The European Commission (EC) has introduced an Electrification Action Plan (EAP) and a review of the EU Emissions Trading System (ETS) as part of efforts to increase Europe’s energy independence and competitiveness while supporting climate goals.
The initiatives were presented as measures to improve the uptake of electricity use across Europe and to adapt the bloc’s main carbon market to evolving economic and geopolitical conditions.
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The EC has announced that it will assess an indicative target for electrifying 46% of energy demand by 2040, compared with the current figure of 23%. The plan is part of the upcoming post-2030 Energy Union package.
According to the EC, achieving this target could reduce the EU’s fossil fuel import bill by €260bn ($297bn) each year by 2040.
The announcement comes as the EU looks to address persistent reliance on imported fossil fuels, which has made Europe vulnerable to external shocks and rising energy costs.
Alongside the EAP, the EC is proposing a significant review of the ETS to support industrial decarbonisation across the bloc.
Since its introduction in 2005, the ETS has generated more than €270bn in revenues, which have been used to support innovation and modernise Europe’s energy systems.
The revised plan updates the Linear Reduction Factor, introducing rates of 3.7% for 2031–35 and 1.7% for 2036–40, to manage the emission reduction trajectory more gradually.
Investment is a central focus in the new proposals. The Industrial Decarbonisation Bank is set to provide €100bn in funding, with the ETS Investment Booster available before 2030.
The Commission says more than €100bn is expected to be invested before the end of this decade.
Member States will be required to allocate at least half their national ETS revenues to decarbonise sectors covered by the system. Support for lower-income Member States will continue through the Modernisation Fund.
The reviewed ETS includes additional provisions for free carbon allocation to companies, renewed support for sectors facing the Carbon Border Adjustment Mechanism, and integration of permanent carbon removals.
The proposal also suggests expanding the scheme to include waste incineration and strengthening the system for aviation and maritime sectors.
The EC said that electricity prices, grid connection delays and policy barriers remain challenges for consumers and businesses seeking to switch from gas and other fossil fuels.
The EAP aims to close the price gap between electricity and fossil energy, improve incentives for cleaner technologies like heat pumps and electric vehicles, and make it easier for consumers to reduce energy bills.
The plan proposes reductions in network charges and taxes for energy-intensive businesses, faster smart meter deployment and support for manufacturing and skills development in clean energy sectors.
EC President Ursula von der Leyen said: “The best way to reduce Europe’s fossil energy dependency is to power our economy with electricity from clean, homegrown sources.
“Today we are proposing to make Europe the world’s first electro-powered continent. From lowering electricity prices to adapting our carbon market to the changing global realities, this is also an investment and independence plan.”
