International Energy Agency Review of Luxembourg's Energy Policies
Summary of Conclusions and Recommendations:
- Since the last review, Luxembourg has made commendable progress in liberalizing its electricity and gas markets.
- By July 2000 and April 2001, over half of the electricity and gas sectors were opened to competition, with both markets being fully competitive by April 2004.
- An independent regulatory body overseeing both electricity and gas markets was established.
- A new combined-cycle gas turbine (CCGT) power plant began operations in May 2002, providing stable electricity supply and predictable pricing, thus reducing reliance on single suppliers for electricity and diversifying natural gas supply sources.
- Luxembourg ratified the Kyoto Protocol in 2001 and submitted its National Allocation Plan based on the EU Directive on Emissions Trading in April 2004.
- Despite high dependence on imported energy, Luxembourg currently faces no significant energy supply issues.
- Consumers in Luxembourg have experienced lower energy prices compared to neighboring countries.
Key Policy Developments:
- Market Liberalization: The Electricity Law of July 2000 and Gas Law of April 2001 significantly reformed the energy sector by opening up markets to competition.
- Regulatory Framework: An independent regulator was set up to manage both electricity and gas markets, ensuring fair and efficient market operations.
- Electricity Supply Diversification: The introduction of a CCGT power plant in May 2002 provided enhanced stability and predictability in electricity supply, reducing dependency on single suppliers and diversifying natural gas sources.
Environmental Policy and Climate Change:
- Luxembourg ratified the Kyoto Protocol in 2001 and submitted its National Allocation Plan under the EU Directive on Emissions Trading in April 2004, demonstrating commitment to combating climate change through emissions reduction strategies.
Energy Pricing and Consumer Benefits:
- The reforms have led to lower energy prices for Luxembourg consumers compared to their neighbors, enhancing affordability and competitiveness in the energy market.
Future Policy Challenges:
- The report highlights the need for continued focus on diversifying energy sources and improving energy efficiency to ensure sustainable energy security and address environmental concerns.
Overall, the review underscores Luxembourg's proactive approach towards liberalizing its energy markets, enhancing energy security, and contributing to global efforts against climate change.
