2 minute read / July 18, 2026
The Commission today presents an Electrification Action Plan to make Europe the first electro-powered continent, and a stronger carbon market to support EU’s industry in the clean transition and electrification.
Europe’s reliance on imported fossil fuels has repeatedly exposed it to geopolitical shocks. These have driven up energy prices for both households and companies, and dragged down our competitiveness. While 70% of EU electricity is now generated from homegrown clean energy sources, the electrification rate of energy demand has stalled at 23% over the past decade. We therefore need to accelerate the electrification of energy-using sectors, notably industry, transport and buildings.
To support this ambition, an indicative electrification target of 46% by 2040 will be assessed by the Commission as part of the post-2030 Energy Union package. Reaching this goal could cut the EU’s fossil fuel import bill by €260 billion per year by 2040. Electrification comes with substantial benefits for the EU economy, businesses and citizens in terms of lower energy prices and competitiveness, stronger energy security and resilience.
The ETS Review: an investment engine fit for 2040 goals
The review will bring relief to industry, while preserving the essential role of the ETS in the climate and energy transition, in line with the EU Climate Law. It updates the Linear Reduction Factor (LRF) of 3.7% for 2031-2035 and 1.7% for 2036-2040, making the trajectory more gradual and aligned with domestic climate ambition level. Up to 2% high-quality international credits will allow to finance decarbonisation projects abroad and provide breathing space in 2036-2040 when the emission reduction in Europe will become more challenging.
