Energy Policies for Eco-Friendly Households in Luxembourg: a Study Based on the LuxHEI Model

Abstract

In the Grand Duchy of Luxembourg, the residential building sector is a major energy consumer and greenhouse gases emitter that plays a key role in achieving the country’s environmental objectives. The purpose of this work is to assess the effectiveness of the most important policy instruments in decreasing the final energy consumption and direct CO2 emissions of Luxembourgish households. To this end, we developed the LuxHEI model, which is an enhanced and upgraded version of the well-known French simulation model Res-IRF. This variant has also been adjusted to the particular problems of a small country with growing economy and a quickly increasing population. The LuxHEI model goes beyond standard energy-economy models by incorporating global warming as a decision-making factor. The model outcomes reveal that in 2060, and compared with the no-policy baseline scenario, the most aspirational policy mix enables energy savings of 42% and emission reductions of 60%. However, in none of the projections, the residential building sector meets the national energy and climate targets on time. From the results we can draw the following policy implications: for a significant improvement of the sector’s energy efficiency and sufficiency, the implementation of a remediation duty for existing buildings and the tightening of the performance standards for new constructions, together with the application of a national carbon tax, are crucial.