The European Commission unveiled on Friday a target to electrify 46 percent of the EU's economy by 2040, covering transport, industry, and buildings. The move is designed to slash the bloc's reliance on imported fossil fuels, which currently costs member states an estimated €260 billion each year. The announcement, part of a broader Electrification Action Plan, includes proposals to reform energy network fees, taxation, and building efficiency standards.
Brussels is accelerating its electrification push in response to the energy security crisis triggered by disruptions in the Strait of Hormuz, which laid bare the EU's vulnerability to imported oil and gas. The Commission acknowledged that the pace of electrification has stagnated at 23 percent over the past decade, leaving 77 percent of the economy still powered by fossil fuels.
Tax Imbalance and Market Barriers
A key obstacle identified by the Commission is the disparity in taxation between electricity and gas. In several EU countries, electricity is taxed more heavily than gas, discouraging households and businesses from switching to cleaner technologies like heat pumps and electric vehicles. Commission President Ursula von der Leyen and Council President António Costa have previously flagged this issue.
To address this, the Commission is proposing a legal principle requiring member states to ensure that electricity is not taxed at a higher rate than gas. However, governments will retain flexibility in structuring their national tax systems under existing EU energy taxation rules. "We are proposing a general principle that electricity should not be taxed higher than gas," a senior Commission official told reporters.
Christian Kjaer, executive director of the Brussels-based non-profit SuperGrid Europe, called the tax proposal "a bold move" but noted that tax policies across Europe have held back electrification for decades. "It's in the nations' own long-term interest," he said.
Heat Pumps and Electric Vehicles
Buildings account for roughly half of the EU's gas consumption, making them a priority for electrification. The Commission plans to promote heat pump deployment in new buildings, simplify permitting, improve cost transparency, and leverage existing funding instruments to help households switch from gas heating. The plan projects that electrification could support the uptake of approximately 100 million heat pumps by 2040, up from 30 million today, and around 120 million battery electric vehicles, compared to 8 million currently.
German MEP Christian Ehler, energy spokesperson for the European People's Party, welcomed the Electrification Action Plan as a positive signal. "Electricity must become cheaper to realise a switch away from fossil fuels. The EU must do everything that makes sense within a market-based economy to achieve this goal," he said, citing promising measures on network codes, grid charges, and flexibility.
Criticism and Caution
Thomas Lewis, an energy policy expert at Climate Action Network Europe, said the 46 percent target signals an important direction but warned that its impact "risks being counter-productive" without strong accompanying measures to phase out fossil fuels and binding post-2030 targets for renewable energy and efficiency. He noted that fossil fuel subsidies continue to distort market prices, artificially lowering the cost of fossil fuels.
Lewis also pointed out that the official proposal dropped a key performance indicator for 100 GW of annual renewable energy deployment that had appeared in leaked drafts. "Doubling down on the deployment of renewable energy and increasing energy savings is the quickest path towards delivering an affordable, secure and sustainable energy supply," he said.
Christian Kjaer cautioned that the 46 percent target would be "pointless" if used in isolation or if it undermined the setting of 2040 targets on renewable energy and efficiency. The Commission has said the target will be part of a broader analytical framework linked to the EU's post-2030 climate and energy strategy, with further details expected later this year.
The plan also comes as Europe faces rising cooling energy demand amid intensifying heatwaves, a trend that underscores the urgency of modernising the grid. Europe's cooling energy demand has doubled in six years, adding pressure on electricity systems already grappling with the transition.
