policies and measures have been implemented.

Road transportation

• vehicle tax reform: since 1 January 2007, the annual tax is based on CO₂ emissions [Note 7];
• promotion of CO₂-efficient vehicles: subsidies for the purchase of low-emission vehicles registered between 1 June 2007 and, to date, 31 December 2010. This subsidy has been complemented by what is known as a ‘prime à la casse’ for new vehicles registered in 2009, and up to 31 July 2010, to replace vehicles over 10 years old. All these financial subsidies are regularly evaluated and will be adapted or amended in due course;
• ‘Kyoto-cent’: climate cents have been levied on all petrol and diesel sold since 1 January 2007 (EUR 0.02/litre for petrol, EUR 0.0225/litre for diesel);
• promoting the use of second-generation biofuels in accordance with EU legal texts;
• promoting public transport: Luxembourg has an ambitious modal-split target for 2020: 25 % of commuter journeys by public transport against 75 % using private vehicles. Two Action Plans have been introduced as instruments in support of this goal: one dealing with transport as a whole and another focusing on non-motorized mobility (‘mobilité douce’ in French): more details here and here.

Buildings (residential, commercial, institutional)

Numerous policies, measures and incentives have been introduced to increase energy-efficiency in buildings and promote the use of renewable energy sources. These measures relate to old buildings (renovation) and new constructions that have to comply with increasingly stringent energy requirements.

To conclude, due to limited mitigation potential, the size and location of Luxembourg and anticipated economic and demographic growth that might offset some of the energy-efficiency gains, there is a risk that national policies and measures might be insufficient to bridge the gap between allocated emissions under the Kyoto Protocol and estimated emissions for the Kyoto period. In fact, recent calculations indicate that, even after taking into account the anticipated effects of implemented and additional policies and measures, GHG emissions will reach an annual average of 13.1 million tonnes of CO₂e over the Kyoto commitment period (2008-2012). This amounts to some 3.7 million tonnes of CO₂e per year above the annual amount of 9.48 million tonnes of CO₂e Luxembourg is supposed to emit to respect its minus 28 % Kyoto reduction target. As a consequence, and since no reductions from carbon sinks are expected, Luxembourg now anticipates using project-based mechanisms and assigned amount units (AAUs) under international emissions trading for between 18 and 20 million tonnes of CO₂e during the commitment period. The Kyoto Protocol’s Clean Development Mechanism (CDM) is expected to cover about half of the emission reductions and Joint Implementation (JI) and International Emissions Trading (IET) the remaining half.

To meet the EU 'Climate and Energy Package' objective for 2020 assigned by the Commission – i.e. (i) to reduce GHG emissions by 20 % to below their 2005 level for sectors outside EU ETS; (ii) to achieve an 11 % share of renewable energy from total energy consumption by 2020; and (iii) to achieve a 10 % share of biofuels from total energy consumption for the transport sector by 2020 – Luxembourg will have to reinforce and define new policies and measures. Discussions are ongoing with a view to revising the national Action Plan for CO₂ reduction as part of the wider ‘Environment-Climate Partnership’ put into place by the current Government and presented in one of our national and regional stories. In addition, a Renewable Energy Action Plan was adopted in July 2010 which foresees Luxembourg reaching its renewable energy objectives for energy consumption in the transport sector through a mix of biofuels, the promotion of electric vehicles and production from renewable energy sources.

Financing use of the Kyoto Mechanisms: the ‘Kyoto Fund’

In order to finance the purchase of tonnes of CO₂ within the framework of project-based mechanisms and international emissions trading, Luxembourg set up the ‘Kyoto Fund’ in 2004. Sources of revenue are annual budgetary grants, 40 % of the CO₂-based vehicle tax and 100 % of the ‘Kyoto-cent’. Budgetary grants represents just over 10 % of the proceeds in the Fund, vehicle tax just under 30 % and the ‘Kyoto-cent’ some 60 %.

Notes

[1]

According to Decision 280/2004/EC and the UNFCCC requirements the latest official GHG inventory covers the period 1990-2008: see submission 2010v2.1. Nevertheless, Luxembourg has produced for the European Commission and the EEA provisional 2009 estimates during the summer of 2010. These estimates are used as reference in the text.

[2]

CO₂e stands for CO₂ equivalents, i.e. other GHG gases are converted into CO₂ according to their 100-year global warming potential (GWP).

LULUCF stands for ‘Land Use, Land Use Change & Forestry’. This covers carbon sinks (or sources) due to land use and changes made to it, whether through human activities (deforestation, reforestation, renaturation, conversion to agricultural land or settlements) or due to natural causes (fires, storms). In the rest of the text, unless indicated, GHG total emissions are quoted excluding emissions from LULUCF activities.

[3]

According to IPCC rules the related emissions were counted in GHG balances for exporting countries, not in Luxembourg’s own balance.

[4]

Directive 2003/87/EC determines which installations are part of the EU Emission Trading System (ETS) during the period 2008-2012. In Luxembourg, 14 installations participates to the ETS, for an allocated annual amount of 2.49 million tonnes of CO2e. Since emissions of these installations are ‘regulated’ by the ETS, national policies and measures to mitigate GHG emissions should ideally target emissions which are not covered by the ETS. The non-ETS sectors are essentially small industries, agriculture, waste management and, especially in Luxembourg, buildings and road transportation.

[5]

First estimates for 2009 show that emissions decreased by 22.4 % for the steel industry and by 8.5 % for the other manufacturing industries. Road transportation related emissions lost 6% between 2008 and 2009.

[6]

According to IPCC rules the related emissions were counted in GHG balances for exporting countries, not in Luxembourg’s own balance.

[7]

Other emissions are also considered: for instance, diesel vehicles – which emit less CO₂ than petrol vehicles – must have a particle filter to qualify for a lower tax rate.

Other interesting links

Second national Allocation Plan for the allocation of GHG emission allowances (‘Deuxième Plan National d’Allocation de quotas d'émission de gaz à effet de serre’): click here (in French and German).

Second, Third, Fourth and Fifth National Communication of Luxembourg under the UNFCCC – Chapter II: click here.

Luxembourg’s National Inventory Report 1990-2008 – Section 2.1: click here.