Luxembourg can enhance energy security and expand emissions reductions through integrated planning and targeted action

Luxembourg is well positioned to strengthen energy security, reduce emissions and improve resilience thanks to its strong regional integration and highly digitalised energy system, according to a new report by the International Energy Agency. But further targeted action in transport and buildings – supported by more integrated energy system planning – will be needed to fully achieve its energy and climate goals.

The IEA’s Energy Policy Review highlights that Luxembourg is seeking to advance a secure and affordable energy transition in a unique context. The country relies heavily on imported energy and is deeply integrated into European energy markets, allowing it to benefit from regional co‑operation and interconnected infrastructure. At the same time, this requires carefully designed domestic policies to support energy security, affordability, decarbonisation and competitiveness.

Luxembourg has established ambitious climate objectives aligned with EU-wide targets. Progress to date has been strong, with energy-related greenhouse gas emissions already having declined by around 40% since 2005, even as Luxembourg's economy and population have continued to grow rapidly. The IEA report notes that continued investment in new technologies, digitalisation and system flexibility can further strengthen both system resilience and emissions reductions.

One of Luxembourg’s key strengths is its highly digitalised energy system. With near-universal deployment of smart meters and the development of national energy data platforms, the country has created a solid basis for improving energy efficiency, enabling greater consumer participation and shifting demand to periods when electricity generation has lower emissions and costs less.

At the same time, Luxembourg’s electricity system has an unusual profile. While nearly all of Luxembourg’s domestically generated electricity comes from renewable sources, its domestic production meets only around one-fifth of its total electricity demand. The report underscores the importance of both connecting more of this homegrown renewable power capacity to the grid and making the most of regional electricity markets. 

“At a time of renewed concerns about energy security and resilience, Luxembourg demonstrates how regional co‑operation, innovation and digitalisation can help build a stronger and more flexible energy system,” said IEA Executive Director Fatih Birol. “As the country moves forward, integrated planning and targeted measures in transport and buildings will be essential for meeting its goals.” 

“I would like to thank the International Energy Agency for organising this review. In a time of geopolitical instability and rapid technological change, energy policy must balance three goals: security, affordability, and sustainability,” said Luxembourg Minister of the Economy, SME, Energy and Tourism Lex Delles. “Recent international tensions remind us that renewable energy is not only a climate imperative but a pillar of long-term security. This is why Luxembourg must stay firmly on the path to electrification. The IEA’s review offers a valuable opportunity to ensure our policies remain resilient and forward looking.”

The IEA review identifies transport as Luxembourg's most pressing challenge. Transport accounts for around half of the country’s energy demand and a large share of emissions, reflecting high levels of fuel sales to non-residents, cross-border dynamics and a high share of private vehicle ownership among Luxembourg residents. While measures such as free public transport and support for electric mobility have established important foundations, additional policy action will be needed to curb emissions and encourage long-term shifts in mobility patterns.

The buildings sector is also a key priority. Accelerating building renovation and electrification will be essential to reducing energy consumption and emissions. Strengthening policy planning and incentives, improving investment signals and increasing awareness of available support measures can also help households and businesses participate in the transition.

The report includes ten recommendations to support Luxembourg in delivering on its energy objectives. The IEA regularly conducts energy policy reviews to assess Member countries’ energy policies and to provide recommendations based on international best practice. The latest review includes a particular focus on transport emissions, system flexibility and consumer participation.