3FOOD

Third Industrial Revolution Consulting Group
will increase both the resilience and vitality of the national economy. As a specific example,
Luxembourg now imports an estimated 97 percent of its total energy requirements. In the
different energy scenarios characterized in the Energy section of the master plan, the most
cost-effective future energy scenario is the one that increases the local production of electricity
energy to 70 percent within Luxembourg.
Using a thought experiment, we can imagine how building up greater local capacity and energy
supply from 3 percent to 70 percent can increase the robustness of the Luxembourg economy.
For example, we can use a multiplier formula of [1 / (1 – 0.03)] to suggest a base economic
multiplier of 1.03 for each euro spent by businesses and consumers for their overall energy
needs. But if the TIR master plan moves the local purchase coefficient from 3 percent to as
much as 70 percent, as suggested, then the base multiplier for energy increases to 3.33. In
other words, instead of a €100 consumer purchase for average energy needs that initially might
support €103 in regional activity, under the TIR master plan it would support more like €333,
without incurring other additional costs to the economy. This is clearly a cost-effective
improvement in well-being without any significant shift in the level of imports. 374
A third area of opportunity is the likely positive impacts of greater resource and energy
efficiencies on both energy and non-energy unit costs. Hence, even while Luxembourg can
benefit from cost-effective reductions in energy and other resources, the remaining resource
requirements consumption will benefit from lower total cost. For example, as suggested in
Table 4, rather than an anticipated cost of €1,330 per kilowatt of a rooftop photovoltaic system
in 2015, an expanded market with economies of scales and scope is anticipated to drive the
costs down to as low as €660 per kilowatt. In this scenario, a greatly expanded market can drive
further material and design innovations that can lower other costs as well. A related fourth area
of benefit is the prospective of greater productivity which can expand economic opportunity
even given the same level of resource consumption. As an example here, Luxembourg’s GDP in
2014 was an estimated €49.4 billion. Had the larger productivity of the nation’s economy been
just 0.5 percent higher over the period 2000 through 2014, Luxembourg’s GDP would have
been €3.6 billion larger. Again, checking Figure 1 on the jobs per million Euro, a €3.6 billion gain
in that higher productivity would have led to higher employment of about 35,000 jobs (all else
374 This example is intended to show only the relative impacts of increasing the local production of Luxembourg’s
energy needs. There are other interactions that will affect, either up or down, the actual net impacts of these
changed purchase patterns. Among these other drivers are the actual mix of energy resources that are produced
locally, the amount of capital borrowed from Luxembourg versus European or other investors, the scale of homegrown
ancillary services necessary to support local production, and the magnitude of local wages versus outside
employment or contractor support services.
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