European Union accelerates plan to electrify its economy

Friday 17 July 2026 - 16:00

By: Azzat Manal

European Union accelerates plan to electrify its economy

The European Union is stepping up efforts to accelerate the electrification of its economy as part of its long-term strategy to reduce dependence on fossil fuels, strengthen industrial competitiveness, and achieve its climate objectives.

The European Commission has presented a new action plan that aims to increase electricity's share of final energy consumption from approximately 23% today to 46% by 2040. According to the Commission, reaching this target could save the bloc up to €260 billion annually by significantly reducing fossil fuel imports while supporting sustainable economic growth.

European Commission President Ursula von der Leyen emphasized that expanding the use of clean electricity produced within Europe is one of the most effective ways to improve energy security and reduce reliance on imported fossil fuels.

Although nearly 70% of the EU's electricity is already generated from low-carbon and renewable sources, electrification across key sectors—including manufacturing, transport, and buildings—has progressed more slowly than expected. The Commission believes accelerating this transition will be essential to meeting Europe's climate neutrality goals.

Among the proposed measures are reducing taxes and charges on electricity bills, expanding the deployment of smart electricity meters, and encouraging the adoption of technologies such as electric vehicles, heat pumps, and other energy-efficient solutions.

The Commission also plans to strengthen the EU Emissions Trading System (ETS) by making it more effective at encouraging industrial investment in clean technologies. Since its launch in 2005, the carbon market has generated more than €270 billion, with revenues supporting innovation and decarbonization projects across the bloc.

A key proposal includes the creation of a €100 billion European Industrial Decarbonization Bank, designed to finance low-carbon industrial projects. In addition, member states would be required to allocate at least half of their carbon market revenues to investments supporting the energy transition.

To help European industries remain competitive internationally, Brussels is also considering extending certain free carbon emission allowances beyond 2030 while linking them more closely to measurable decarbonization efforts.

The initiative reflects the European Union's broader commitment to building a cleaner, more resilient, and more energy-independent economy while accelerating the transition toward sustainable growth and long-term climate goals.