The MP wanted to know if this practice represents a distortion of the free market, if it is compatible with EU regulations, what the OECD’s position towards it is, and whether there are any protests from non-EU countries.
The ADR politician was also interested to know how long the government intends to continue the subsidising of electric cars and how much money has already been spent on it since its introduction.
Minister of Finance Yuriko Backes, Minister of the Economy Franz Fayot, and Minister for the Environment, Climate and Sustainable Development Carole Dieschbourg provided a joint response to the enquiry.
The government officials noted that there is a broad consensus that the energy transition needs to be accelerated and that this can be achieved through a “combination of financial incentives and legal obligations”. The European Union also shares this opinion, which is why Luxembourg’s subsidising plan fits into the EU Green Deal.
The response also elaborates that the OECD has welcomed Luxembourg’s incentives for electric cars. By the end of 2021, 17 EU countries had introduced similar subsidising mechanisms. Furthermore, there is no reported case of a non-member state protesting the practice.
The Ministers explained that the financial incentive has recently been prolonged until 31 March 2024, after which it will be reevaluated. In terms of spending, the government has so far paid out close to €34 million. The response highlighted that this sum also includes other green transportation means, such as bicycles and hydrogen vehicles.
