EU Electrification Action Plan Sets an Indicative 46% Electrification Ambition for 2040, with Gas Imports Potentially Falling by More Than 70%
Electricity currently accounts for 23% of the EU’s final energy consumption. On 17 July 2026, the European Commission published its Electrification Action Plan, proposing an indicative electrification rate of 46% by 2040, subject to further assessment as part of the post-2030 Energy Union package. According to the Commission’s estimates, achieving this level could reduce EU gas imports by more than 70% and cut the bloc’s fossil-fuel import bill by up to €260 billion per year by 2040.
The Electrification Action Plan had been announced in the Clean Industrial Deal and the Affordable Energy Action Plan. The 46% figure is indicative, not binding, and will be assessed by the Commission as part of the post-2030 Energy Union package expected in the fourth quarter of 2026. For 2030, the Clean Industrial Deal and the Affordable Energy Action Plan established a 32% electrification reference level.What the Plan Contains
Two tracks run through the document: more clean supply and more electric demand.
On the supply side, the plan pushes for faster growth in wind, solar and battery storage, alongside support for small modular nuclear reactors. It positions hydrogen as a complementary decarbonisation solution where direct electrification is not feasible or cost-effective. On demand, it focuses on the three sectors where fossil fuels still dominate: buildings, transport and industry. The plan aims to increase the number of heat pump installations and support the electrification of vehicle fleets and industrial processes.
The Commission also wants to facilitate more power purchase agreements (PPAs) with the aim of lowering wholesale energy prices for energy-intensive industries.
Closing the Price Gap Between Electricity and Gas
The price gap between electricity and gas is one of the plan's central obstacles. Electricity often costs three times more than gas, with taxes and network charges contributing to that difference.
The Commission encourages Member States to bring national electricity-to-gas price ratios by 2030 to a maximum of 2.5 for households and 2 for industry. The measures include ensuring that electricity is not taxed more heavily than gas, reforming electricity-network tariff design, allowing targeted reductions in network charges for certain consumer groups, and progressively phasing out fossil-fuel subsidies. Measures on fossil-fuel subsidies are expected as part of the post-2030 Energy Union package in Q4 2026.
The Commission also presented its EU Emissions Trading System review proposals on the same day, linking carbon-market reform to industrial investment and decarbonisation. What This Means for Power and Gas Markets
The plan strengthens the policy case for rising electricity demand and declining fossil-gas demand through the 2030s, although the pace will depend on implementation, relative energy prices, grid development and technology uptake.
PPAs could move further into the mainstream. The Commission’s push to facilitate PPAs for energy-intensive industry could expand the pool of potential corporate offtakers and deepen the corporate PPA market where renewable generators contract their output.
Flexibility gains importance as electrification and the share of wind and solar increase. A system moving toward 46% electrification will require greater deployment of storage, demand response and other flexibility resources. Market design is already moving in that direction, from the proposed storage order in the day-ahead coupling to national frameworks like Greece's RED III battery storage rules.
Gas buyers contracting into the 2030s now face a demand outlook increasingly shaped by electrification policy as well as industrial cycles. The Commission estimates that accelerated electrification could reduce EU gas imports by more than 70% by 2040. This is a modelled potential outcome rather than a binding target or implementation schedule, and its delivery will depend on subsequent policy measures and their implementation. Key Dates to Watch
The next milestone comes in the fourth quarter of 2026, when the Commission plans to present the post-2030 Energy Union package. That package is expected to assess the indicative 46% ambition and set out the measures on fossil-fuel subsidies. In the meantime, progress against the 32% reference level for 2030 will show how fast the demand shift is actually moving.
Key Terms
Electrification rate – the share of electricity in final energy consumption. The EU stands at 23%; the plan proposes an indicative 46% for 2040.
Electrification Action Plan – a European Commission Communication published on 17 July 2026 to accelerate the shift from fossil fuels to electricity in buildings, transport and industry.
Post-2030 Energy Union package – the policy package expected in Q4 2026 that will assess the indicative 46% ambition and propose measures to progressively phase out fossil-fuel subsidies.
PPA – power purchase agreement, a long-term contract between an electricity producer and a buyer; the plan aims to facilitate PPAs for energy-intensive industry.
ETS – the EU Emissions Trading System; the Commission presented its ETS review proposals alongside the Electrification Action Plan.
Frequently Asked Questions
What is the EU Electrification Action Plan?
A European Commission Communication, published on 17 July 2026, that aims to increase electricity’s share of EU final energy consumption from 23% to an indicative 46% by 2040 and reduce the bloc’s dependence on imported fossil fuels. Is the 46% electrification target binding?
No, it is indicative. The Commission will assess it as part of the post-2030 Energy Union package expected in Q4 2026. For 2030, the Clean Industrial Deal and the Affordable Energy Action Plan established a 32% electrification reference level.
How could the plan affect EU gas imports?
According to the Commission’s estimates, reaching 46% electrification could reduce EU gas imports by more than 70% and cut the bloc’s fossil-fuel import bill by up to €260 billion per year by 2040. How does the plan address high electricity prices?
The Commission encourages Member States to bring national electricity-to-gas price ratios by 2030 to a maximum of 2.5 for households and 2 for industry. Measures include ensuring that electricity is not taxed more heavily than gas, reforming electricity-network tariff design, allowing targeted reductions in network charges for certain consumer groups, and progressively phasing out fossil-fuel subsidies. What does the plan mean for PPAs?
The Commission wants to facilitate more power purchase agreements for energy-intensive industries, with the aim of lowering wholesale energy prices. This could support further growth in the corporate PPA market, although lower prices are an intended outcome rather than a guaranteed result.
More information is available from the European Commission press release and the Commission's electrification policy page.
Disclaimer
This article is prepared by D.TRADING for general informational purposes only and does not constitute legal, financial, investment, accounting, tax, or regulatory advice. The information contained herein is based on publicly available sources and reflects opinion on the regulatory environment as of the publication date. D.TRADING makes no representations or warranties, express or implied, as to the accuracy, completeness, or timeliness of the information provided. This document is not an offer or solicitation to buy or sell any energy products, commodities, or financial instruments.
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