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Energy policy tools in Luxembourg - Assessing their impact on households’ space heating energy consumption and CO2 emissions by means of the LuxHEI model

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  • Stéphane Poncin

    (CREA, Université du Luxembourg)

Abstract

In the Grand Duchy of Luxembourg, the residential building sector is a major energy consumer and greenhouse gases emitter that is considered key in achieving the country’s climate goals. The purpose of this paper is to assess the effectiveness of the most important policy instruments in achieving savings in the final energy consumption and direct CO2 emissions of Luxembourgish households. Our study is based on the LuxHEI model, which is an enhanced and upgraded version of the well-known French simulation model Res-IRF. This variant has 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 total environmental and economic effectiveness increases if energy policy tools are applied concurrently. In 2060, and compared to the no-policy baseline scenario, the most aspirational policy mix enables energy savings of 42% and an emission mitigation of 60%. From our results, we can draw the following policy implications: for a significant improvement of the sector’s energy efficiency and sufficiency, (1) the implementation of a remediation duty for existing buildings and (2) the tightening of the performance standards for new constructions, (3) combined with a national carbon tax, are crucial.

Suggested Citation

  • Stéphane Poncin, 2018. "Energy policy tools in Luxembourg - Assessing their impact on households’ space heating energy consumption and CO2 emissions by means of the LuxHEI model," DEM Discussion Paper Series 18-23, Department of Economics at the University of Luxembourg.
  • Handle: RePEc:luc:wpaper:18-23
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    More about this item

    Keywords

    Climate goals; energy-economic policy modelling; energy efficiency; emission mitigation; residential building sector. ;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D10 - Microeconomics - - Household Behavior - - - General
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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