Introduced in 2021, Luxembourg's carbon tax is set at €46.43 (US$49.91) and targets CO2 emissions from fossil fuels used in industry, transport, and buildings. This tax aims to establish a minimum carbon price to align with neighboring countries and complements the EU ETS by covering sectors not included in it, such as transportation and residential heating. The tax rate has progressively increased from €20/tCO2e in 2021 to €30/tCO2e in 2023, with some revenue allocated to a climate and energy fund to support low-income earners. Exemptions apply to fossil fuels used for electricity generation and industrial processes.