Chapter 1 provides an overview of the main environmental trends observed in Luxembourg since 2005. It describes the country's progress and challenges on its path towards decoupling environmental pressures from economic growth and achieving national and international goals, based on data from national and international sources. It reviews the main economic and social developments, takes stock of changes in the energy, carbon and material levels of the economy and measures progress towards sustainable management of natural resources. Where possible, trends are compared with those of other OECD member countries.

Luxembourg is a small country with a centralised system of environmental governance. The government has made significant efforts to increase its transparency and accountability and to update environmental legislation. However, resource constraints impede more effective implementation of environmental policies and law and use of good practices in compliance assurance. Chapter 2 analyses the institutional and regulatory framework for environmental management, the setting and enforcement of environmental requirements, and mechanisms of public participation in decision-making, as well as access to environmental information, education and justice.

Chapter 3 analyses Luxembourg’s progress towards achieving a greener and more inclusive economy. It looks at efforts to build a sound policy and institutional framework for sustainable development. It reviews steps taken to green the tax system, by using energy and transport taxes to pursue environmental objectives and removing environmentally harmful subsidies. In addition, this chapter examines investment in sustainable infrastructure and services and the country’s eco-innovation performance, as well as opportunities for greening the financial sector. Finally, it briefly reviews progress in mainstreaming environmental considerations into development co-operation.