On 17 July 2026, the European Commission presented a new Electrification Action Plan aimed at making Europe the world’s first “electro-powered” continent (“Action Plan”). It seeks to accelerate the shift from fossil fuels to electricity across industry, transport and buildings. The Commission argues that higher electrification would strengthen Europe’s competitiveness, energy security and resilience. By 2030, the Commission will assess an indicative target of increasing electrification from the current 23% of energy demand to 46% by 2040. According to the plan, achieving the 2040 target could reduce the EU’s fossil fuel import bill by EUR 260 billion per year. The Action Plan is available at this link.

The Action Plan focuses on reducing the price gap between electricity and fossil energy costs and on incentivising the uptake of cleaner, electricity-based technologies such as heat pumps, electric vehicles and batteries, among others, across Europe. The Action Plan seeks to level the playing field between electricity and gas. Their price differential often discourages the shift to cleaner options such as heat pumps, electric vehicles and electric industrial processes.

To tackle this, the proposal to future-proof electricity bills in the EU will empower Member States to reduce network charges for certain consumer groups and taxes for energy-intensive businesses. It also spurs faster deployment of smart meters, which will make it easier for consumers to save on their energy bills. The proposal also seeks to make sure that electricity is not taxed more heavily than gas.

The Action Plan also proposes solutions to lowering the upfront costs of electrification technologies across key demand sectors, such as buildings, transport and industry. It sets out a wide variety of tools that can be mobilised, such as the use of social leasing schemes, ETS financial instruments, including the Social Climate Fund and the Industrial Decarbonisation Bank, and a Clean Heat Market mechanism.

To enable electrification, grid deployment must be saccelerated. European electricity grids are among the largest and most reliable in the world. However, long waiting lists for new connections and the existing grid is not being used as efficiently as it could be. The Grids Package proposed last year addresses these challenges, and its swift adoption by the co-legislators by the end of the year will be key for Europe to speed up electrification.

Also, the Action Plan addresses other barriers, including the slow uptake of innovative electrification solutions, by promoting the development of viable investment project and manufacturing capacity in clean energy technologies. It adopts a whole-value chain approach to bring the business case of electrification, starting with investing in skills and the job creation potential aselectrification has the potential to create hundreds of thousands of quality jobs.