Environment at a Glance: Luxembourg
Table of contents
The OECD Environment at a Glance Country Notes are designed to support transparent, evidence-based information. They provide concise and descriptive overview of progress across major environmental issues, including climate, air quality, freshwater resources, waste and the circular economy, and biodiversity conservation. They feature selected environmental indicators, building on harmonised datasets available on OECD Data Explorer. Differences with national data sources can occur due to delays in data treatment and publication, or due to different national definitions and measurement methods. See the Reader’s guide to the Environment at a Glance Country Notes for more information.
Luxembourg is a small open economy characterised by strong international interdependence and substantial cross-border flows of goods and people. The economy is dynamic dominated by services, and Gross Domestic Product (GDP) per person is well above the OECD average. With few exploitable natural resources beyond forests, Luxembourg depends heavily on external markets for energy and raw materials. Cross-border workers form a major pillar of the labour force. Rapid population growth is driven largely by immigration: almost half of the residents are born abroad, which contributed to high population density high consumption levels and growing mobility and infrastructure needs.
Agricultural and forest cover more than half and more than a third of the territory, respectively. However, the continued expansion of artificial areas has increasingly fragmented landscapes.
The Grand Duchy of Luxembourg is a small unitary state with a centralised system of environmental governance. Its 102 municipalities nevertheless have a large degree of autonomy, including for land-use planning and the delivery of environmental services.
The per person production-based (i.e. produced within the territory) and demand-based (or footprint, i.e. including emissions incorporated in imported goods) greenhouse gas (GHG) emissions remain above the OECD averages, and have started to decline only after 2010. This is mainly due a decrease in transport emissions, driven by higher road fuel prices and subsequent reduction in road fuel sales.
Total GHG emissions (excluding land use, land-use change and forestry – LULUCF) decreased by 22.2% during 2000-24, with little change in the sectoral composition. Carbon dioxide (CO2) emissions from fuel combustion per person are high due to the historically low taxation of road fuels, which has encouraged cross-border workers and drivers of vehicles in transit to fill in Luxembourg. Consequently, transport is the largest source of GHG emissions, accounting for more than half of the total. The residential sector is the second largest emitter (17.8% in 2024, excluding LULUCF), followed by manufacturing (12.7%) and agriculture (8.9%). The LULUCF sector is a net sink (Luxembourg, 2026).
The energy mix is dominated by oil, mainly road fuels. Luxembourg imports most of its energy. Its domestic production is very low compared to demand and to final energy consumption. National production is mainly based on renewables such as wind, solar photovoltaic, biogas and, more recently, wood waste, whose share in power generation is rising.
The low share of renewables in electricity production between 2002 and 2012 is explained by the operation of a large gas fired combined heat-power turbine that started around 2002 and closed in 2016, and which represented 66% of the electricity produced in 2015 (OECD, Environmental Performance Reviews: Luxembourg, 2020). Since then, the share of renewables in electricity production quadrupled, to reach 91.3% in 2025.
Emissions of most major air pollutants have decreased since 2000. This is due to the effects of the 2008-09 economic crisis, resulting in less road transport (following a decrease in international trade); a higher price for road fuels (leading to a decrease in fuel sales to non-residents); and the continuous renewal of the car fleet. Other factors that played a role include industry’s introduction of catalytic converters and limits for solvents; more efficient technologies (particularly in combustion and processes in the metallurgical industry); as well as reductions in the sulphur content of petroleum products and fuels; as well as the substitution of coal with natural gas in the energy mix (OECD, Environmental Performance Reviews: Luxembourg, 2020). Although decreasing, road transport remains by far the largest source of nitrogen oxides (NOx). Luxembourg reached its 2020 Gothenburg Protocol objectives for sulphur dioxide (SO2), NOx, non-methane volatile organic compounds (NMVOCs) and ammonia (NH3) emissions.
NOx emissions per person are high due to the historically low taxation of road fuels, which has encouraged cross-border workers and drivers of vehicles in transit to fill in Luxembourg. Most other emission intensities are below the OECD and OECD-Europe averages.
Emission reductions went on par with air quality improvements. Average population exposure to fine particles (PM2.5) nevertheless remains above the 2021 guideline value of 5 µg/m3 recommended by the World Health Organization.
Water is abundant in Luxembourg, and the country is therefore under low water stress. Since the entry into force of the Water Law in 2008, which imposes water pricing in accordance with the polluter pays principle, water consumption gradually declined. Per person abstractions for public supply is low compared to most OECD countries.
Since 2011, the network of wastewater treatment plants has been extended, and the plants are continuously being modernised. Most households are connected to plants with tertiary (“advanced”) treatment. Less than 1% of the population is not yet connected to a public wastewater treatment plant. The wastewater from these dwellings is, in the majority of cases, pre-treated in private septic tanks before being discharged into the public sewage network or into the natural environment.
Luxembourg generates a high amount of municipal waste per person. This is partly due to the waste produced by cross-border workers, as well as to the economy’s high level of consumption. Since 2000, waste recovery (in particular incineration with energy recovery) has been growing faster than production. 1
Luxembourg has few natural resources and imports a large share of the materials it consumes (mainly fossil fuels, construction materials and metals). Domestic material consumption declined following the financial and economic crisis (2008-2010), then rose again between 2013 and 2017, but less rapidly than GDP and population growth, partly due to the definitive closure of some steel producing installations. Material intensity per person is high, driven by the economy’s high level of consumption, including cross-border workers. Material productivity is among the highest in the OECD thanks to the sustained economic growth.
Domestic consumption of metal products decreased when steel industries experienced a production reduction during years 2006 to 2009, while sand and gravel imports increased between 2015 and 2016, to support the acceleration of construction activities.
Despite its small size and the fact that it is a landlocked country, Luxembourg stands out thanks to its geological and landscape diversity and species richness. Demographic growth, economic development and growing numbers of cross-border workers have exacerbated the demand for infrastructure and built-up areas.
About 1 300 vascular plants have been recorded in Luxembourg – a figure that compares with those of much larger European countries. The share of threatened species is high, as is the number of common species in decline. Overall, two-thirds of species are either extinct or in an unfavourable or poor state of conservation. The main factors in the deterioration of the natural environment are artificialisation of soils, habitat loss and degradation, landscape fragmentation, caused by the intensification of agricultural practices, infrastructure development and urban sprawl, as well as invasive alien species and climate change. Aquatic and open land habitats are in a particularly unfavourable state (OECD, Environmental Performance Reviews: Luxembourg, 2020).
Protected areas cover almost 40% of the territory in Luxembourg. This is well above the OECD average and the 2030 Global Biodiversity Framework (GBF) target (under the Convention on Biological Diversity) of protecting 30% of terrestrial and inland water areas. Areas covered by nature parks (International Union for the Conservation of Nature - IUCN - categories V and VI) have increased substantially over the past two decades, and the share of natural monuments and habitat (IUCN categories III and IV) is much higher than the OECD average. Four-point five percent of the country’s land is covered by protected areas that have had management effectiveness assessments.2
This section shows selected policy instruments based on data available for most OECD countries and does not provide a complete overview of countries’ policy mix to achieve their environment-related objectives. Interpretation should consider the country specific context.
The share of revenues from environmentally related taxes in GDP has been decreasing considerably since 2010 and is in line with the OECD average. Like all OECD countries, Luxembourg collects most environmentally related revenues through taxes on energy products and, to a lesser extent, on vehicles. Taxes on pollution and resource use are limited to water abstractions and polluting discharges, and generate a negligible revenue. Taxes on transport fuels have traditionally represented an important source of revenue, due to the large amounts of fuel sales to non-residents (OECD, Environmental Performance Reviews: Luxembourg, 2020).
In total, 87.1% of GHG emissions in Luxembourg were subject to a positive Net Effective Carbon Rate3 (ECR) in 2023. Explicit carbon prices in Luxembourg consist of emissions trading system (ETS) permit prices and carbon taxes, which cover 86.7% of GHG emissions in CO2 equivalent. With roughly 72.8% of total GHG emissions, coverage is largest for carbon taxes. Fuel excise taxes, an implicit form of carbon pricing, covered 80.6% of emissions in 2023. About 68% of GHG emissions have a Net ECR above EUR 60 per tonne of CO2 equivalent, a mid-range estimate of current carbon costs. Net ECRs are highest in the road transport sector, which accounts for 54% of the country's total GHG emissions. The Net ECR is on average zero in the agriculture and fisheries sector. The agriculture and fisheries sector accounts for 0.8% of GHG emissions (OECD, Pricing Greenhouse Gas Emissions 2024: Gearing Up to Bring Emissions Down, 2024).
Luxembourg provides public support for environment-related research and development (R&D) in the form of grants and tax incentives, as well as financial support to enterprises for improving environmental performance. Luxembourg has developed a specialisation in environmental technology in recent years. Eco-innovation promotion programmes have a strong focus on the circular economy. However, the share of environmentally related R&D in total public R&D remains relatively low.
Luxembourg is a marginal player in environmentally related inventions, with less than 20 patent applications annually by national inventors in more than two jurisdictions. Their share in total inventions is also in line with the OECD average.
Luxembourg’s development co-operation focuses on access to basic social services, humanitarian assistance and sustainable finance. Luxembourg is consistently among the most generous Development Assistance Committee (DAC) members relative to its gross national income (0.99% in 2025), including in allocating official development assistance (ODA) to least developed countries. Furthermore, in-donor refugee costs and climate finance are accounted for outside ODA to avoid a crowding out effect. This is reflected in the low share of bilateral aid targeting climate change, 10.8% in 2023-24. Similarly, the share targeting biodiversity is low, at 4% in 2023-24 (OECD, 2026).
References
Hockings, M., & al, e. (2006). Evaluating Effectiveness. A framework for assessing management effectiveness of protected areas. 2nd Edition. IUCN. Retrieved from https://portals.iucn.org/library/efiles/documents/PAG-014.pdf
Luxembourg. (2026). National Inventory Documnet 1990-2024. Environment Agency. Retrieved from https://unfccc.int/documents/656560
OECD. (2020). Environmental Performance Reviews: Luxembourg. OECD Publishing, Paris. doi:10.1787/fd9f43e6-en
OECD. (2024). Pricing Greenhouse Gas Emissions 2024: Gearing Up to Bring Emissions Down. OECD Series on Carbon Pricing and Energy Taxation, OECD Publishing, Paris. doi:10.1787/b44c74e6-en
OECD. (2026). Development Co-operation Profiles. OECD Publishing, Paris. Retrieved from https://www.oecd.org/en/publications/development-co-operation-profiles_04b376d7-en/luxembourg_b4df7146-en.html
Further reading
CBD (2022), Country profiles: Luxembourg, https://www.cbd.int/countries/profile/?country=lu
IEA (2020), Luxembourg 2020 Energy Policy Review, IEA Energy Policy Reviews, OECD Publishing, Paris, https://doi.org/10.1787/54355dd7-en
MECO (2015), The “Third Industrial Revolution – Lëtzebuerg, Luxembourg.
MECDD (2019), Luxembourg 2030 – 3ème Plan National pour un Développement Durable, Luxembourg.
MECDD and MEA (2020), Integrierter Nationalenergie- und Klimaplan Luxemburgs für den Zeitraum 2021-2030, Luxembourg.
MECDD (2020), Fourth Biennial Report of Luxembourg under the United Nations Framework Convention on Climate Change, Chapter III.
UNEP-WCMC (2024), “Protected Area Profile for Luxembourg”, the World Database of Protected Areas, www.protectedplanet.net
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← 1. Break in time series between 2015 and 2016: since 2016, more waste similar to household waste from non-household sources is included in municipal waste statistics
← 2. Protected Area Management Effectiveness evaluations can be defined as: “the assessment of how well protected areas are being managed – primarily the extent to which management is protecting values and achieving goals and objectives" (Hockings & al, 2006).
← 3. Effective Carbon Rate (ECR) is the sum of fuel excise taxes, carbon taxes and tradeable permits that effectively put a price on carbon emissions. The Net ECR equals the ECR minus fossil fuel subsidies that decrease pre-tax fossil fuel prices.