Luxembourg’s recovery and resilience plan

RRF FUNDED PROJECTS IN LUXEMBOURG

WHAT’S IN THE PLAN?

The reforms and investments in Luxembourg’s plan  are helping the country to become more sustainable, resilient and better prepared for the challenges and opportunities of the green transition and digital transition. Following Council approval of Luxembourg’s plan on 13 July 2021, Luxembourg’s recovery and resilience plan was updated on 17 January 2023 and 23 September 2024, also to introduce a REPowerEU chapter.

^{*This value includes also de part of the plan which is financed with national resources.}

• 13 investment streams and 10 reforms
• 80.1% of the plan will support climate objectives
• 37.5% will foster the digital transition

The transformative impact of Luxembourg’s plan is the result of a combination of complementary reforms and investments, which address several specific challenges and will support cohesion and boost growth potential in the long term. The reforms address bottlenecks to lasting and sustainable growth, while investments are targeted at green and digital transition. They contribute to clean energy and transport, biodiversity protection, as well as the digitalisation of public administration and, as part of a broader European project, developing and deploying an ultra-secure communication infrastructure based on quantum technology. The plan provides training to job seekers, temporary and older workers, improves the resilience of the healthcare system and increases the availability of affordable housing. The plan also promotes a transparent and fair economy through measures aimed at ensuring effective supervision and enforcement of the national anti-money laundering framework.

All measures have to be implemented within a tight timeframe, as the Regulation establishing the Recovery and Resilience Facility requires all milestones and targets within the national plans to be completed by August 2026.

Luxembourg’s plan now includes one reform and three investments to reduce its reliance on fossil fuels, in line with one of the REPowerEU Plan's objectives.

To finance this increased ambition, Luxembourg has asked for a share of its Brexit Adjustment Reserve to be transferred to the plan, amounting to €128 million. These funds would be added to Luxembourg's REPowerEU grant of €30 million.

Key measures for REPowerEU

The REPowerEU measures include a reform “National biogas strategy”, which revises Luxembourg’s support scheme for biogas production and contributes to the objective of increasing the production and uptake of sustainable biomethane.

The investments are financial support schemes to accelerate the green transition. They cover energy renovation and construction projects for housing, purchase of zero-emission cars, vans, mopeds and bicycles, and photovoltaic power plants for self-consumption in enterprises.

Together, these measures are expected to foster the deployment of renewable energy, energy efficiency, and sustainable transport.

Luxembourg has one of the highest greenhouse gas (GHG) emissions per capita in the EU, despite being a relatively low carbon-intensive economy. To reach climate neutrality, Luxembourg needs to significantly reduce emissions; notably in the transport and construction sectors.

Key measures for the green transition

• Luxembourg’s plan puts a strong focus on the green transition. Its contribution to the green transition amounts to 80.1% of its total allocation of €241.1 million.
• Specific measures include €30.5 million to enlarge the network of charging points for electric vehicles across the country, and €83.4 million to provide financial aid to people buying zero-emission vehicles. 
• The plan also directs €6 million to establish a 'Naturpakt' with municipalities to provide financial support for actions to protect nature and prevent biodiversity loss

Luxembourg is among the EU leaders in connectivity with high coverage of next-generation access networks. However, Luxembourg needs to invest in digital skills. In addition, the use of digital public services remains below the EU average.

Key measures for the digital transition

• Luxembourg’s plan contributes to the digital transition of the country with a broad and cross-cutting approach.
• Specific measures to support securing Luxembourg's digital transition include a €10 million investment and a related reform to support quantum-technology communication for ultra-secure connectivity solutions, to improve the security of public sector communications as part of a wider European project, and €13 million to digitalise the public administration, simplifying internal processes as well as those with firms and citizens. 
• The plan also includes an investment on future skills for workers and two investments to increase the efficiency of the health sector through its digitalisation.

The plan devotes 37.5% of the available funds to measures that support digital objectives. 

Key macro-economic challenges for Luxembourg’s economy include, in particular, a relatively low activity rate for older workers, and a shortage of skilled workers, including in strategic sectors such as information and communication technologies and healthcare. In addition, sharply rising housing prices have an impact on housing affordability, which also risks amplifying inequalities.

Key measures in reinforcing economic and social resilience

• A contribution to skills development is provided by investments of €1.5 million in the vocational training programme “Futureskills”, which aim at developing digital and managerial skills among job seekers.
• The plan also includes a complementary reform, “Skillsdësch”, to design training programmes for the most promising job profiles.
• The single digital register for health professions as well as the reform redefining the competences, tasks and responsibilities of healthcare professionals will contribute to anticipating shortages of healthcare professionals.
• The reform of the “Housing Pact” strengthens the public sector's capacity to increase the supply of affordable and sustainable housing.
• The plan also includes investments amounting to €12.7 million in the modernisation of the public administration and digitalisation of public services so that people and firms can more easily access these services.
• In the fight against money laundering and terrorist financing, the plan foresees the adoption of a new law to improve supervision against money laundering and to perform assessments of money-laundering and terrorist-financing risks in order to strengthen the resilience of the economy

Annual events facilitate the exchange of views on the state of implementation of the Recovery and resilience plans, while ensuring close cooperation between all stakeholders and providing a platform to discuss interlinks between the Plans and other Union programmes. 

More information on Annual events held in Luxembourg can be found here

Luxembourg’s plan is consistent with the challenges and priorities identified in the European Semester, the annual cycle of coordination and monitoring of each EU country’s economic policies. For a detailed explanation of the European Semester see the following link: The European Semester explained | European Commission (europa.eu)

DOCUMENTS