The increase, announced by finance minister Pierre Gramegna (DP) on Monday, is expected to set households back a further €20 per year, on a distance travelled of 20,000 kilometres.

Gramegna said the increase was offset by the fact that households would save up to €80 per year when free public transport is introduced from March 2020, an estimate from Statec.

Luxembourg, which has among the lowest fuel prices in western Europe, increased excise duties on fuel in May 2019 by 2 cents on a litre of diesel and 1 cent per litre of petrol.

According to government figures, the increase in cost prompted a 2.5% decline in diesel sales from May to November 2019 compared to 2018. Sales had, however, increased sharply in the first months of 2019, ahead of the May price increase. On the other hand, petrol sales increase 5% from May to November, and by 10% over the first four months of 2019, before the price increase.

According to Gramegna, the excise duty places Luxembourg professional diesel prices above those in Belgium but 10 cents below those in Germany and 8 cents below France.

Assessing the end-of-year results, the minister estimated combined fuel sales totalling 2,650 billion litres. In the following years, the budget foresees sales at 2,626 billion litres in 2020, 2,681 billion litres in 2021, 2,723 billion litres in 2022 and 2,753 billion litres in 2023.

Luxembourg has committed to reducing CO2 emissions by 55% by 2030 under its national integrated energy and climate plan and the transport sector is responsible for two thirds of the country’s emissions, according to the government. By 2020, the goal was to reduce CO2 emissions from 9.3m tonnes in 2019 to 8.1 million tonnes in 2020.

The ministry stressed that the increase in excise duty was separate from a planned CO2 emissions tax, which will apply to all fossil fuels.