REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS State of the Energy Union Report 2025 (pursuant to Regulation (EU)2018/1999 on the Governance of the Energy Union and Climate Action)
Date: 2025-11-06
Institutions: Directorate-General for Energy, European Commission
Subjects: EU energy policy, clean technology, climate change policy, energy cooperation, energy diversification, energy market, energy transition, greenhouse gas, renewable energy, security of supply

   EUROPEAN COMMISSION  Brussels, 6.11.2025  COM(2025) 667 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS State of the Energy Union Report 2025                              (pursuant to Regulation (EU)2018/1999 on the Governance of the Energy Union and Climate Action)  
 
 
 
 
 
1. INTRODUCTION: BUILDING A STRONG ENERGY UNION  

As highlighted in the Draghi report, high energy costs are at the core of the challenges Europe is 
facing.  While  significantly  lower  than  during  the  2022  energy  crisis,  energy  prices  are  still 
significantly higher than our competitors, and largely differ across EU Member States, remaining 
a  source  of  concern  for  many  industries  and  European  citizens.  These  are  mainly  driven  by 
Europe’s  reliance  on  imported  fossil  fuels  amounted  close  to  EUR  375  billion  in  20241,  and 
structural inefficiencies due to incomplete integration of the EU electricity system. 

A genuine Energy Union relying on domestically produced clean energy generation, based upon 
a  strong  renewable  energy  sector  and  efficient  use  is  absolutely  vital  for  EU’s  security  and 
competitiveness  and  to  achieve  our  climate  neutrality  objectives.  Europe  has  already  reached 
47% renewable in its electricity mix in 2024, and energy efficiency measures led to an estimate 
of around EUR 120 billion savings on energy bills paving the way to energy independence.  

In early 2025, the Commission presented the Clean Industrial Deal (CID)) outlining actions to 
lower energy  prices  and create quality  jobs  and  the  right  conditions  for  companies  to thrive as 
regards  financing,  lead  markets,  trade  and  access  to  resources.  The  Clean  Industrial  Deal 
embeds  climate  neutrality  into  industrial  policy  by  outlining  concrete  actions  to  turn 
decarbonisation into a driver of growth for European industries. Alongside, the Action Plan for 
Affordable Energy (AEAP) introduces short term and structural measures to deliver stable and 
predictable energy costs, increase energy efficiency, and expand renewable generation, ensuring 
that  businesses  can  remain  competitive  while  consumers  benefit  from  affordable  energy. 
Together, these initiatives mark a new phase to complete the Energy Union and achieve a truly 
integrated energy system allowing cheap homegrown clean energy to flow freely across Europe.  

Over  the  past  years,  the  rapidly  evolving  geopolitical  landscape  has  influenced  global  energy 
markets  worldwide.  Russia’s  weaponisation  of  energy  has  threatened  Europe’s  energy  security 
and  impacted  the  Union's  economic  stability  and  growth.  In  response,  the  EU  launched  the 
REPowerEU Plan  in May 2022 to phase out its dependence on Russian fossil fuels in line with 
the  Versailles  Declaration.  By  now,  all  national  Recovery  and  Resilience  Plans  under 
NextGenerationEU include a REPowerEU chapter with a total of EUR 65.3 billion in estimated 
investment. Thanks to the European rapid coordinated action and cooperation with international 
partners, EU’s gas imports from Russia went down from 45% in 2021 to 19% in 2024 and 12% 
in 2025 (until August) with the interruption of the Ukraine transit. Russian oil imports have also 
shrunk thanks to EU efforts and sanctions, from 27% at the beginning of 2022 to 3% in the first 
half of 20252, while Russian coal imports have been completely phased out. 

To fully cut dependence, the Commission has delivered on its promise to address the remaining 
dependencies in May 2025 by presenting a Roadmap towards ending Russian energy imports 
followed  by  a  first  legislative  proposal  in  June.  This  landmark  proposal,  currently  under 
negotiation  by  the  co-legislators,  includes  a  strong  political  signal  -  Europe  will  no  longer 
tolerate the weaponisation of energy supplies. This is in line with the 19th package of sanctions 
against Russia, where the Commission proposed an EU-wide import ban on Russian LNG from 1 
January 2027, paired with tougher action on the shadow fleet and full transaction bans on Rosneft 
and Gazprom Neft to choke oil cashflows.  

Europe is the fastest-warming continent in the world, a threat to its prosperity and security.  By 
reducing its reliance on fossil fuels from Russia and the rest of the world, the EU aims not only, 
to  strengthen  its  energy  independence,  but  also  to  protect  its  citizens  and  pursue  Europe's 
leadership  in  decarbonisation  efforts,  as  the  EU  cannot  be  relying  on  fossil  fuels  it  does  not 
produce.  

According  to  the  Commission’s  EU-wide  assessment  of  the  final  updated  National  Energy 
and  Climate  Plans  (NECPs),  if  Member  States  implement  the  NECPs  alongside  EU  policies, 

1 Imports of energy products to the EU down in 2024 - News articles - Eurostat 
2 Quarterly reports highlight solar (record and progress away from Russian gas - European Commission 
EU imports of energy products - latest developments - Statistics Explained - Eurostat 

 
 
 
the  EU  will  be  closing  in  on  its  2030  objectives  for  GHG  emission  reductions  and  renewable 
energy.  However,  a  significant  gap  remains  in  energy  efficiency,  indicating  that  additional 
measures and stronger implementation are needed to meet the EU’s 2030 energy savings targets, 
together with further actions to secure the necessary investments and financing. 

Despite  the  acceleration  of  clean  investments  in  recent  years,  notably  with  the  support  coming 
from  the  Recovery  and  Resilience  Facility  and  cohesion  funds,  current  investment  levels  fall 
short  of  the  estimated  annual  energy  system  investment  needs  amounting  to  EUR  660  billion 
over  the  period  2026-2030  and  even  higher  over  the  period  2031-2040–  needed  to  reach  our 
climate and energy targets3. 

Against  this  backdrop,  the  proposal  for  an  ambitious  Multiannual  Financial  Framework  (MFF) 
amounting  to  EUR  1.98  trillion  for  the  2028-2034  period  (in  current  prices),  puts  forward  a 
fivefold  increase  of  the  Connecting  Europe  Facility  budget  for  cross-border  energy 
infrastructure - showcasing the absolute necessity to significantly increase investment in the 
European grids.  

The annual State of the Energy Union Report is the annual stocktaking exercise of the EU’s 
progress towards the objectives of the Energy Union and the clean energy transition.  

This year’s report presents progress made in 2024–2025, outlining how the EU has responded to 
evolving  global  and  domestic  challenges  in  the  first  year  of  this  Commission’s  mandate.  The 
report  is  structured  in  three  parts:  it  first  addresses  how  the  delivery  of  the  Action  Plan  for 
Affordable Energy is progressing and anchors the implementation of 2030 policy objectives 
and targets. The second part analyses the state of play in the implementation of the Energy 
Union across its five dimensions, based on the results of the assessment of the Member States’ 
biennial progress reports on the implementation of the NECPs submitted in 2025. The third part 
is  forward  looking,  paving  the  way  to  decisive  actions  to  complete  the  Energy  Union  and 
prepare the climate and energy policy framework for the decade ahead.  

3 Energy in the next long-term EU budget: Commission invites input 

2 

 
 
 
 
 
KEY 2025 ACHIEVEMENTS TOWARDS A GENUINE ENERGY UNION 
to  
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The Action Plan for Affordable Energy presented by the Commission on 26 February 2025 alongside 
the  Clean  Industrial  Deal  will  contribute  to  lowering  energy  costs  for  industries,  businesses  and 
citizens.  It  contains  a  comprehensive  set  of  measures,  including  investment  mobilisation,  boosting 
flexibility  and  streamlined  permitting  to  scale  up  clean  and  affordable  energy  supply,  investments  in 
energy efficiency measures as well as grid reinforcement. 

- 

- 

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To  support  its  implementation,  the  Commission  adopted  on  2  July  2025  a  package  of  Guidance 
documents  promoting  anticipatory  grid  investments,  innovative  renewable  energy  technologies  and 
forms  of  renewable  energy  deployment,  designating  grid  and  storage  infrastructure  areas,  and 
revising network tariff methodologies, with a view to supporting Member States, national regulatory 
authorities  and  grid  operators  in  expanding  the  renewable  fleet,  reinforcing  our  grids  and  network 
planning,  and  designing  network  tariffs  that  incentivise  flexibility  and  a  cost-efficient  use  of  the 
network. 

The  first  two  Tripartite  Agreements  for  Affordable  Energy  covering  respectively  offshore  wind  and 
grids, and energy storage were announced by Commissioner Jørgensen on 4 September 2025, and are 
expected  to  be  concluded  in  the  coming  months.  By  bringing  together  energy  producers,  industrial 
consumers  and  the  public  sector  represented  by  the  Member  States  and  the  Commission,  these 
contracts  will  set  mutual  commitments  to  unlock  the  investments  needed  for  the  rapid  integration  of 
home-grown, affordable energy into the system. In addition, the Commission is currently assessing the 
potential for similar contracts in other sectors, such as biomethane, energy efficiency, small modular 
reactors or energy integration of data centres. 

The EU has drastically reduced its dependence on Russian energy: gas imports from Russia (pipeline 
gas and LNG) dropped from 45% in 2021 to 12% in  2025 (until August), while oil imports fell from 
27% at the beginning of 2022 to just 3% as a result of the  implemented sanctions. These substantial 
reductions, driven by coordinated EU measures and energy diversification efforts, mark a major step 
towards phasing out Russian energy imports and strengthening the Union’s energy security. 

The Roadmap towards ending Russian energy imports put forward by the Commission on 6 May 2025, 
set out a coordinated and gradual approach to end Russian gas, oil and nuclear imports to the EU. The 
first legislative proposal for a Regulation on phasing out Russian natural gas imports will ensure the 
gradual but effective phase out of Russian gas and oil, while preserving the EU’s security of supply and 
market  stability.  It  also  provides  for  measures  to  strengthen  the  transparency  and  monitoring  of  the 
EU’s security of the energy supply, by fully ending the EU’s dependency on Russian energy. With the 
19th  package  of  sanctions  against  Russia,  the  Commission  proposed  an  EU-wide  import  ban  on 
Russian LNG from 1 January 2027, paired with tougher action on the shadow fleet and full transaction 
bans on Rosneft and Gazpromneft to choke oil cashflows. 

-  Estonia,  Latvia,  and  Lithuania  have  successfully  synchronised  their  electricity  grids  with  the 
Continental  Europe  Synchronous  Area  on  9  February  2025.  The  synchronisation  of  the  Baltic 
countries  is  a  flagship  project  ensuring  EU  energy  security,  which  has  been  supported  by  the 
Commission with unprecedented political, technical and financial backing over the past 15 years. This 
includes over EUR 1.23 billion in grants from the EU's Connecting Europe Facility (CEF) and EUR 60 
million from the Recovery and Resilience Facility (RRF). 

-  The  EU  is  getting  ready  for  winter  with  a  gas  storage  filling  trajectory  in  line  with  the  recorded 
average  of  2016  –  2021  (83  %  by  the  beginning  of  October)  and  on  track  to  meet  the  1  November 
target of 90%. Recent amendments to the  Gas Storage  Regulation provide greater flexibility, helping 
Member States optimise storage operations and strengthen energy security. 

- 

The  final  National  Energy  and  Climate  Plans  (NECPs)  show  that  Member  States  have significantly 
reduced the gap towards the 2030 energy and climate targets with an estimated decrease in total net 
GHG  emissions of around 54% in 2030 compared to 1990, a limited 1.5% ambition gap towards the 
42.5% renewable energy target but more efforts are needed as regards  Member States’ contributions 
to the energy efficiency target of 11.7% by 2030,, as well as regards securing the necessary investments 
and  financing..  The  Commission  is  closely  monitoring  the implementation  of  the plans and  exploring 
further action to deliver on Member States’ projections. To support closing the energy efficiency gap, 
the  Commission  has  launched  the  Efficiency  Action  Forum  at  the  Informal  Energy  Council  on  4-
5September 2025.  

3 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- 

-  The Energy Union Task Force announced in the Affordable Energy Action Plan and launched already 
in  June  2025,  brings  together  high-level  representatives  of  the  Commission  and  Member  States  to 
enhance coordination across the Energy Union and reinforce its governance and completion. It aims at 
giving  political  impulse  to  concrete  key  challenges  that  shape  our  collective  energy  system  of  the 
future.  

-  The  new  installed  renewable  energy  capacity  in  2024  is  estimated  at  around 77  GW (12.9  GW  for 
wind and 65.5 GW for solar), which represents a 17% annual increase compared to 2023. Electricity 
generation from renewables consolidated its leading position in 2024 in the EU, providing 47.3% of the 
total  electricity.  For  the  first  time  ever,  solar  energy  became  the  EU’s  largest  power  source  in  June 
2025.  

-  The 2030 EU target of 42.5% renewables in EU energy consumption (with the aspiration to achieve 
45%) will require a much faster uptake of renewables in the coming years, with an annual increase of 
2.6 percentage points needed to reach the next reference point of 29.7% in 2025. 

-  Regarding  the  transition  away  from  fossil  fuels,  coal  production  and  consumption  continues 
declining.  From  2018  to  2024,  the  EU  roughly halved  its  consumption of  both  hard  coal  and  brown 
coal. 

-  Primary  energy  consumption  in  the  EU  decreased  by  4.1%  in  2023  and  final  energy  consumption 
decreased by 3% compared with 2022. Main reductions in final energy consumption are to be observed 
in the residential sector, followed by industry and services. 

-  On  11  September  2025,  the  Energy  Efficiency  in  SMEs  initiative  was  launched,  to  support  energy 
investments  for  350  000  Small  and  Medium-sized  Enterprises  across  Europe  with  a  new  financing 
envelope  of  EUR  17.5  billion  (2025-2027).  The  Commission  will  continue  to  mobilise  public  and 
private capital through coalitions, national hubs, investment platforms, EIB support, and encouraging 
the establishment of new investment tools to scale up energy efficiency. 

- 

- 

The  Commission’s  eighth  Nuclear  Illustrative  Programme  (PINC)  of  June  2025  provides  a 
comprehensive,  fact-based  overview  of  nuclear  development  trends.  Delivering  on  Member  States’ 
plans  will  require  significant  investments  estimated  at  EUR  241  billion  until  2050  covering  the 
newbuild of large-scale reactors and lifetime extensions (‘base case scenario’ with 109 GW capacity). 
At  the  end  of  2024,  there  were  101  nuclear  power  reactors  operating  across  12  Member  States,  or 
almost a fourth of the over 400 reactors in operation in the world. 

The EU Energy and Raw Materials Platform has been set up by the Commission to leverage the size of 
the  European  market  and  empower  European  companies  in  effectively  procuring  energy-related 
products  and  raw  materials.  It  hosts  different  mechanisms  aiming  at  covering,  hydrogen,  raw 
materials, biomethane, liquified natural gas (LNG) and natural gas.  

-  Work  has  progressed  to  align  candidate  countries  with  the  EU’s  energy  policies  as  part  of  the 
broader  enlargement  priorities.  Screening  meetings  were  held  for  Ukraine  and  Moldova,  to  assess 
their  alignment  with  EU  energy  acquis.  The  Commission  has  completed  the  screening  process  for 
Albania  and  North  Macedonia.  Negotiations  on  Chapters  15  (energy)  and  21  (Trans-European 
Networks) of Cluster 4 of the accession process are ongoing for Serbia and Montenegro. 

- 

- 

In January 2025, President von der Leyen launched the  Global Energy Transitions Forum (GETF), 
that  will  focus  on  the  delivery  of  the  first-ever  Global  Stocktake  (GST)  by  tripling  global  renewable 
energy capacity and doubling the rate of energy efficiency improvements by 2030.  

In  addition,    the  Commission  has  adopted  a  Communication  on  the  new  EU  vision  for  enhancing 
global climate and energy transition, in October 2025. 

-  A new governance framework is being proposed for the Strategic Energy Technology Plan (SET Plan) 
to craft Common Implementation and Investment Agendas for each clean energy technology, enhancing 
collaboration between the EU, Member States, research and industrial stakeholders, in alignment with 
the Net-Zero Industry Act ambitions.  

4 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
2. DELIVERING ON THE ACTION PLAN FOR AFFORDABLE ENERGY  

The  European  Union  faces  a  pressing  challenge:  high  and  volatile  energy  prices  threaten  to 
erode  public  support  for  the  energy  transition,  with  47  million  Europeans  affected  by 
energy poverty and growing price disparities with other major economies undermining the EU's 
industrial competitiveness.  

To  address  the  combined  challenges  of  import  dependence  of  expensive  fossil  fuels, 
inefficiencies in the energy market and lack of full integration of the energy system, the EU 
is  taking  a  comprehensive  approach  to  complete  the  Energy  Union.  The  Action  Plan  for 
Affordable Energy presented actions to lower energy bills in the short term such as the lowering 
of  electricity  taxes  already  showing  results  in  some  Member  States,  while  aiming  at  more 
structural  measures 
to  modernise  Europe's  energy  system  by  investing  in  grids  and 
interconnectors, improving enabling conditions such as permitting and governance, and boosting 
renewable  energy  production  and  energy  efficiency.  The  Commission  is  committed  to  swiftly 
implement this Plan and support Member States at every step.  On 21 October, the Commission 
has announced to step up efforts to lower energy prices with a set of 7 actions to bring relief to 
industries  and  consumers.  An  overview  of  progress  achieved  in  every  action  of  the  plan  is 
provided in Annex 1.  

Member States’ actions lowering energy taxation  
Denmark  introduced  the  2026  Finance  Bill  including  a  reduction  on  electricity  taxes  to  the  EU 
minimum  in  2026-2027.  That’s  a  drop  from  about  €97/MWh  to  roughly  €1.1/MWh,  or  almost  zero. 
According  to  Denmark,  this  will  lead  to  savings  of  €134/year  (DKK  1,000)  for  a  single  person,  and 
about €533/year (DKK 3,975) for a working family in a house (3 September). 

Germany has announced the intention to cut electricity taxes to the EU minimum for specific sectors 
(industry,  agriculture,  forestry)  to  benefit  around  600,000  companies  with  supported  by  EUR  1.5 
billion  in  2026  and  EUR  3  billion  in  2027,  as  well  as  EUR  6.5  billion  to  support  transmission  grid 
charges (3 September).  

Further integrating the EU energy system 

Completing  the  Energy  Union  is  paramount  for  overcoming  inefficiencies  in  the  Internal 
Energy Market. The EU's energy system remains characterised by limited cross-border capacity, 
lack  of  energy  system  integration  resulting  in  price  spikes  and  regional  price  disparities.  This 
prevents the optimal use of clean electricity and undermines security of supply. Half of Europe's 
cross-border  infrastructure  needs  remain  unmet  and  long  queues  for  renewable  producers  and 
consumers  to  connect  to  the  grid  hinder  Europe’s  competitiveness  and  the  energy  security  and 
transition.  

Storage  also  remains  a  critical  challenge:  despite  record  growth,  EU  battery  energy  storage 
capacity stood at only 61 GWh in 2024, while some estimates consider that EU needs to achieve 
200GW energy storage deployed by 2030, equivalent to at least 18.5 GW annually4.  

To address these persistent gaps and fast forward the benefits of a fully integrated Energy Union, 
the  Commission  has  launched  the  Energy  Union  Task  Force.  Bringing  together  high-level 
representatives from the Commission,  Member States,  relevant EU bodies and stakeholders the 
Task  Force  will  enhance  political  cooperation  on  issues  such  as  accelerating  interconnectivity, 
deploying  storage,  digitalising  the  energy  system,  enhancing  preparedness  for  challenging 
situations to the electricity system, and improving grid planning across Member States. 

In parallel, to support implementation of the Affordable Energy Action Plan, bring down energy 
system costs and support Member States in managing the transition, the Commission has adopted 
a series of guidance documents. These include inter alia guidance on anticipatory investments, 

4  New  report:  European  battery  storage  grows  15%  in  2024,  EU  energy  storage  action  plan  needed  - 
SolarPower Europe 

5 

 
 
 
 
designed to ensure that electricity grids are expanded and reinforced in line with future needs and 
growing  demand.  The  Commission  recommendation  on  network  tariff  methodologies  will  also 
create the right price signals for investment in flexibility, demand-side response and efficient grid 
use.  By  aligning  tariffs  more  closely  with  system  needs,  for  example  through  time-of-use  and 
location  elements,  they  help  reduce  peak  demand,  improve  flexibility  avoid  congestion,  and 
ultimately lower costs for consumers. 

The  European  Grids  Package,  which  will  be  presented  later  this  year,  aims,  inter  alia,  to 
increase  the  EU  role  in  infrastructure  planning,  strengthen  EU  planning  and  delivery  of  cross-
border  interconnections.  Among  its  objectives  the  Package  will  help  accelerating  the 
development  of  national  networks,  streamlining  and simplifying  permitting  processes for  grids, 
storage and renewables, as well as improving cost-sharing mechanism.  By facilitating the timely 
deployment of energy projects and enhancing market integration, these measures will help reduce 
system bottlenecks, increase renewables integration, and bring down prices for consumers. The 
Commission  is  also  launching  the  Energy  Highways  initiative  to  remove  eight  critical 
bottlenecks in EU’s energy infrastructure by bringing governments and developers together and 
ultimately, bring more affordable energy in Europe.   

Member States’ actions on grids’ investments 
Spain has announced grid investment needs of €13.59 bn by 2030 to accommodate for the increases in 
grid  connection  requests.  This  will  enable  accommodating  13.1  GW  renewable  hydrogen,  9  GW  of 
industrial plants, 3.8 GW for data centres, 1.8 GW for buildings and 1.2 GW for ports. To enable such 
investments, a draft proposal is underway. 

Inefficiencies  in  the  use  of  our  existing  grids  in  the  form  of  redispatch  already  today  result  in 
costs of EUR 5.2 billion per year. If left unaddressed, this could rise to EUR 26 billion per year 
by  2030.  The  cross-border  trade  of  electricity  in  the  internal  market  already  today  offers 
consumers benefits of around EUR 34 billion every year.  

Deeper  market  integration  and  better  governance  can  significantly  increase  these  benefits  by 
ensuring  a  smoother  flow  of  electricity  across  borders  and  a  better  oversight  of  the  relevant 
processes.  Further  integration  of  energy  market  can  increase  these  benefits  up  to  EUR  40-43 
billion annually by 2030. The Commission will also kick off the reflection process on deepening 
the  integration  of  the  internal  electricity  market  by  publishing  a  White  Paper  on  Deeper 
Electricity Market Integration. 

Finally, a Gas Market Task Force has been set up to scrutinise the functioning of the gas market 
and to rigorously evaluate the oversight processes to identify areas for improvement and ensure 
energy  markets  optimal  functioning.  The  findings  of  the  task  force,  together  with  possible 
recommendations, are expected by the end of year, aiming to foster a more resilient and efficient 
energy system for the future. 

Accelerating the clean energy transition  

The EU’s energy mix is still heavily reliant on fossil fuels,  mostly imported. About 70% of 
the  energy  consumed  in  the  EU  came  from  fossil  sources  in  2023,  almost  90%  of  which  is 
imported. In 2024, alone, the import cost for Europe was above EUR 375 billion.  

To support the consumption of higher priced fossil fuels, Member States’ have roughly allocated 
one  fifth  more  public  funds  to  fossil  fuel  subsidies  in  2024  (+18%)  than  in  2021  (pre-crisis 
year),  albeit  the  level  of  such  subsidies  declined,  by  more  than  one  third  compared  to  2023  (-
34%) and halved compared to the energy supply disruption year 2022 (-49%)5. This dependence 

5 Study on Energy Subsidies - 2025 edition, Enerdata, Trinomics and Seven (preliminary data). 

6 

 
 
on  imported  fuels  poses  a  significant  risk  to  the  EU's  energy  security  and  resilience6  and  it 
constitutes a drag on competitiveness by distorting incentives to invest in energy transition.  

Therefore, the EU must diversify and expand its homegrown clean energy production.  

Significant  progress  is  already  visible.  Between  2021  and  2023,  EU  electricity  consumers 
saved  EUR  100  billion  thanks  to  electricity  generation  from  new  solar  PV  and  wind 
capacity,  demonstrating  the  importance  of  unlocking  renewable  energy’s  potential  to  reduce 
fossil fuel reliance and lower costs7. 

Rapid  grid  expansion  and  their  integration  is  essential,  with  renewable  electricity  capacity 
growing rapidly –around 77 GW added in 2024 alone, including 12.9 GW of wind and 65.5 GW 
of new solar photovoltaic capacity – and annual expansion of renewable electricity capacity that 
should  reach  around  100  GW  up  to  2030  as  underlined  in  the  Clean  Industrial  Deal.  A  swift 
implementation  of  the  recently  adopted  rules,  notably  on  faster  permitting,  is  a  prerequisite  to 
support this crucial acceleration. 

Source: Eurostat, WindEurope, Solar Power Europe   

Member States’ actions on permitting 
Ireland has introduced, for renewables, mandatory acknowledgement of application completeness or 
request  of  further  info  within  45  days;  sets  decision  deadlines  depending  on  capacity  (52  weeks  for 
≥150 kW, 30 weeks for <150 kW or repowering); requirement that authorities cannot extend scope of 
EIA after opinion is given (12 August 2025). 

Italy  made  a  preliminary  review  (subject  to  Parliament  approval)  of  the  permitting  legislation 
proposing  the  removal  of  obstacles  for  interventions  that  do  not  require  new  land  use,  smooth 
integration  of  storage,  faster  regime  for  projects  with  no  or  limited  environmental  impacts,  the 
simplification of processes for upgrading/repowering plants, introduction of single municipal point of 
contact (11 September 2025). 

Increased  energy  efficiency  also  means  reducing  our  energy  import  dependency.  Every  1%  of 
improvement  in  energy  efficiency  translates  into  a  2.6  %  reduction  in  gas  imports.  Continued 
efforts  to  improve  efficiency  play  a  decisive  role  in  enhancing  energy  security  and  lowering 

6 Only about half of the Member States have  partially addressed the phase-out of fossil fuel subsidies in 
their NECPs according to the EU-wide assessment of the final NECPs (COM(2025) 274, 27.5.2025).  
7 How much money are European consumers saving thanks to renewables?  – Renewable Energy Market 
Update - June 2023 – Analysis - IEA 

7 

 
 
 
 
energy  prices  and  costs.  The  contribution of  energy efficiency measures  in  lowering fossil fuel 
import bills is around 25%.  

To advance energy efficiency, the Commission will focus its efforts on 10 specific areas outlined 
in the Energy Efficiency Roadmap. These initiatives range from supporting and simplifying the 
implementation  of  energy  efficiency  regulations  to  developing  a  tradable  energy  efficiency 
market  and  enhancing  collaboration  and  international  cooperation.  The  energy  efficiency  for 
SMEs initiative was launched on 11 September. The additional €17.5 billion financing effort by 
the EIB Group will use a combination of existing and new financial products, including debt and 
equity  instruments,  support  the  rollout  of  proven  energy-saving  technologies  for  SMEs,  that 
lower  their  energy  bills  and  boost  their  resilience  and  competitiveness.  There  is  considerable 
appetite for take up of such financial solutions for SMEs to decarbonise and be more resilient and 
competitive.  

Member States’ actions on energy efficiency 
Italy’s  approval  of  the  scheme  Conto  Termico  3.0,  enabling  incentives  for  energy  efficiency  and 
renewable thermal energy in public (€400 million) and private buildings (€500 million) (4 August). 

Clean energy investments 

To meet its energy and climate targets, the Commission estimates that the EU needs to mobilise 
over EUR  660 billion annually between 2026 and 2030 and EUR 695 billion annually from 
2031 to 2040 for energy related investments such as in renewable energy, energy efficiency and 
grid capacity.  

The  core  of  energy-related  EU-level  investment  is  clearly  geared  towards  accelerating  the 
deployment  of  renewable  energy,  reducing  energy  consumption  through  energy  efficiency 
interconnectors  and  upgrading  electricity 
measures, 
infrastructure.  

flexibility,  deploying 

reinforcing 

While the bulk of these investments needs to come from private capital, public funding needs to 
be better targeted to mobilise private investments. This requires a flexible approach, deploying a 
coordinated  mix  of  non-financial  actions  and  a  comprehensive  toolbox  of  financial 
instruments –from de-risking mechanisms to return-enhancing and structured finance solutions– 
to address the specific barriers faced by the full spectrum of investors, from  large institutional 
investors  to  commercial  banks  and  project  developers,  across  all  segments  of  the  energy 
sector.  

By  channelling  EU  funds  into  expanding  renewable  energy  capacity  and  large-scale  electricity 
storage at the same time into modernising transmission and distribution grids across the Member 
States, the Recovery and Resilience Facility contributes to the objective of increasing the share of 
renewable energy to at least 42.5% by 2030. Alongside investments, the RRF supports Member 
States in adopting investment-enabling reforms aimed at expediting renewable energy permitting, 
faster access to the grids and a more flexible electricity system. The RRF is expected to deliver 
61  GW  of  new  renewable  installed  capacity  allowing  to  save  several  billion  cubic  meters  of 
natural gas, around 40 million households will be covered with electricity, and it will modernise 
and construct more than 10 000 km of electricity grids. A large share of the RRF has also been 
dedicated  to  energy  efficiency,  particularly  in  buildings.  Out  of  the  EUR  723,8  billion 
available under the recovery facility, EUR 106,5 billion were used to finance energy efficiency 
investments, representing 15% of the funds. 

As  a  follow  up  to  the  Affordable  Energy  Action  Plan,  the  Commission  is  stepping  up  efforts 
under the electricity market rules to decouple electricity bills from price volatility by boosting the 
uptake  of  long-term  electricity  supply  contracts.  The  European  Investment  Bank  (EIB)  has 
taken  a  leading  role  in  this  regard,  launching  several  financial  products  with  InvestEU 
support  such  as  EUR  500  million  in  counter-guarantees  for  clean  Power  Purchase 
Agreements (PPAs) to support the bankability of new renewable generation projects and de-risk 
buyers, and launching a EUR 1.5 billion programme to provide bank guarantees to European 
grid  component  manufacturers.  Furthermore,  it  has  expanded  the  financing  capability  of  the 

8 

 
Wind Package from EUR 5 billion to EUR 6.5 billion, and established a new guarantee product 
for emerging clean tech of EUR 250 million to be also supported by InvestEU.  

The  Innovation  Fund  is  the  EU’s  flagship  investment  fund  in  highly  innovative  clean 
technologies. With an estimated EUR 40 billion in funding available between 2020 and 2030, the 
programme  is  funded  entirely  by  the  EU  Emissions  Trading  System  (EU  ETS),  which  support 
energy independence.   

The Modernisation Fund also provides investment support, funded entirely from the EU ETS.  
Since January 2021, around 200 schemes and individual projects have been confirmed for a total 
amount  of  EUR 19.1 billion,  which  has  been  disbursed  to  beneficiary  Member  States.  These 
initiatives  mostly  relate  to  renewable  energy,  energy  efficiency,  energy  storage  and  the 
modernisation of energy networks.  

In  the  area  of  nuclear  energy,  the  Commission  published  the  eighth  Nuclear  Illustrative 
Programme (PINC) on 13 June 2025, offering a comprehensive, fact-based overview of nuclear 
investment needs to achieve Member States plans, and pinpointing areas where Member States’ 
action should be prioritised. The ‘base case’ scenario requires investments of around EUR 241 
billion  in  present  value  terms,  with  new-build  of  large-scale  reactors  accounting  for  EUR  205 
billion and lifetime extensions accounting for EUR 36 billion. Recent operational data confirms 
that the EU’s nuclear fleet is performing at a high-capacity factor of over 80%, contributing to 
baseload supply and decarbonisation goals, all while being an important component for industrial 
competitiveness and security of supply in certain Member States.  

Realising  the  full  impact  of  these  reforms  requires  a  long-term  investment  strategy.  The 
upcoming Clean Energy Investment Strategy will address systemic barriers to investments in 
clean  energy  technologies,  infrastructure,  storage  and  energy  efficiency,  and  outline  actions  to 
unlock private capital and better leverage public funding.  

In  addition,  the  development  of  sustainable  alternative  fuels,  particularly  for  aviation  and 
maritime sectors, offers strong possibilities to enhance Europe’s energy security, and reinforcing 
domestic  capabilities  and  innovation.  The  upcoming  Sustainable  Transport  Investment  Plan 
outlines an array of relevant measures in this regard. 

Finally,  the  preparation  of  Tripartite  Agreements  for  Affordable  Energy  for  Europe’s 
industry,  bringing  together  governments,  producers,  industrial  consumers  and  other  relevant 
stakeholders  will  further  help  to  unlock  the  necessary  investments  by  increasing  predictability, 
addressing  project  risks  and  barriers  to  their  deployment,  reducing  financing  costs  and 
strengthening Europe's industrial base. During the informal Energy Council held in Copenhagen 
on  4  September,  Commissioner  Jørgensen  announced  the  first  two  tripartite  agreements  on 
offshore  and  grids,  and  on  storage,  expected  in  the  coming  months.  The  Commission  will 
consider,  in  collaboration  with  stakeholders  and  Member  States,  other  possible  priority  sectors 
such  as  biomethane,  energy  efficiency,  small  modular  reactors,  and  energy  integration  of  data 
centres. 

Replacing  the Temporary  Crisis  and  Transition  Framework  (TCTF),  the  recent  adoption  of  the 
Clean Industrial Deal State Aid Framework (CISAF) adopted on 25 June 2025 will also be a 
key enabler for the acceleration of the roll out of clean energy and industrial decarbonisation. It 
aims  at  streamlining  State  aid  for  renewables,  industrial  decarbonisation,  and  clean-tech 
manufacturing  by  enabling  Member  States  to  deploy  grants  and  tax  incentives  under  clearer 
conditions to bolster EU competitiveness as part of the broader Clean Industrial Deal. 

9 

 
Member States’ State aid 
Czechia  €960  bn  State  aid  for  investment  in  manufacturing  activities  in  the  production  of  clean 
equipment (batteries, PV panels, wind turbines, heat pumps, electrolysers, CCUS) and respective raw 
materials (18 March 2025). 

Germany  State  aid  scheme  of  €5  bn  approved  by  the  Commission  to  help  industries  subject  to  ETS 
decarbonise  their  processes  through  electrification,  hydrogen,  CCUS  and  energy  efficiency.  It  will 
consist two-way carbon contracts for difference with annual grants based on companies’ bids and the 
evolution of ETS and energy prices, to cover additional costs from decarbonising (24 March 2025). 

Portugal €612 bn electricity-levy reduction scheme (75-85%) for sectors that rely heavily on electricity 
and are particularly exposed to international trade, under certain conditions (24 April 2025). 

Romania  direct  investment  State  aid  grant  for  the  upgrade  of  the  Bucharest  municipality  district 
heating  network  to  improve  energy  efficiency  in  final  energy  consumption  due  to  reduced  losses  (10 
April). 

Making energy affordable in the medium to long term 

Romania  direct  investment  State  aid  grant  for  the  upgrade  of  the  Bucharest  municipality  district 
Renewables  and efficiency measures  already driving down the cost of electricity, it is now 
heating  network  to  improve  energy  efficiency/savings  in  final  energy  consumption  due  to  reduced 
necessary  to  create  an  integrated  energy  system  that  smartly  scales  up  electrification,  improve 
losses (10 April 2025). 
overall  system  efficiency  and  flexibility  by  better  integrating  cheap  and  abundant  renewables 
across sectors.  

The  next  wave  of  actions under the  Action  Plan  for Affordable  Energy  as  listed  in  the  Annex, 
will  focus  on  structural  changes  to  make  this  shift  possible.  This  refers  to,  for  example,  the 
Electrification  Action  Plan  and  the  Heating  and  Cooling  Strategy  to  address  barriers  to 
electrification  and  unlock  the  potential  of  clean  electricity  and  energy  efficient  system 
integration.  These  initiatives  will  be  further  supported  by  the  Strategic  Roadmap  on 
Digitalisation  and  Artificial  Intelligence  (AI),  which  aims  to  translate  advances  in  digital 
solutions and AI technologies into actionable steps that benefit the energy and digital transitions 
while  addressing  challenges  and  risks  like  the  integration  of  data  centres  consumption  in  EU 
energy system.   

The Citizen Energy Package aims to provide guidance on how consumers can participate in and 
benefit from renewable energy and demand response, including as part of an energy community 
or via energy sharing.  

Affordability of energy is an important aspect of the overall affordability of housing. There are 
significant variations in being exposed to energy poverty across socio-economic groups both in 
the short term8 and in the long run9. There are also remarkable differentiations in energy poverty 
rates across EU Member States. The Commission will adopt the first-ever European Affordable 
Housing Plan by the end of the year aiming to support Member States to address the structural 
drivers  of  the  housing  crisis  and  unlocking  public  and  private  investment  for  affordable  and 
sustainable  housing10.  This  includes  the  operationalisation  of  the  Pan-European  Investment 
Platform for Affordable and Sustainable Housing, launched with the EIB,  national promotional 
banks and other financial institutions, which will also promote sustainable investment in housing 
projects across the EU. 

8  Koukoufikis,  G.,  Ozdemir,  E.,  and  Uihlein,  A.,  Shedding  Light:  Unveiling  the  Dynamics  of  Energy 
Poverty in the EU, Publications Office of the European Union, Luxembourg, 2024, doi:10.2760/7432189, 
JRC138567. 
9 Ozdemir, E., and Koukoufikis, G., The persistence of energy poverty in the EU, Publications Office of 
the European Union, Luxembourg, 2024, doi:10.2760/745025, JRC138409. 
10  Some  descriptive  analysis  on  this  issue  were  conducted  in  Ozdemir,  E.,  and  Koukoufikis,  G., 
Addressing  Housing  Affordability  and  Energy  Poverty:  A  Dual  Challenge  for  the  EU,  European 
Commission,  Petten,  2025,  JRC140895.  In  addition,  the  authors  of  this  study  are  currently  preparing  a 
forthcoming comprehensive report on the analysis of the trends in changing house prices and households’ 
affordability of housing costs related expenditure.   

10 

 
 
 
 
 
 
 
Investments  in  energy  efficiency  and  renovation  of  buildings,  clean  heating  and  cooling  and 
integration of renewable energy as well as for zero- and low-emission mobility solutions will be 
supported  by  the  Social  Climate  Fund.  The  primary  goal  of  the  Fund  is  to,  in  parallel  to  the 
ETS2,  ensure  a  fair  transition  to  climate  neutrality  by  supporting  the  most  affected  vulnerable 
groups, notably households in energy or transport poverty. 

In addition, the Commission will continue to  leverage the  EU’s Strategic Energy Technology 
(SET) Plan, one of the main instruments of the Energy Union’s 5th pillar on research, innovation 
and  competitiveness,  to  develop  new  technologies  and  bring  down  their  costs  through 
coordinated research and innovation efforts. 

3. TAKING STOCK OF 2030 IMPLEMENTATION: EVIDENCE BASE FOR THE NEXT 
STAGE IN THE ENERGY UNION  

By 2025 almost all Member States11 have submitted their updated integrated NECPs. These 
plans are  critical  to  deliver  a  fair,  resilient,  and  climate-neutral  Europe,  and to  steer  the much-
needed investments for the climate and energy transition. 

The Commission’s  assessment of the plans12 shows that Member States have substantially 
improved their plans following the Commission’s recommendations on the drafts, and as a 
result  the  gap  to  achieving  the  agreed  2030  energy  and  climate  targets  has  significantly 
narrowed. However, more ambition and effort are needed from Member States to remain on the 
trajectory  to  meet  the  target,  notably  on  energy  efficiency.  An  improved  analytical  framework 
and  targeted  action  to  address  the  fairness,  jobs  and  skills  aspects  of  the  transition  also  come 
short. In addition, the plans often lack comprehensive strategies for mobilising public and private 
finance. Few of them have specified the sources of financing, assessed the level of public support 
needed and discussed how private investment can be mobilised. This demonstrates the value of 
the  iterative  and  cooperative  process  between  the  Commission  and  the  Member  States.  This 
progress  also  supports  the  2050  climate  neutrality  objective  and  the  broader  transition 
framework,  linking  energy  autonomy,  security  of  supply,  competitiveness and  reduced reliance 
on fossil fuels. 

By  15  March  2025,  Member  States  were  due  to  report  on  their  progress  towards 
implementing  their  NECPs.  This  reporting  covered  progress  towards  their  targets,  objectives 
and contributions across the five dimensions of the Energy Union, including on greenhouse gas 
emissions and removals, the phasing-out of fossil fuel subsidies, as well as the implementation or 
amendment of Member State policies and measures and their financing.  

Moreover, Member States had to report on progress towards their adaptation goals, the impact of 
their  policies  and  measures  on  air  quality  and  emissions  of  air  pollutants  as  well  as  the  steps 
taken to establish a multilevel energy and climate dialogue. 

Based on these reports, the Commission assessed the progress achieved and took stock of where 
the  EU  stands  in  meeting  its  2030  climate  and  energy  ambitions13.  The  complete  Commission 
assessment of the Member States’ biennial reports is published together with this Report. In 
addition, the annual Climate Action Progress Report reviews climate policy progress under the 

11 Except Poland 
12 The package published on 28 May 2025 includes an EU-wide assessment of the final updated NECPs, a 
Staff Working Document with the individual assessments of 23 national plans, and guidance to facilitate 
implementation. This is complemented by a Staff Working Document with the assessment of the Slovakian 
and Estonian national plans that was published on 2 October 2025. . Belgium submitted its final plan on 7 
October  2025  and  the  Commission’s  services  are  currently  assessing  it.  Poland  is  urged  to  submit  their 
final updated NECPs as soon as possible. 
13 Each Member State is to report to the Commission every two years on the status of implementation of its 
national  energy  and  climate  plan  by  means  of  an  integrated  national  energy  and  climate  progress  report 
covering all five dimensions of the Energy Union. Where possible, the reporting and assessment makes use 
of comparable energy statistics. As a result, the latest consolidated data in certain areas relate to 2022 or 
2023.   

11 

 
 
Governance  Regulation.  The  key  take-aways  of  the  assessment  are  summarised  in  the  below 
sections. 

3.1  Decarbonisation  

In  202414,  net  greenhouse  gas  emissions,  including  land  use,  land-use  change,  and  forestry 
(LULUCF)  and  international  maritime  and  aviation  emissions  under  the  EU  target  scope, 
decreased  by  2.5%  compared  to  2023.  Emissions  continue  the  downward  path  observed 
following the exceptional drop of 9% achieved in 2023. Emissions were 37.2% lower than in 
1990 (or 39% when only domestic net emissions are considered), while GDP was 71% higher, 
meaning that economic growth continues to decouple from emissions. 

In 2024, the EU Emissions Trading System (EU ETS) achieved a further reduction in emissions 
from power and industry installations, with a 5.8% decrease compared to 2023 levels. This brings 
these emissions to around 50% below 2005 levels.  Aviation emissions covered by the EU ETS 
rose  compared  to  2023  by  around  15%,  although  around  half  of  this  increase  was  due  to  an 
enlarged  geographical  scope 15.  In  the  Effort  Sharing  sectors,  emissions  remained  at  a  similar 
level compared with 2023. Provisional 2024 data for GHG emissions and removals from the land 
use,  land-use  change,  and  forestry  (LULUCF)  sector  show  an  increase  in  net  carbon  sinks  of 
around 7% (or 15 MtCO2-eq) compared to 2023, although approximated data remain subject to 
large revisions (for more details see the Climate Action Progress Report 2025). 

In  2023,  the  EU  reached  a  share  of  24.6%  of  renewable  energy  in  gross  final  energy 
consumption, an increase of 1.5 percentage points compared to 2022. 

On  average,  the  overall  renewable  energy  share  has  been  increasing  by  0.8  percentage  points 
annually since 2020. Progress has been strong in the electricity sector, with an increase in the 
renewables  share  from  37.4%  in  2020  to  45.3%  in  2023.  Onshore  wind  accounted  for  15%  of 
electricity consumption in the EU, followed by solar PV with 9% and biofuels with 3%. 

The  progress  in  heating  and  cooling  (from  23.0%  to  26.2%)  and  transport  (from  10.3%  to 
10.8%) was more limited. The 2030 EU target of 42.5% renewables in EU energy consumption 
(with the  aspiration  to  achieve  45%)  will require  a much  faster  uptake  of  renewables  in  the 
coming  years,  with  an  annual  increase  of  2.6  percentage  points  needed  to  reach  the  next 
reference point  of  29.7%  in  2025 (in  line  with the  Governance  Regulation).  In the  heating  and 
cooling sector, renewable energy production comes mainly from biomass (86.6 Mtoe) and heat 
pumps (19 Mtoe), with solar thermal playing a relatively minor role.  

Transport  is  among  the  highest  emitters  of  greenhouse  gases,  necessitating  targeted  efforts  to 
reduce  emissions  through  advancements  in  zero-emission  mobility  and  sustainable  alternative 
fuels,  specifically  in  aviation  and  maritime  sectors.  In  transport,  renewable  energy  was  mainly 
supplied by biofuels (18 Mtoe), outweighing electricity (2 Mtoe).  

To meet the aviation decarbonisation climate targets set by the ReFuelEU Aviation framework, 
Europe  must  prepare  to  produce/import  3  million  tons  of  Sustainable  Aviation  Fuel  (SAF), 
including  600  thousand tons  of  e-SAF,  by  2030,  with  projected  increases to  35  million  tons of 
SAF, including 17 million tons of e-SAF, by 2050.  

For  the  waterborne  sector,  it  is  estimated  that  by  2030,  1.5  Mt  of  Sustainable  Maritime  Fuels 
(SMF) will be required. Moving towards 2035, the targets will require approximately 6.4 Mt of 
bio-SMF and 4.6 Mt of e-SMF. 

These targets will create a high demand for the usage of both sustainable biofuels and RFNBO-
derived fuels, particularly after 2030. 

14 Latest official EU greenhouse gas (GHG) data submitted by the European Environment Agency (EEA) 
to  the  United  Nations  Framework  Convention  on  Climate  Change  (UNFCCC)  in  March  2025  and 
approximated GHG emissions submitted by the EU Member States to the EEA in July 2025. 
15 Re-inclusion of non-domestic flights to and from airports in outermost regions. 

12 

 
 
Despite the increase at EU level, the share of renewable energy  in total energy consumption in 
2023 continued to vary widely across Member States, reflecting the different starting positions of 
each  Member  State.  Sweden  achieved  the  highest  renewable  energy  share  in  2023  (66%), 
followed  by  Finland  (51%),  Denmark  (44%)  and  Latvia  (43%),  while  Luxembourg,  Belgium, 
Malta and Ireland had the lowest shares (of less than 16%). 

Considering  both  national  consumption  and  currently  notified  statistical  transfers,  in  2023  two 
Member  States  had  a  renewable  energy  share  still  below  their  2020  binding  renewable 
energy  target  under  the  2009  Renewable  Energy  Directive:  France  and  Ireland,  both  0.7 
percentage  points  lower  than  the  baseline  2020  target.  Consequently,  these  Member  States 
had  to  take,  within  one-year,  additional  measures  to  cover  the  gap  within  the  next  year. 
Moreover,  three  Member  States  still  had  not  met  their  reference  point  for  the  year  202216. 
Those  Member  States  are  expected  to  explain  in  the  next  integrated  progress  report  how  they 
intended to close the gap17.  

Overall, there is progress in the implementation of permitting reforms with a positive dynamic in 
Member  States.  When  monitoring  the  implementation  of  the  Commission  Recommendation  on 
permitting,  1200  national  measures  were  detected,  of  which  520  were  deemed  in  strong 
alignment.[1] Many of those measures are recent and still need to show their full effects. As part 
of  the  Action  Plan  for  Affordable  Energy,  the  Commission  announced  further  legislative 
measures  as  well  as  implementation  support  and  capacity  building  measures  to  help  Member 
States in speeding up permitting for renewable energy and related infrastructure projects18. 

Energy Communities are successfully expanding across the Member States, contributing to the 
energy transition through citizen-led initiatives. More than 8,000 energy communities now exist 
across the EU.1 The Commission is supporting these developments through the recently launched 
Citizen  Energy  Advisory  Hub1  and  the  Energy  Communities  Facility.  Moreover,  the  LIFE 
programme  has  supported  the  cooperation  between  energy  communities  and  local  and  regional 
authorities  to  implement  more  than  50  local  services  helping  citizens  materialize  and  scale-up 
energy community projects. 

EU Member States are actively working on enhancing climate resilience and adaptation through 
various plans, strategies and frameworks. All Member States have established national adaptation 
policies, and some have also  sectoral adaptation policies in place or under preparation. Several 
Member States are integrating adaptation rules into their national climate laws to enhance legal 
support  for  adaptation  efforts.  Member  States  are  also  making  progress  in  developing  and 
refining  their  national  climate  risk  assessments,  crucial  for  evidence-based  policymaking  on 
adaptation.  

Local and regional efforts in building climate resilience and climate change adaptation across the 
EU are also advancing. In Member States with legal requirements, regional and local authorities 
are mandated  to  prepare  and  implement  adaptation  plans,  with many  integrating  resilience  into 
sector-specific  programmes.  Where  mandates  are  absent,  numerous  regions  and  cities  are 
voluntarily developing adaptation strategies within the framework of national adaptation plans or 
EU  cross-border  programs,  often  supported  by  government  incentives,  guidance,  and  joint 
initiatives. 

3.2  Energy efficiency  

16 Ireland (falling short by 4 pp), France (2.5 pp) and Slovenia (0.3 pp). Reference point as set in Article 4 
of  the  Governance  Regulation  based  on  the  previously  EU-level  target  before  the  entry  into  force of  the 
revised Renewable Energy Directive.   
17 The Commission progress assessment of the Member States which in 2022 missed their baseline and/or 
reference  points  is  presented  in  the  dedicated  staff  working  document,  based  on  the  measures  and 
explanations provided in the progress reports. 
18 European Commission: Directorate-General for Energy, COWI, Eclareon and Prognos, Monitoring the 
implementation  of  the  Commission  recommendation  and  guidance  on  speeding  up  permit-granting 
procedures for renewable energy and related infrastructure projects  – Final report, Publications Office  of 
the European Union, 2025, https://data.europa.eu/doi/10.2833/2257747 

13 

 
 
In 202319, primary energy consumption in the EU reached 1,209 million tonnes of oil equivalent 
(Mtoe), a 4.1% decrease compared with 2022 and a yearly average decrease of 2.7% since 2020, 
moving  slightly  closer  to  the  new  2030  target  of  992.5  Mtoe  with  a  significant  gap  still  at 
22% from the 2030 target.  

Final energy consumption reached 894 Mtoe in 2023, a 3.0% decrease compared with 2022 and a 
yearly  average  decrease  of  2%  since  2019,  and  still 17%  away  from  the  new  2030  target (763 
Mtoe), which translates into at least 2.2% yearly average efforts needed to 203020. Thus, energy 
efficiency  efforts  will  need  a  further  step  up  to  achieve  the  11.7%  final  energy  consumption 
reduction  target  by  2030,  as  the  Commission  2025  EU-wide  assessment  of  the  final  updated 
NECPs identified a reduction of only 8.1% compared to the 2030 projections.  

Despite the decrease at EU level, the average yearly reduction since 2019 of primary as well as 
final energy consumption continued to vary widely across Member States, reflecting the different 
conditions  and  starting  points  of  each  Member  State.  Luxembourg  achieved  the  highest 
average  yearly  reduction  in  final  energy  consumption  since  2019  (5,4%),  followed  by  the 
Netherlands  (3.8%)  and  Finland  (3.0%),  while  in  Malta,  Croatia  and  Portugal  final  energy 
consumption even increased since 2019. 

In 2023, final energy consumption decreased by 6.1% in the EU residential sector, by 5.4% in the 
industry  sector  and  by  3.0%  in  the  service  sector  compared  to  the  levels  of  2022.  Climate-
corrected  data  in  the  residential  sector  (-3.5%  compared  to  2022)  suggest  that  the  decrease  is 
largely linked to an improvement of the energy performance of residential buildings, but also to a 
milder  winter  compared  to  that  of  the  previous  year.  Efforts  to  improve  the  rate  of  building 
renovation  and  monitor  its  evolution  as  well  as  to  increase  efforts  to  decarbonise  and 
electrify  heating  need  to be  stepped  up.  While  2.8 million  heat  pump  units  were  installed  in 
2022, deployment slowed to 2.7 million units in 2023 and 2 million units in 2024.21 Other clean 
technologies  in  buildings  experienced  significant  growth:  rooftop  solar  photovoltaic  (PV) 
capacity reached approximately 338 GW by the end of 2024, and battery storage installations in 
Europe  totalled  around  66 GW  in  the  first  quarter  of  2025,  supporting  both  grid  stability  and 
integration of renewable energy. National measures are not yet at the necessary pace to reach 
a zero-emission building stock by 2050, for which a swift implementation of the recast Energy 
Performance of Buildings Directive will be key. 

In June the Commission published a package to support Member States’ implementation of the 
Energy Performance of Buildings Directive. Member States must transpose the Directive by May 
2026. 

Policy and regulatory measures are being strengthened to remove barriers to energy efficiency. 
Regulatory  efforts,  including  as  part  of  the  Recovery  and  Resilience  Plans  of  many  Member 
States, focus on removing barriers by simplifying permitting procedures for building renovations 
and  grid  connections,  addressing  split  incentives  in  rental  markets,  and  promoting  training  and 
certification  for  energy  professionals.  Furthermore,  market-based  instruments,  such  as  energy 
taxes, levies, and allowances, are used to incentivise investments in energy efficiency and support 
the  uptake  of  low-energy  technologies.  Energy  Efficiency  Obligation  Schemes  (EEOS)  and 
tradable  White  Certificates  require  suppliers  to  achieve  energy  savings  for  end-users.  Carbon 
pricing  mechanisms,  including  the  EU  ETS,  generate  revenue  for  efficiency  initiatives,  while 
energy taxes and vehicle levies encourage reduced consumption. Eco-design and energy labelling 
regulations further promote efficient products and informed consumer choices. 

The  implementation  of  energy  efficiency  measures,  including  updates  to  energy  labelling  and 
ecodesign regulations, led to an estimated savings of around EUR 120 billion on energy bills in 
2023, and could rise to about EUR162 billion in 203022. 

19 Latest available data 
20 This refers to the period 2023-2030 
21 JRC, forthcoming CETO report on heat pumps. 
22 Action Plan for Affordable Energy. 

14 

 
 
3.3  Energy markets 

Sufficient  cross-border  interconnection  between  Member  States  is  an  absolute  prerequisite  to 
allow clean and cheap electricity to flow freely and reach citizens and businesses across Europe, 
contributing  to  lower  electricity  prices,  higher  security  of  supply  and  better  integration  of 
renewable energy. 

Member  States  have  made  good  efforts  to  increase  cross-border  capacity,  exemplified  by 
projects  such  as  the  Baltic  Interconnector  between  Finland  and  Estonia,  the  ElecLink 
interconnector  between  the  UK  and  France,  and  the  Greece-Bulgaria  IGB  gas  pipeline.  The 
completion of various projects of common interest should further improve the interconnectivity 
levels.  Member  States  currently  report  83  ongoing  PCI  projects,  most  of  which  concern 
electricity  interconnectors.  The  process  for  establishing  the  second  PCI/PMI  list  is  underway, 
with 230 eligible projects so far, and is expected to conclude by the end of 2025.  

Nevertheless,  thirteen Member States (BE, DE, IE, EL, ES, FR, IT, CY,  NL, PL, PT, RO, SE) 
have still not reached the 2030 interconnection target of a minimum of 15%, with eight (IE, EL, 
ES, FR, IT, CY, NL, PL) also remaining below the 2020 interconnection target of 10%.23 Further 
effort is required to meet the 2030 objectives, in particular in terms of timely delivery of planned 
cross-border projects. 

In  April  last  year,  ACER  sent  an  opinion  paper  to  the  European  Parliament  and  European 
Commission,  highlighting the  urgent  need for  Transmission  System  Operators (TSOs)  to  make 
further  progress.  The  internal  electricity  market  is  the  foundation  of  our  shared  security  of 
supply  and  a  key  enabler  of  our  renewable’s  deployment  targets.  Maximising  the  use  of 
interconnection  capacity  by  reaching  the  minimum  70%  requirement  is  a  pre-requisite  for  the 
energy  transition  as  cross-border  trade  supports  the  deployment  of  renewables,  it  keeps  costs 
down and enhances security of electricity supply by optimising the use of the existing grid.   

In  addition,  it  is  important  that  Member  States  enhance  the  non-fossil  flexibility  capacity 
available  in  their  electricity  systems  by  completing  the  transposition  and  implementation  of  all 
relevant  EU  regulations  enabling  the  effective  participation  of  demand-response,  storage  and 
distributed generation into all relevant markets. Many Member States have set ambitious targets 
for  consumer  participation,  smart  meter  roll-out,  and  electricity  system  adequacy,  laying  the 
groundwork for a more responsive and integrated energy system.  

3.4  Security of supply  

The successful extension of the Gas Storage Regulation underscores Europe’s commitment to 
energy  security  and  resilience.  Given  the  crucial  role  of  security  of  supply  for  the  energy 
transition, this development will help prepare for the next winters while providing flexibility for 
Member States to prevent excessive prices and market distortions.  

Gas storage levels of 90% were reached before the end of August 2024, and there were no gas 
security of supply issues despite a cold winter and relatively low supply of LNG throughout 
the winter months.  The Commission and Member States worked closely together to ensure that 
security of supply would not be affected by the end of the Russian gas transit through Ukraine in 
December  2024. Although  the  impact has varied  in  different  regions,  overall security  of  supply 
and  prices were  not  affected significantly EU  wide  thanks  to  the  collective  anticipatory  work, 
including  the  diversification  efforts  through  the  AggregateEU  mechanism,  which  achieved 
remarkable results: almost 190 registered companies, 90 bcm of demand aggregated, 160 bcm of 
supplies and more than 77 bcm matched between off-takers and suppliers. As a result, the share 
of Russian gas imports dropped to 12% in 2025 (until August) compared to 19% in 2024. The EU 
Energy and  Raw  Materials  Platform  will  also  extend demand  aggregation to  new  products  and 
commodities, leveraging the power and size of the European market. On 14 October 2025, gas 
storage levels were at 83% capacity.  

23  Based  on  ENTSO-E  Winter  Outlook  2024-2025  data  (DG  ENER  calculations  based  on  import 
interconnections capacity and generation capacity data reported for 10 January 2025, 19:00). 

15 

 
 
There have also been no security of supply concerns for oil. Small oil stock releases took place 
due  to  disruptions  in  oil  pipelines  and/or  refinery  closures,  but  all  Member  States  retained  or 
returned to the mandatory oil stocks. Due to the continued sanctions on the import of Russian oil, 
as well as the shadow fleet, there are only 3 Member States that continue to import Russian oil 
(accounting for 3% of EU oil imports in 2024).  

The electricity security of supply situation has been overall favourable in the EU, owing to 
increasing  renewable  installed  capacities,  moderate  demand  for  electricity,  generally  good 
nuclear  generation  and  favourable  hydro  levels  across  the  EU.  A  major  development  for 
electricity  security  of  supply  was  the  synchronisation  of  the  Baltic  states  with  the  electricity 
system  of  Continental  Europe,  which  has  allowed  Estonia,  Latvia  and  Lithuania  to  gain  full 
energy independence from Russia and thereby EU’s collective energy security.  

December  2024  was  also  marked  by  the  incident  of  the  disruption  of  the  Estlink-2  submarine 
power  cable  between  Finland  and  Estonia,  which  did  not  endanger  the  security  of  electricity 
supply in the region but evidenced the vulnerability of critical energy infrastructure to malicious 
acts,  especially  undersea.  In  response,  the  Commission  adopted  in  February  2025  a  Joint 
Communication to strengthen the security and the resilience of submarine cables around four key 
pillars: prevention, detection, response and deterrence.  

Last  year,  some  localised  extreme  weather  events  also  put  EU  electricity  system  under  high 
pressure, such as Eowyn Storm in Ireland in January 2025.  

Another  major  event  was  the  Iberian  blackout  on  28th  April  2025,  which  affected  the  whole 
Iberian  Peninsula  and  a  small  area  in  France  near  the  Spanish  border.  The  restoration  of  the 
Portuguese  and  Spanish  transmission  grid  was  completed  throughout  the  same  night,  in 
accordance with the network code on electricity emergency and restoration. While the underlying 
factors are still being examined, the Commission is monitoring them closely. The Commission is 
analysing all findings, including the ex-post evaluation reports submitted by Spain and Portugal 
and the report of the expert panel set up by ENTSO-E, and may consider taking action to improve 
overall  EU  security  of  supply,  for  instance  through  the  upcoming  revision  of  the  EU  energy 
security framework. 

Reported  national  targets  on  energy  security  focus  mainly  on  ensuring  uninterrupted  supply, 
secondly on diversification of energy sources. Member States report a strong focus on enhancing 
gas supply security through the development of new LNG terminals, alternative pipeline routes, 
and renewable gases. 

3.5  Research, innovation and competitiveness  

Clean  energy  technologies  provide  an  important  economic  contribution,  with  the  renewable 
energy  sector  estimated  to  employ  around  1.8  million  jobs  in  the  EU  and  its  total  turnover 
estimated  at  around  EUR  233  billion  in  202324.  The  competitiveness  of  the  EU  clean  energy 
technologies sector is crucial not only to achieve the energy and climate objectives, but also to 
create jobs, while strengthening energy and economic security25. 

The Net-Zero Industry Act (NZIA), which entered into force in 2024, marked an important 
step  in  supporting  EU  net-zero  technology  manufacturing.  In  May  2025,  the  Commission 
adopted four pieces of secondary legislation26, an important milestone for the implementation of 
the act. The Commission also  presented a Communication assessing the EU supply in net-zero 
technologies and showing a strong reliance on China, in particular for solar PV systems (94% of 
PV modules and PV cells) and batteries (50% of battery packs, modules and cells as well as 81% 
of  anode  active  materials)27.  Overall,  the  EU  clean  tech  sector  continues  to  face  strong 
competitive  pressure.  At  the  global  level,  substantial  manufacturing  overcapacities  in  batteries, 

24 EurObserv’ER, The State of Renewable Energies in Europe, 2024 edition, 2025.  
25  For  a  more  comprehensive  assessment  see  the  2025  Progress  Report  on  Competitiveness  of  Clean 
Energy Technologies, COM(2025) 74 final.  
26 See: https://ec.europa.eu/commission/presscorner/detail/en/ip_25_1324.. 
27 C/2025/3236. 

16 

 
 
solar, wind (nacelles) and hydrogen (electrolyser stacks) are expected to persist in the next years 
without further policy actions28.    

The  EU  leads  globally  in  public  R&I  spending  in  clean  energy  technologies  and  has 
increased  its  public  investments  in  the  sector  in  recent  years29.  In  2023,  Member  States 
provided nearly EUR 8.5 billion research funding for the Energy Union R&I priorities, increasing 
their expenditure by a fifth on the year before. This was supplemented at EU level by over EUR 2 
billion  in  relevant  Horizon  Europe  projects.  The  combined  amount  places  the  EU  in  the  lead 
among  major  economies  for  public  R&I  spending  in  clean  energy  technologies30.  However, 
private  R&I investment, which  provides  over  three quarters  of  R&I  funding  for  clean  energy 
technologies across major economies remains significantly higher in major Asian economies than 
in  the  EU  and  the  US31.  The  Startup  and  Scaleup  Strategy,  launched  in  May  2025,  aims  at 
closing  the  innovation  gap  between  the  EU  and  its  main  global  competitors,  with  key  actions 
ranging  from  fostering  innovation-friendly  regulation,  to  improving  access  to  finance  and 
accelerating market uptake and expansion. 

The  new  governance  of  the  Strategic  Energy  Technology  Plan  (SET  Plan),  proposed  by  the 
Commission  in  2025,  aims  at  defining  Common  Implementation  and  Investment  Agendas 
per technology with the Member States to further harness synergies between the EU, Member 
States  and  energy  research  and  industrial  stakeholders.  In  addition,  in  2025  the  SET  Plan  has 
started  to  give  more  consideration  to  cross-cutting  challenges,  such  as  market  uptake  of 
innovation, circularity, digitalisation and societal skills. Member States reported national targets 
translating  SET  plans  objectives  show  a  strong  focus  on  energy  systems  and  hydrogen.  With 
regard  to  nuclear  technologies,  the  European  Industrial  Alliance  on  Small  Modular  Reactors 
(SMRs)  in  September  2025  published  its  strategic  action  plan,  outlining  specific  actions  to 
support and accelerate the development and deployment of SMRs through a number of selected 
projects by the early 2030s. On fusion energy, the ITER project met all its KPIs last year and on 
1st  Semester  2025,  indicators  showed  that  the  project  is  on  schedule,  bringing  it  closer  to  the 
scientific exploration phase that will open the doors to industrial commercialisation. 

4. A DECISIVE MOMENT TO COMPLETE THE ROBUST ENERGY UNION 

Decarbonisation presents a powerful growth opportunity: it can provide stability for energy prices 
and markets, lower energy bills costs, create high-quality jobs and boost the competitiveness of 
European industries, all while increasing domestic energy production, bringing benefits in terms 
of security of supply and energy independence.  

The full implementation of the  Affordable Energy Action Plan is starting to show its first 
effects on the ground. It will remain a priority in the coming months to bring energy prices 
down  to  all  European  citizens  and  business,  while  accelerating  the  implementation  of  the 
2030  framework.  The  Commission  will  step  up  efforts  building  on  the  set  of  actions 
announced on 21 October32.  

At the same time, it will lay  a solid foundation to sustain the transformation well into the next 
decade on the path to climate neutrality by 2050.  

The Commission proposal to amend the European Climate Law setting a 2040 EU climate 
target  of  90%  reduction  in  net  greenhouse  gas  emissions,  compared  to  1990  levels,  is 
currently under consideration by the co-legislators. 

Once agreed, the 2040 EU climate target will serve as a benchmark for the EU policy framework 
for  the  decade  ahead.  The  experience  gained  from  implementing  the  current  regulatory 

28 BloombergNEF, Energy Transition Supply Chains, 2025. 
29 CETO, Overall Strategic Analysis of Clean Energy Technology in the EU - 2024 Status Report, 2025. 
30 JRC analysis for CETO 2025 reports (forthcoming).  
31 COM(2025) 74 final. 
32 Commission steps up efforts to lower energy prices with a set of actions to bring relief to industries and 
consumers - Energy 

17 

 
 
framework,  including  the  Governance  Regulation,  has  underlined  the  importance  of  aligning 
ambition with the capacity to deliver, and of ensuring coordination of national strategies. 

Focus should lie on putting forward a coherent and predictable policy framework providing 
long-term  certainty  to  Member  States,  investors  and  citizens  throughout  the  next  phase  of  the 
energy transition. To do so, several challenges lie ahead. 

First,  deeper  electrification  will  be  essential  to  achieving  an  ambitious  reduction  in 
greenhouse gas emissions and meeting the energy needs for a competitive and prosperous 
EU. Yet, electricity’s share in final energy demand has remained flat at around 23% for over a 
decade.  To  reach  the  EU’s  decarbonisation  goals  and  deliver  large-scale  electrification  of  land 
transport,  of  space  and  water  heating  and  of  many  industrial  processes,  it  needs  to  rise  to  one 
third  by  2030,  around  32%,  as  indicated  in  the  Clean  Industrial  Deal  and  to  almost  double  to 
reach 50% by 2040. 

When  considering  also  the  electricity  needed  to  produce  hydrogen,  this  shift  will  require  the 
generation  capacity  to  more  than  double  by  2040,  as  well  as  investing  approximately  EUR  1 
trillion in grids and flexibility by 2040.  

Second,  for  this  strategic  approach  to  be  cost-effective,  it  will  also  be  necessary  to  continue 
driving  the  adoption  of  energy-efficient  technologies,  and  ensure  that  all  households  and 
businesses are equipped with smart meters. Most importantly, the lion’s share of the investment 
needs for energy efficiency between 2030 and 2040 relate to  renovation of existing buildings, 
including heating and cooling refurbishment, in particular, for the residential sector with needs of 
up to EUR 241 billion per year33.   

Third, innovative technologies made in Europe need to flourish for the energy transition to 
succeed  and  to  ensure  that  the  future  energy  system  is  based  on  a  competitive  EU  clean  tech 
sector. The development and uptake of digital solutions and AI applications have a great potential 
to ensure greater efficiency and flexibility of the energy system, and to facilitate the integration 
of  renewables  at  a lower  cost.  At  the  same  time,  it  is  important  to  ensure  cybersecurity  of  EU 
energy system and plan the integration of growing consumption of data centres34. 

To  support  massive evolution of the energy  system,  clean energy investments will  need  to 
rise from  approximately EUR  240  billion  in  2020 to  around  EUR  695  billion  per  year  by 
2040. This investment must support the expansion, digitalisation and modernisation of electricity 
infrastructure, domestic manufacturing, storage. 

Leveraging public and mobilising private investments will be crucial, as will be the creation of 
innovative financial instruments to support sustainable investments in energy and climate across 
the EU and to foster cross-border cooperation. For instance, the EU renewable energy financing 
mechanism  could  support  cost-efficiency  and  increase  Member  States  ambition  through  the 
facilitation of EU-wide renewable energy auctions, as recommended by the Letta report.  

As  indicated  in  the  Affordable  Energy  Action  Plan  and  in  the  Energy  Efficiency  Roadmap, 
scaling up EU guarantee schemes for energy efficiency services and energy efficiency accelerator 
instruments  will  contribute  to  enhance  the  market  for  energy  efficiency  and  to  turn  energy 
savings  into  a  market-driven  commodity  that  help  Europeans  to  benefit  from  services  able  to 
reduce their energy bills. The upcoming revision of the Energy Governance offers an opportunity 
to  transform  National and Energy  Climate  Plans into  credible  investment  strategies that  steer 
reforms and effectively channel funding towards the clean transition. 

Following  the  mid-term  review  of  Cohesion  Policy,  Member  States  are  able  to  use  cohesion 
funds  to  support  energy  interconnections  projects  and  related  transmission,  distribution  and 
storage infrastructures.  

33 (SWD(2024) 64 final) 
34 IEA reporting growth by 70% of data centres consumption in Europe between 2025 and 2030:  Energy 
and AI 

18 

 
 
Moreover, the proposal for an ambitious Multiannual Financial Framework (MFF) amounting to 
EUR 1.98 trillion for the 2028-2034 period (in current prices), suggests a fivefold increase of the 
Connecting Europe Facility budget to reinforce the cross-border infrastructure needed in for a 
robust Energy Union.  

National  and  Regional  Partnership  plans  will  support  domestic  transmission  and  distribution 
grids  also  taking  into  account  the  Trans-European  Network  (TEN-E).  The  climate  resilience 
framework will seek, inter alia, to ensure that all investments and major policies vulnerable to the 
impacts  of  climate  change  are  designed  to  face  climate  risks  that  could  materialise  in  their 
lifetime. The proposal also relies on a European Competitiveness Fund that will simplify and 
accelerate  EU  funding  and  catalyse  private  and  public  investment  in  strategic  technologies, 
including those critical for the clean transition.  

Ensuring  coherence  between  future  NECPs  and  the  development  of  National  and  Regional 
Partnership Plans, including their mid-term review, will be essential. It will support the alignment 
of  investment  priorities  with  long-term  energy  reforms  and  the  delivery  of  the  infrastructure 
underpinning a truly integrated Energy Union, including removal of the eight critical bottlenecks 
identified under the Energy Highways. 

Simplification has a key role to play in order to achieve the national and EU-level energy 
policy  objectives  and  targets  in  a  faster  pace,  building  on  Implementation  Dialogues  and 
reality  checks.  The  current  Governance  Regulation  already  represented  a  major  step  in  this 
regard, but a renewed push is necessary to further streamline and align planning, reporting and 
investment tracking elements. This could streamline processes and ensure the future energy and 
climate  policy  framework  remains  responsive  and  well  targeted  while  ensuring  ambitious 
climate and energy transition. The future energy and climate framework should be used more 
strategically to attract investment and support Member States’ implementation. 

European  citizens  need  to  feel  the  benefits  of  the  energy  transition  in  their  daily  life. 
Ensuring citizen engagement opportunities at the planning and development phase of energy 
projects  and  grid  infrastructure  or  supporting  them  to  benefit  from  innovative  offers  to  avoid 
price  volatility,  will  ensure  the  necessary  social  acceptance  to  achieve  the  EU’s  targets  and 
contribute  to  lower  energy  bills.  The  citizens’  panel  on  energy  efficiency  organised  by  the 
European Commission in 2024 could serve as an example to feed into upcoming EU initiatives.  

Taken  together,  these  improvements  must  contribute  to  a  more  coherent,  forward-looking 
framework  capable  of  supporting  the  EU’s  clean  transition  for  the  decade  ahead,  while 
safeguarding  competitiveness,  affordability,  security  and  social  fairness  and  contribute  to 
complete the Energy Union. 

19 

 
 
 
Table: Implementation progress of the Action Plan for Affordable Energy 

ANNEX 1 

completed   

in progress 

Sub-action 

Status  Deadline 

Actions Pillar I: 
Lowering energy 
costs 

1. Affordable 
energy bills 

Guidance  on  network 
anticipatory grid investments 

tariff  methodologies  and 

Recommendation 
to  Member  States  on  using 
flexibilities  (including  ETD)  in  lowering  electricity 
taxation 
Citizens’  Energy  Package  including  Guidance  and 
measures on energy poverty and communities 

EIB  pilot  for  clean  PPAs  (EUR  500M),  grids 
manufacturing package (EUR 1.5 bn) 

Guidance  on  innovative  forms  of  renewables  and  on 
grid and storage acceleration areas 

Commission  implementation support through  Accele-
RES  expansion,  Expert  Group  on  permitting,  CA-RES, 
implementation dialogue, Q&A guiding tool 
State aid framework revision 

Guidance on design of contracts for difference 

2. Lowering 
electricity supply 
costs 

Legislative  proposals  for  streamlined  permitting  of 
energy infrastructure, storage and renewables 

European Grids Package  

Guidance on promoting remuneration of flexibility in 
retail contracts 

Network code on demand response 

Forward  market 
opportunities 

rules 

to 

increase 

hedging 

Q3 2026 

Member  States 
procedures and strengthen national authorities 

to  adapt  national  permitting 

Harnessing EU purchasing power 

EIB  energy  efficiency  product  for  SMEs,  guarantee 
scheme, pilot 

3. Improving gas 
markets 

Assessment  EU-wide  market  certification  scheme  for 
energy savings 

ASAP 

Q2  2025  - 
2026 

Q3 2025 

Q3 2025    

EU energy labelling and eco-design rules update 

Q3 2025 

Assessment access to capital and financial incentives  

Q4 2025 

20 

Q2 2025 

Q4 2025 

Q1 2026  

Q2 2025 

Q2 2025  

Q2 2025 

Q2 2025 

Q4 2025 

Q4 2025 

Q4 2025  

Q4 2025 

Q1 2026 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4. Energy 
efficiency 

Actions Pillar II: 
Completing the 
Energy Union 

Gas Market Task Force assessment 

Member  States  and  market  surveillance  authorities 
to strengthen surveillance and enforcement 

EIB programme for energy efficiency in SMEs 

Strengthen efficient appliances and products 

Q4 2025 

As  soon  as 
possible 

Q3 2025 

As  soon  as 
possible 

Sub-Actions 

Status  Deadline 

Establishment of an Energy Union Task Force 

Illustrative programme for nuclear (PINC) 

Q2 2025 

Q2 2025  

White Paper on Deeper Energy Market Integration 

Q4 2025  

5. Completing the 
Energy Union 

Clean Energy Investment Strategy 

Strategic Energy Technology Plan 

Electrification  Action  Plan,  Heating  and  Cooling 
Strategy,  Strategic  Roadmap  for  Digitalisation  and 
AI 
Fusion Strategy 

Governance Regulation revision 

Q4 2025 

Q4 2025 

Q1 2026 

2026 

By  mid-
2027 

Actions Pillar III: 
Attracting 
Investment and 
Ensuring Delivery  
6. Tripartite 
agreements 

Action – Pillar IV 
for 
Ready 
Potential Crises 
7. Security of 
supply for price 
stability 
8. Price crises 
preparedness 

Action -
Monitoring 

Sub-action 

Status  Deadline 

Launch  of  process  for  tripartite  sectoral  agreements 
for affordable energy for Europe’s industry 

Q4 2025 

Sub-action 

Status  Deadline 

Energy security framework revision 

Q1 2026 

Guidance on schemes to lower peak demand for price 
spikes in periods of system stress 

Cross-border  interconnection  capacities  temporary 
increases during crises 

Ongoing 

Permanent 

Sub-Action 

Status  Deadline 

21 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
State of the 
Energy Union 
Report 

Commission  to  implement,  monitor  and  report  on  the 
progress  delivering  the  Action  Plan  in  State  of  the 
Energy Union report. 

Yearly 

22 

 
 
 
 
 
ANNEX 2 – Progress report on competitiveness 

This annex  provides an  update  on the  competitiveness  of  the  EU in  clean  energy  technologies, 
complementing section  3.5.  It  builds  on  the  progress report35  adopted  with  the  Clean  Industrial 
Deal and the Action Plan for Affordable Energy in February 2025, as well as on the work of the 
Clean Energy Technology Observatory (CETO). 

1. Global market developments 

Global  investment  in  clean  energy  has  overtaken  investment  in  fossil  fuels,  with  around  two 
thirds  of  the  EUR3  trillion  capital  flow  to  energy  expected  for  2025  going  to  clean  energy 
technologies36. Renewables are the most cost-competitive sources of electricity in the EU, which 
reached a 47% renewable share in its electricity mix in 2024. 

The  EU  remains  a major  player  in clean  tech trade, with  recent  reductions in  trade  deficits for 
heat pumps, solar PV and batteries, and a surplus in solar thermal. Yet these improvements partly 
reflect  weaker  demand  and  high  inventories  rather  than  a  rebounding  manufacturing  base. 
Exports  fell  in  2024,  with  the  EU  losing  7%  in  export  value37.  At  global  level,  manufacturing 
overcapacity  in  solar,  batteries,  wind  and  hydrogen  are  expected  to  persist,  with  China 
dominating  investment  and  production,  hosting  over  85%  of  global  solar  and  battery  capacity. 
EU  production  costs  remain  significantly  higher,  with  Chinese  solar  modules  estimated  at  35–
65% cheaper than European ones, and wind turbines around one third cheaper38. 

2. Net-zero technology manufacturing and supply chains 

Fostering clean tech manufacturing is central to EU policy under the Clean Industrial Deal and 
the Net-Zero Industry Act. New state aid and tax frameworks were adopted in 2025 to support 
investment,  while  the  NZIA’s  secondary  legislation  provides  tools  to  boost  EU  capacity  and 
apply  resilience  criteria  in  procurement  and  auctions.  Despite  these  measures,  dependencies 
remain significant: in 2023, China provided more than 90% of PV modules, nearly 80% of PV 
systems overall, half of battery components, and the vast majority of permanent magnets for wind 
turbines39. 

The  EU  retains  strong  positions  in  wind  turbines,  grid  technologies,  hydropower  and  high-end 
heat  pumps,  as  well  as  global  leadership  in  biogas  and  biomethane.  It  is  also  well  placed  in 
innovative fuels for aviation and maritime transport, though production remains small-scale and 
costly. In 2024, overall EU clean tech production value for six key clean energy technologies fell 
by 11% to EUR35 billion, with strong growth only in wind and hydropower40. 

3. Research and innovation trends 

The EU remains the global leader in public R&I investment in clean energy technologies, with 
more  than  EUR  10.5￼billion  mobilised  in  2023.  However,  private  R&I  –  which  dominates 
globally  –  is  much  stronger  in  major  Asian  economies  (0.37%-0.64%  GDP)  than  in  the  EU 
(0.17% GDP) and the US (0.08 GDP)41 , leaving the EU at a disadvantage. The EU continues to 
be  well  placed  in  high-value  patent  filings  in  renewables  and  energy  efficiency.  Considering 

35 COM(2025)74 final. 
36 IEA, World Energy Investment, 2025. Converted to EUR using the average exchange rate of EUR 0.9239 
for USD 1 over the year 2024, based on ECB. 
37  JRC  based  on  COMEXT/COMTRADE  data  for  selected  technologies  (Li-ion  batteries,  PV  modules, 
solar thermal, heat pumps, hydropower, wind energy) for CETO 2025 reports (forthcoming). 
38 IEA, Advancing Clean Technology Manufacturing, 2024 
39 COM(2025)3236. 
40  JRC  based  on  PRODCOM  data  for  selected  technologies  (Li-ion  batteries,  solar  PV  modules,  solar 
thermal, heat pumps, hydropower, wind energy) for CETO 2025 reports (forthcoming). 
41 CETO, Overall Strategic Analysis of Clean Energy Technology in the EU: 2024 Status Report, 2025. 

23 

 
 
these patenting trends, the EU is well positioned in technologies such as wind, hydrogen, smart 
grids and ocean energy, but lags behind countries such as the US and China in batteries, solar PV, 
geothermal and digital technologies42. During 2024, global venture capital investments in clean 
energy technologies continued the decline observed in 2023. In the EU venture capital investment 
in clean tech fell by half in 2024. However, Europe’s global share has grown to nearly one fifth 
over recent years. Unlike the US and China, which benefit from a broad pool of mid-sized deals, 
EU performance relies on a small number of very large transactions43. 

Recent  initiatives  in  nuclear  energy  include  the  creation  of  the  Industrial  Alliance  on  Small 
Modular Reactors, preparations for a European Fusion Strategy. Furthermore, the reform of the 
SET Plan will strengthen coordination with Member States, research stakeholders and industry. 
Looking  ahead,  the  proposed  European  Competitiveness  Fund  will  work  alongside  Horizon 
Europe  to  provide  continuous  support  from  research  to  deployment,  while  the  EIB’s  TechEU 
programme  is  expected  to  mobilise  EUR250  billion  by  2027,  including  through  EU  support. 
Together,  these  instruments  aim  to  strengthen  Europe’s  ability  to  scale  up  innovation,  secure 
supply chains and maintain competitiveness in the global clean energy race. 

42 CETO, Overall Strategic Analysis of Clean Energy Technology in the EU: 2024 Status Report, 2025. 
43 JRC analysis for CETO 2025 reports (forthcoming). 

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