Luxembourg announced ambitious climate targets to accelerate progress towards carbon neutrality in 2050. These objectives require significant mitigation efforts, as progress in the green transition has stalled in the past few years. The emissions reductions required in the next 30 years are greater than the declines of the 1990s, which were driven by reforms to the steel industry and the closure of coal power plants. At the same time, the targets can allow Luxembourg to benefit from the green transition. Owing to the specificities of Luxembourg’s economy, most of the efforts will need to be focused on the transport and housing sectors. The transition will require deep changes in the behaviour of households, whose high carbon footprint is due to car usage and home heating. Sustainably reducing emissions also requires tackling cross-border fuel sales for both freight and commuters. Furthermore, reforms in agriculture are needed to reduce pressures on biodiversity. A wide range of policy tools need to be used to increase public acceptability. A higher carbon price over the medium and long term would lead to lower fuel sales and greater energy efficiency. Better spatial planning policy could reduce urban sprawl and car dependency. Stricter regulations and enhanced incentives would facilitate more environmentally-friendly agricultural practices.