From next summer, fares on trains, trams and buses will be scrapped under plans by recently re-elected prime minister Xavier Bettel, who vowed to make the environment a key part of his campaign.
Fares are currently capped at two euros for two hours of travel, which in a small European nation of just 999 sq miles (2,590 sq km) covers most journeys.
However, even this low fare will end under the plans that will be paid for in part by removing a tax break for commuters.
The country has a population of nearly 600,000 – but its capital, Luxembourg City, has some of the worst traffic congestion on the planet.
Around 110,000 people live there but another 400,000 commute in for work every day, while nearly 200,000 cross the border from neighbouring France, Belgium and Germany.
Drivers spent an average of 33 hours in traffic jams in 2016, according to a study.
The country already has shown its green credentials.
Over the summer, free transport was introduced for every child and young person under the age of 20.
And secondary school students are provided with free shuttles between their places of study and their home.
Mr Bettel’s Democratic party is to form a government with the left-wing Socialist Workers’ party and the Greens after he secured a narrow victory in October.
The new administration is also considering introducing two new public holidays and legalising cannabis – the latter policy has caused much debate in the country.
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