National Climate Goal for Industry

An ambitious vision calling for an effective support strategy

Luxembourg, 29 September 2021In its climate law of December 2020, the Luxembourg government fixed very ambitious targets for reducing greenhouse gas emissions at national level. Set at 55% reduction to be reached by 2030 compared to 2005, five sectors, i.e. (1) energy and manufacturing industry & construction, (2) transport, (3) residential and service sector buildings, (4) agriculture and forestry, (5) waste and wastewater treatment, are supposed to contribute with specific targets to this goal. This commitment is all the more confident and ambitious since the government’s objective is 5% higher than the EU recommendation defined for Luxembourg according to the Effort Sharing Mechanism.

It goes without saying that FEDIL – The Voice of Luxembourg’s Industry and its members agree on the need to mitigate climate change. They are aware that more efforts are needed to decarbonise industry and make the energy transition a reality. However, FEDIL and its members also believe that a number of business and technological barriers are likely to put the national decarbonisation vision at risk. FEDIL thus calls for a framework of measures and actions that are instrumental for reaching the climate targets. In this sense, FEDIL claims an effective supporting strategy in terms of investment, taxation, and innovation, as well as access to sufficient and competitively priced renewable energy. At the same time, the climate policy should not prevent the implementation of new industrial projects that are necessary for economic growth and competitiveness. To make all industrial players adhere to the ambitious climate goal, awareness raising, increased predictability on opportunity costs, and financial incentives are needed.

In particular with regard to decarbonisation investments and technology availability, the government needs to

  • Incentivise a huge influx of low carbon investments across all industrial sectors.
  • Absorb the increasing operational costs due to decarbonisation by electrification through appropriate instruments.
  • Streamline authorisation procedures to accelerate the low carbon transformation.
  • Analyse and deploy hydrogen (H2) and carbon capture & utilisation (CCU) technologies, where applicable.

The above considerations brought FEDIL to work out a catalogue of nine (9) propositions to tackle the low carbon transition in the non-ETS[1] industrial sector:

  1. Make the CO2 tax progressive for industrial companies, which should provide a better return on climate investments for the industry and have a significant impact on national CO2
  2. Provide a Voluntary Agreement Scheme for CO2 reductions to incentivise a broad group of companies to reduce emissions.
  3. Introduce an extraordinary state aid for the electrification of heat as an investment incentive and compensation for extra operational costs of electricity.
  4. Make electricity the energy of choice for the industry by granting industrial companies attractive electricity prices.
  5. Introduce super fiscal deductions for low carbon investments in plant and machinery equipment, including related staff-, training-, or retraining costs.
  6. Dynamise energy efficiency by introducing tradable energy efficiency certificates.
  7. Promote technology switches to renewable process heat production and secure sourcing of biomass, biofuels, and biogas at predictable prices. Foster and promote new sourcing opportunities for renewable electricity EU wide.
  8. Preserve technology neutrality by authorising carbon capture technologies to decarbonise processes with incompressible emissions and develop local carbon usage applications.
  9. Implement specific measures for the construction sector, such as promoting upwards constructions; improved electricity supply on construction sites and promote biofuels; decentralise and multiply inert waste landfills; and make transport related emission reductions accountable in the construction activity.

FEDIL and its members are convinced that much more far-reaching and unconventional measures as the ones foreseen by the National Energy and Climate Plan, doubled by a well-designed legal framework and attractive support instruments, are necessary to meet the commitments towards a climate-neutral future. The industry itself is part of the solution, and all players are willing to contribute bringing emission reductions in the industrial sector on track for 2030.

 

 

[1] A distinction is made between energy-intensive and non-energy intensive sectors. The policy applied to energy-intensive industry is now known as the Emission Trading System (ETS).

Annex: FEDIL’s position on Luxembourg’s National Emission Trajectories (EN)

Press contact FEDIL

Laurence Kayl, Head of Communications
laurence.kayl@fedil.lu

T +352 43 53 66-617