The European Commission on Friday published its Electrification Action Plan, which aims to reduce Europe’s dependence on imported fossil fuels – a key driver of higher energy prices for households and industry in recent years.

While renewable electricity now accounts for 70% of the EU’s power mix, the electrification of final energy demand has remained stuck at 23% over the past decade. “We therefore need to accelerate the electrification of energy-consuming sectors, particularly industry, transport and buildings,” the European Commission said.

As part of the post-2030 Energy Union package, the Commission will assess an indicative electrification target of 46% by 2040. It estimates that reaching this goal could reduce annual fossil fuel import costs by €240 billion ($274.5 billion) by 2040.

The Commission acknowledged that significant barriers remain. Electricity prices are often three times higher than gas prices, grid connection approvals can take years, and businesses still lack sufficient incentives to replace fossil fuels with electric technologies.

The action plan aims to address these challenges by narrowing the price gap between electricity and fossil fuels, thereby encouraging the deployment of heat pumps, electric vehicles and battery energy storage systems.

“The action plan aims to create a level playing field between electricity and gas. The price difference between the two often discourages a switch to cleaner options such as heat pumps, electric vehicles and electric industrial processes,” the Commission said.

A key proposal would allow member states to reduce grid charges for specific consumer groups and lower taxes for energy-intensive industries, while also encouraging faster deployment of smart meters. The Commission also wants to ensure that electricity is no longer taxed more heavily than gas. In addition, the plan includes measures to reduce the upfront costs of electrification technologies in the buildings, transport and industrial sectors.

Accelerating grid expansion is another key priority. The Commission said long waiting times for grid connections and the inefficient use of existing networks continue to slow electrification. It urged the EU’s co-legislators to adopt the proposed Grid Package by the end of the year to speed up network development.

The plan also seeks to accelerate the deployment of innovative clean energy technologies by supporting investment projects and expanding manufacturing capacity across the entire value chain. According to the Commission, the strategy could create hundreds of thousands of high-quality jobs.

To support industrial electrification, the Commission also plans to reform the EU Emissions Trading System (EU ETS). Proposed changes include adjusting the linear reduction factor for emissions allowances and, from 2030, linking the free allocation of allowances more closely to companies’ investments in decarbonization.

The Bank for Industrial Decarbonization will also receive €100 billion to support industrial projects across Europe. The funding is expected to be channelled through the EU ETS Innovation Fund, which supports the first commercial deployment of innovative clean technologies across multiple sectors.

“Today, we are proposing to make Europe the world’s first electrically powered continent,” European Commission President Ursula von der Leyen said. “From lowering electricity prices to adapting our carbon market to changing global realities, this is also a plan for investment and independence.”