Brussels (July 17, 2026) — The European Commission today released its Electrification Action Plan alongside a revision of the EU Emissions Trading Scheme (EU ETS), pairing the two initiatives to strengthen Europe’s competitiveness, energy security and industrial decarbonization.  

The Plan sets an indicative target for electricity’s share of final energy consumption to reach 46% by 2040 — double today’s share. The ETS review would reshape the post-2030 carbon market and direct significantly more revenues towards investment in decarbonizing energy-intensive industries, whilst, controversially, allowing polluting emission permits for a longer period.

Following is a statement from Clem Perry, Global Clean Energy Supply Lead at WRI’s Polsky Center for the Global Energy Transition:

“The EU’s Electrification Plan and the ETS review reflect a simple reality: replacing volatile, polluting fossil fuels with clean electricity is essential to Europe’s competitiveness, security and prosperity.  Europe has cleaned up its power supply, but now it must bring that clean power into transport, buildings and industry to break its dependence on imported fossil fuels.  

“Doubling Europe’s electrification rate by 2040 would reshape the continent’s economy, but reaching that goal will require far more than an indicative target. Europe must electrify smarter, not just faster. It can't simply plug millions of new electric cars, heat pumps and data centers into the grid and hope it holds up. The Action Plan rightly recognizes that new demand can be a source of flexibility, rewarding businesses and households for using or storing energy when clean power is abundant, and easing demand when grids are constrained. Delivering that vision will require modern grids and storage, clear market rules and dependable incentives and revenues for flexibility.

“The Plan still lacks a dedicated strategy for heating and cooling. As heatwaves in Europe become more frequent, longer and more intense, clean, efficient and affordable, heating and cooling must be central to the Plan's implementation to protect people from extreme heat.

“The ETS review must reinforce Europe's shift to clean electrification. Directing more carbon-market revenues towards industrial decarbonization is welcome, but extending free allowances and slowing the decline in emissions permits must come with firm, enforceable investment conditions. Otherwise, Europe risks weakening the very business case for clean electrification that the Plan is intended to strengthen.  

“Done right, electrification can create jobs, attract investment, lower bills for families and businesses and reduce Europe's reliance on volatile imported fossil fuels. The Plan appropriately confronts taxes, levies and fossil fuel subsidies that make electricity needlessly expensive. Now the Commission and Member States must deliver by lowering energy costs, accelerating grid connections, financing the shift to electric heating, transport and industrial processes and rewarding flexible demand.” 

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