COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS ELECTRIFICATION ACTION PLAN
Date: 2026-07-17
Institutions: Directorate-General for Energy, European Commission
Subjects: EU energy policy, action programme, electrical energy, energy crisis, energy production, energy supply, energy transition, price of energy, reduction of gas emissions, renewable energy

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 17.7.2026  COM(2026) 595 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS ELECTRIFICATION ACTION PLAN  {SWD(2026) 595 final} - {SWD(2026) 596 final}  
 
 
Introduction 

The recent crisis in Middle East showed for the second time in five years the risks of the EU’s 
dependency on imported fossil fuels. Even though Europe was better prepared following the 
measures adopted since 2022, the sharp increase of oil and gas prices had a negative impact on 
the economy and the society at large. With over half of the EU’s energy consumption met by 
imported fossil fuels, this is a structural vulnerability. Since the beginning of the conflict, the 
EU has spent more than an additional EUR 50 billion in fossil fuel imports, and the resulting 
inflation has led to an increase in interest rates. In addition, some Member States have adopted 
fiscal measures to alleviate the burden on consumers of fossil fuels in the short term, adding to 
the pressure on their public finances.   

In  an  era  of  recurring  geopolitical  turbulence  and  volatile  global  markets,  an  energy 
independent Union powered  efficiently  by clean, abundant, and affordable energy is  a 
matter  of  sovereignty.  To  secure  Europe’s  resilience  and  security  while  supporting  EU’s 
competitiveness, a radical shift towards efficient electrification of demand is required. Clean 
energy  deployment  and  energy  efficiency  are  the  enablers  of  a  cost-effective  and  swift 
electrification. On the generation side, around 70% of the EU’s electricity already comes from 
homegrown clean sources today and important progress has been made in terms of efficiency, 
but this progress will soon hit a ceiling if not accompanied by  an efficient electrification of 
demand sectors.  In 2024,  the EU  used 20% less  energy than it did  in  20061. Electrification 
needs  to  build  on  Europe’s  efficiency  gains  and  continue  the  shift  toward  a  power  system 
dominated by clean energy. 

Electrification would come with substantial benefits for the EU economy and citizens. An 
accelerated energy transition with electrification at its core could reduce imports of gas by more 
than 70% and of crude oil by more than 40% by 2040. The EU could  save  up to  EUR 260 
billion  per  year  by  2040  on  its  fossil  fuel  import  bill,  which,  at  the  same  time,  can  shield 
households and industry from the effects of international crises on their energy bills. It would 
also  lower  electricity  generation  costs  by  about  20%,  leading  to  more  affordable  electricity 
tariffs  and  attracting  the  switch  to  electric  appliances.  Along  the  value  chain,  a  joint 
commitment to an electric transition strengthens European business cases by giving investment 
certainty for expanding clean tech manufacturing and services and creating future-proof jobs 
across the EU2.  Electrification  would  also  accelerate achieving the Union´s decarbonisation 
objective by substantially cutting emissions by more than 2,000 Mt CO₂ in 2040 compared to 
today3. 

A  quicker  electrification  of  the  European  economy  is  therefore  key  for  higher 
competitiveness, security of supply, and lower energy prices across the entire value chain, 
from the manufacturing of net-zero technologies to the energy that reaches homes, businesses 
and industries. At the level of end use, switching from gas to heat pumps and district heating 
in homes4 and offices, and from petrol to electric vehicles5, trucks and ferries, and electrifying 

1 Eurostat. Figures refer to primary energy.  
2 The International Energy Agency (IEA) estimated that in 2023 Clean energy accounted for 10% of global GDP growth in 2023, and in the 
European Union, it accounted for nearly one-third of GDP growth, the highest share of any region assessed by the IEA. The IEA also noted 
that globally in 2023 clean energy investment and sales accounted for between 1% and 4% of total GDP in the four major regions assessed 
and that 36 million workers were employed across clean energy supply chains.  Source : https://www.iea.org/commentaries/clean-energy-is-
boosting-economic-growth. 
3 Approximately 20-30% of current CO2 emissions. 
4 “5 things you should know about heat pumps”, DG ENER 
5 Ayvens – Car cost index 2025.  

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industrial  processes,  reduces  system  costs,  delivers  more  affordable,  secure  and  cleaner 
European energy, helps build up the value chains of an electrified European economy, reduces 
emissions and air pollution, bringing health benefits.  

Yet, despite sharing with other major economies a significant exposure to imported fossil fuels, 
the EU’s electrification rate has remained stagnant at 23% for a decade compared to over 30% 
in China, Korea, or Japan today6. 

To  drive  changes,  the  Commission  proposes  an  ambitious  electrification  target  for  the 
European Union.  

Action 1 

• 

 An indicative electrification target of 46% by 2040 (electricity share in final energy 
consumption) will be subject to an impact assessment by the Commission as part of 
the Energy Union Package for the decade ahead (Q4 2026). 

With over 8 million battery electric vehicles7 (BEVs) on EU roads, 28 million heat pumps in 
EU  buildings8,  and  increases  in  large-scale  heat  pumps  in  district  heating,  the  change  has 
already started. To progress in the electric transition, the EU can build on clean technologies, 
which are already commercially available in Europe for all key sectors from day one.  

As a successful global player in manufacturing clean and efficient technologies, the EU is well-
placed to capture upstream opportunities. Boosting the electrification potential would support 
Europe’s strong net-zero technology manufacturing base and related value chains, for example 
of wind turbines, BEVs or heat pumps, insulation technologies, digital optimisation tools for 
heating systems, boost the number of qualified jobs significantly and thereby reduce the risk 
of new strategic dependencies. Clean electrification value chains such as renewables including 
hydropower, nuclear, heat pumps, battery and thermal energy storage, insulation technologies, 
solar  thermal,  digital  energy  management  tools  and  grids  already  employ  over  four  million 
people9,  and  the  sector  accounted  for  30%  of  EU  GDP  growth  in  202310.  The  EU´s 
electrification agenda can contribute to a strong European market for these technologies, giving 
EU  manufacturers  the  scale  needed  to  compete  globally.  An  energy  transition  with 
electrification at the forefront could, for example, support the business case for manufacturing 
electric  vehicles  in  the  EU  by  stimulating  the  uptake  of  approximately  120  million  BEVs 
compared to 8 million BEVs today, and of approximately 100 million heat pumps compared to 
30 million heat pumps installed today.  

Across a growing share of sectors, clean electric solutions are increasingly cost-competitive 
to their fossil fuel alternatives and can therefore bring energy costs down for consumers 
in most cases. BEVs and heat pumps are more efficient than their combustion alternatives thus 
increasing energy savings for the European economy. BEVs can still be more expensive to buy 
but are generally much cheaper to use than petrol and diesel vehicles. Driving a BEV can save 

6 IEA -  impetus for EU electrification. The electrification rate corresponds to the electricity share of final energy consumption. 
7 BEVs refer to vehicles running on an electric engine only, while electric vehicles (EVs) refer to BEVs and plug in hybrid vehicles using an 
additional combustion engine. 
8 European Alternative Fuels Observatory; European Heat Pump Association 
9 IRENA Renewable energy and jobs: Annual review 2025; IEA World Energy Employment 2025; GIFEN, Programme Match, April 2023; 
ENEN2plus Euratom Research and Training Programme Project 
10 IEA commentary - Clean energy is boosting economic growth, April 2024 

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up to 78% compared to an equivalent passenger fossil-fuelled car11. Switching from gas boilers 
to heat pumps cuts the average EU household’s heating bill by up to 60%12, while providing 
important co-benefits for climate adaptation through their ability to also cool down buildings, 
especially during heatwaves. In some industrial processes, electrification with heat pumps leads 
to cost savings if the electricity-to-gas price ratio is between 2.5 and 3.513. These efficiency 
gains lower energy system costs, reducing energy prices for all users, and benefitting the whole 
economy. 

EU  energy  legislation14  already  supports  efficient  electrification.  Therefore,  its  full  and 
effective  implementation  across  all  Member  States  is  key.  In  addition,  with  the  launch  of 
Electrify  Now15  in  June  2026,  a  global  platform  to  drive  the  acceleration  of  clean 
electrification, the EU will also promote electrification globally, as the world enters what the 
IEA has called the “age of electricity”. However, for the EU to stay in the electrification race, 
urgent additional action is needed. 

Tapping into the EU’s electrification potential means tackling barriers that still prevent 
widespread adoption.  This  requires  a value chain  approach and  taking into  account  cyber, 
physical,  and  economic  security  threats  to  electricity  networks  and  is  in  line  with  the  EU’s 
economic  security  strategy,  as  well  as  anticipating  and  managing  structural  change  across 
sectors and regions16. First, electricity on average is almost three times more expensive than 
gas for EU companies and two and a half times more expensive for households17. Second, the 
upfront investment cost of the switch from fossil-fuels to electricity is still very high. Third, 
electricity  grid  capacity,  connection  queues  and  sub-optimal  use  of  existing  grids  constrain 
both  the  switch  to  electricity  among  consumers  as  well  as  the  addition  of  new  electricity 
generation capacity. A fourth barrier is slow uptake of innovation to make new electrification 
solutions  commercially  viable.  Finally,  bold  action  is  needed  to  reinforce  European  supply 
chains, boost EU’s manufacturing and address skills shortages. 

Building on AccelerateEU18, this plan acts on these barriers to speed up electrification across 
the  sectors  that  are  most  dependent  on  fossil  fuels,  notably  transport,  buildings  and 
industry19. 

11 Depending on the Member State. The website https://evroutes.com uses residential prices to calculate savings from the use of electricity 
compared to oil. 
12 European Commission – Five things you should know about heat pumps: https://energy.ec.europa.eu/news/5-things-you-should-know-
about-heat-pumps-2025-12-05_en 
13 IEA – “Renewables for industry – electrification of low-temperature heat and steam”, 2026 
14 For example, the Renewable Energy Directive (RED), the Energy Efficiency Directive (EED), and the Electricity Market Design (EMD). 
The RED mandates integration of renewable electricity in heating, cooling, and transport, directly stimulating electrification. The EMD 
allows energy communities to generate, store, and share renewable electricity. The EED requires national policies to enforce the "energy 
efficiency first principle", which prioritizes cost-effective, highly efficient electrical solutions over traditional fossil fuel combustion. 
15 Electrify Now - Energy - European Commission 
16 2025 Full Progress review on the implementation of the Council Recommendation on ensuring a fair transition towards climate neutrality, 
European Commission Working Document, July 2026 (forthcoming). 
17 Eurostat 
18 COM(2026) 370 final 
19 The KPI for electrification rate is 32% by 2030. 

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1.  Reducing the gap between electricity and fossil energy costs  

Electricity prices for households and industry are in many cases significantly higher than for 
fossil fuels.  Only in  two  Member States electricity  is  less than twice as  expensive as gas20. 
Price  disparity  between  electricity  and  fossil  fuels  is  a  structural  and  critical  barrier,  which 
needs and can be resolved to encourage electrification for both industry and households. This 
structural imbalance is due to several reasons, including the dominance of fossil fuels in setting 
the  price  for  electricity  and  infrastructure  costs.  The  latter  are  then  distributed  among  end-
consumers in a way not matching the realities of generating and distributing electricity. While 
the electricity system is growing and changing, the design of network charges needs to evolve 
to ensure cost-efficient transmission and distribution networks and the optimal use of existing 
electricity  systems.  Furthermore,  levies  and  taxes  on  the  electricity  bill  are  in  some  cases 
disproportionate and unrelated. Taking all taxes into account, electricity is taxed more than gas 
for final consumers in most Member States21 and in at least five Member States, some of these 
levies are unrelated to or go beyond the electricity system22. Finally, energy subsidy regimes 
in several Member States, mainly for fossil fuels, prevent business cases for electrification and 
distort  market  prices  by  artificially  lowering  the  cost  of  fossil  fuels  and  weakening  market 
signals  for  cleaner  energy.  The  impacts  are  visible  on  electricity  bills.  To  date,  half  of  the 
amount  paid  by  EU  households  through  their  electricity  bills  corresponds  to  the  price  of 
electricity, a quarter to network charges and a quarter to taxes and levies 23.  

The gap between electricity and fossil energy costs can be measured via electricity-to-gas price 
ratios. A ratio of two means that electricity prices are double those of gas for the same amount 
of energy. A high ratio directly stifles demand for electric alternatives: Member States with the 
lowest electricity-to-gas price  ratios record triple the heat pump sales compared to Member 
States where the ratio exceeds three24. When electricity costs are over 2/2.5 times more than 
gas,  the  economic  case  to  switch  to  heat  pumps  or  other  electric  processes  diminishes 
significantly.  

The Commission therefore supports efforts by Member States to remove disparities between 
electricity  and  fossil  fuel  energy  costs.  The  Action  Plan  for  Affordable  Energy,  the  Energy 
Union Task Force, and the Clean Industrial Deal State Aid Framework have provided tools for 
action and coordination, and the Recovery and Resilience Facility has supported reforms in 
this  area.  The  Commission  encourages  Member  States  to  take  actions  to  bring  national 
electricity-to-gas  price  ratios  down  for  households  to  maximum  2.5  and  for  industry  to 
maximum 2 by 2030. This plan aims at providing a pathway towards these levels. 

20 Only in Finland and Sweden is the electricity-gas price ratio below 2 for the same amount of energy – own calculations based on Eurostat 
data for second half 2024.  
21 Source: Eurostat, all taxes including excise duties and VAT. 
22 France, Germany, Italy, Portugal and Greece.  
23 Source: VaasaETT, data for May 2026 – 48% electricity, 26% taxes and levies, 26% network charges. 
24 EHPA - Taxation policy for heat pumps, 2025. 

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Electricity-to-gas price ratios in EU Member States25 for industry and households in 202526  

1.1 

Reducing electricity system costs through network charges, flexibility and 
storage 

Switching towards electrification can only convince households and industry if the conditions 
are right. Electricity supply needs to be reliable and affordable. On the contrary, price volatility 
creates uncertainty, raises risk and the cost of capital, undermining the case for electrification. 
Energy  storage  (household  batteries,  long-duration  and  large-scale  batteries,  thermal  and 
pumped hydropower storage) and flexibility services are key for a stable and reliable energy 
system with affordable energy prices. 

Flexibility empowers to react to spiked, zero or negative prices and smooth prices as well as 
enhancing the resilience of the energy system and lowering system costs to the benefit of all 
users.  Households,  industrial  consumers,  hydrogen  producers,  data  centres  and  drivers  of 
BEVs27  can  also  gain  from  being  flexible,  with  the  right  remuneration  and  framework 
conditions,  such  as  dynamic  price  contracts  and  dynamic  network  charges  as  well  as 
remuneration for the provision of ancillary services. The Commission supports Member States 
in  ensuring  the  use  of  flexibility  from  existing  buildings  and  products,  with  a  focus  on 

25 Malta, Cyprus and Finland (for households) are not present in the relevant Eurostat datasets. 
26 Commission’s calculation based on EUROSTAT data. 
27 For instance, EVs can engage in smart and bidirectional charging through vehicle-to-grid (V2G) services. Based on existing projections, 
companies above 100 employees (except rental fleets, taxis and private car services) could reach a share of 50% of their fleet charging smartly, 
and  15%  of  their  fleet  reinjecting  electricity  into  the  grid  by  2030  (Shares  based  on  different  studies/publications  -  ENTSOE  TYNDP 
assumptions, T&E). Commission analysis shows that by 2040, BEV smart charging and V2G could deliver over €44 billion in annual savings 
for BEV owners and additional benefits to the power system through reduced investment needs.  

5 

HOUSEHOLDSINDUSTRYRomaniaBelgiumPolandHungaryCzechiaCroatiaGermanySlovakiaLithuaniaLatviaSpainLuxembourgEstoniaIrelandDenmarkGreeceAustriaItalySloveniaFranceBulgariaPortugalNetherlandsSwedenGreeceHungaryItalyIrelandBelgiumRomaniaCroatiaCzechiaBulgariaSlovakiaGermanyAustriaPolandLithuaniaSpainNetherlandsSloveniaPortugalLuxembourgEstoniaLatviaFranceDenmarkSwedenFinland 
 
 
 
transparency  for  consumers28. Flexibility also  ensures that new demand for power does not 
excessively increase system costs.  

Expanding  computing  capacities  on  the  Union´s  territory  and  Artificial  Intelligence  (AI) 
developed  and  deployed  in  the  EU  through  innovative  and  sustainable  Cloud  and  AI 
technologies are essential for the EU´s Tech Sovereignty. With the proposal for a Cloud and 
AI  Development  Act29,  the  Commission  aims  to  address  the  limited  and  geographically 
concentrated  availability  of  computing  capacity  in  the  EU  and  the  risks  associated  with 
dependence on cloud and AI supplied by non-European providers. But it also poses challenges, 
not  only  in  terms  of  increasing  energy  consumption  but  also  for  electricity  grids,  carbon 
emissions and environmental resources such as water. To limit the impacts, data centres need 
to be highly energy- and water-efficient and sustainable. Well-designed and integrated flexible 
data centres can help reduce overall electricity system costs and moderate prices by supporting 
grid stability and renewable integration. Flexible data centres can contribute to grid efficiency, 
demand response, on-site clean energy capacity, and system flexibility, and should therefore 
be adequately incentivised. Data centre acceleration zones established by the Member States, 
as proposed in the Cloud and AI Development Act, and the tripartite agreement announced in 
the Strategic Roadmap for Digitalisation and AI in the Energy Sector could help facilitating 
the integration of data centres, enabling infrastructure deployment and limiting the impacts on 
resources and consumer bills.  

Energy storage is an essential element to optimise the functioning of the EU energy system, 
notably long-duration energy storage providing  power for  more than eight hours to  provide 
reliable base power to reduce dependence on fossil fuel backup capacities and to make better 
use  of  domestic  renewable  generation.  The  Tripartite  Agreement  on  Energy  Storage30  has 
recently  brought  together  important  players  in  the  value  chain,  including  Member  States, 
storage  and  renewables  developers  and  manufacturers,  industrial  consumers  as  well  as  the 
European  Commission  and  financial  institutions  around  mutual  commitments  to  accelerate 
exploitation  and  deployment  of energy storage  capacities as  a priority for the coming years 
(2026-2028). The pledges submitted for the period 2026-2028, taken together, account to 30-
35 GW of stationary storage capacity.  

Nevertheless, further efforts will be needed to meet the energy system’s flexibility and energy 
storage needs by 2030 (200 GW31 and 500 GW installed by 2040, from around 55 GW in 2026), 
both for short- and long-duration storage. For cross-seasonal storage, potential revenue streams 
are often insufficient to cover upfront investments. 

Storage  is  also  increasingly  important  for  industrial  consumers.  In  Power  Purchase 
Agreements, electricity storage can help cover more of the consumer’s demand with renewable 
sources32.  Member  States  can  promote  this  by  implementing  the  April  2026  Commission 
Recommendation  on  removing  barriers  to  PPAs33.  On  the  demand  side,  thermal  storage 
provides  another  source  of  flexibility  for  industries  that  use  heat:  its  capacity  in  the  EU  is 
expected to triple to 1.5 GWh by 2028. 

28 For instance, through a new expert group to activate flexibility from new and existing buildings and products. 
29 COM(2026) 502 final. 
30 https://ec.europa.eu/commission/presscorner/detail/en/ip_26_1426 
31 Source: Commission’s estimates. 
32 More granular guarantees of origin can also contribute to this evolution. See Commission Recommendation on removing barriers to the 
development of power purchase agreements and other energy purchase agreements (C/2026/2676) 
33 C/2026/2676 

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Since electrification is at the heart of the EIB Group’s energy strategy, the EIB Group intends 
to  provide  more  than  EUR  75  billion  over  the  next  three  years,  focusing  on  large-scale 
electrification of end-use sectors in industry, buildings and transport, alongside decarbonisation 
and  capacity  expansion  in  the  power  sector.  This  includes  investment  in  grids,  storage  and 
flexibility  solutions  to  support  higher  electricity  generation,  wider  electrification  and  the 
integration  of  variable  renewables.  The  EIB  Group  is  also  strengthening  support  for 
manufacturers  of  related  equipment,  including  industrial  electrification  technologies,  heat 
pumps and EV chargers. 

Action 2 

The Commission has adopted alongside this plan 

• 

a  legislative  proposal  on  network  charges  to  incentivise  electrification,  a  flexible  and 
system-friendly  use  of  the  grid,  including  storage  installations  and  accelerating  smart 
meter  deployment,  and  to  improve  the  electricity-to-gas  price  ratio  from  the  network 
charges side. 

The Commission will  

• 

• 

• 

• 

propose a new network code and the revision of the network codes on requirements for 
generators  and  demand  connection  in  2026  to  facilitate  demand  response  and  the 
seamless integration of battery storage, thermal storage, geothermal, EVs and heat pumps 
into the electricity grid; 
together with other parties to the Tripartite Agreement on Storage, and the Energy Union 
Task Force, ensure robust implementation of the commitments agreed in this cooperative 
model, covering the whole storage value chain, including long-term storage solutions; 
organise a high-level conference to assess barriers and solutions for storage, including 
long-duration storage and combined with renewable PPAs; 
assess  the  EU’s  long-duration  flexibility  needs  for  2030,  2040  and  2050,  drawing  on 
flexibility needs assessments and estimating in particular the potential of long-duration 
storage  and  demand  response,  and  help  identifying  priority  use  cases,  barriers  to 
deployment and investment needs, including in energy-intensive industries, data centres, 
islands, remote areas, grid-constrained regions. 

KPI: 200 GW of storage capacity by 2030 from around 55 GW in 2026. 

The Commission will  

• 

launch a framework for regulatory sandboxes and living labs across  Member States to 
enable new vehicle-to-grid (V2G) business models (cf. SWD(2026) 596); 

•  assess  and  promote  the introduction  of  smart  charging  by  default  in  electricity  supply 

• 

contracts linked to EVs by mid-2027; 
introduce by end of 2027 V2G requirements for new EVs placed on the internal market 
in the Union as of 2030, including technical requirements to enable interoperability such 
as standardised communication protocols 34; 

•  support the development of a methodology to assess the flexibility potential in different 
industries and industrial processes, as well as data centres, to fill the knowledge gap in 
the emerging industrial flexibility sector by 2027; 

34 On the basis of the necessary empowerment for the Commission to take action in this field, proposed through Omnibus IX (Automotive 
Omnibus). 

7 

 
 
 
 
•  adopt a common Union rating scheme for data centres to increase transparency in the 
energy  use  of  data  centres  and  promote  lead  markets  for  sustainable  digital  assets  and 
services across Europe, as well as introduce minimum performance standards for data 
centres to leverage their flexibility potential. 

1.2 

Addressing the gap in taxation between electricity and gas 

To address  another component  of the electricity bill  and to  contribute to  the rebalancing  of 
electricity and gas prices, Member States can carry out taxation reforms. To align the principles 
of  electricity  taxation  with  electrification,  electricity  should  not  be  taxed  more  than  gas. 
Recently, the Netherlands and Belgium have taken steps to rebalance electricity and gas prices 
by  limiting  the  gap  in  taxation  between  those  energy  carriers.  Also,  Denmark  has  acted  by 
reducing electricity excise duties to households using heat pumps and reduced electricity taxes 
to the minimum for two years. 

In addition, energy subsidies represent fiscal efforts and costs to public budgets. It is, therefore, 
essential that energy subsidies are well designed and well-spent and provide coherent support 
for  EU  policy  objectives,  for  instance  for  electrification  of  key  sectors.  In  2024,  fossil  fuel 
subsidies amounted to EUR 97 billion, a high level compared to around EUR 60 billion on 
average between 2015 and 2019.35 In 2024, fossil fuel subsidies declined by 20% compared to 
2023 (EUR 121 bn) and by 42% compared to the peak in 2022 (EUR 168 bn), due to the phase-
out of a many temporary crisis measures. According to national phase-out plans communicated 
by Member States during 2023 and 202436, less than half (39% or EUR 38 bn) of fossil fuel 
subsidies had a planned end-date before 2025, another 8% (EUR 8 bn) were scheduled to end 
between 2026 and 2030, while for the remaining 52% (EUR 50 bn), there is either no end-date, 
or the end-date has been set after 2030. 

Action 3:   

The Commission has adopted alongside this plan 

• 

as  part  of  the  legislative  proposal  on  network  charges  a  provision  regarding  the  tax 
differential between electricity and gas. 

The Commission will  

• 

propose measures on progressively phasing out fossil fuel subsidies as part of the post-
2030 Energy Union package (Q4 2026). 

KPI on national electricity/gas price ratios to maximum 2.5 for households and 2 for industry 
by 203037 

35 Report to European Parliament and Council on Energy Subsidies in the EU (forthcoming). 
36 Plans to phase out fossil fuel subsidies from 2024 onward. 
37 The basis to calculate the level of the KPI is the coefficient of performance of heat pumps in residential and industrial use, respectively, 
compared to gas boilers. In addition, the KPI takes into account the need to recover the initial capital investment.  

8 

 
 
 
 
 
 
 
1.3 

 Making electricity cheaper and increasing the share of clean affordable, 
homegrown energy 

As the figure below shows, the lowest electricity prices in the EU are observed in markets with 
very high shares of clean electricity (renewables and nuclear38) since they are less exposed to 
fossil  fuels  setting  the  wholesale  electricity  price.  Moreover,  renewable  and  nuclear  energy 
drive fossil fuels out: the additional 260 GW of wind and solar capacity installed since 2021 
displaced 14  bcm  of  gas  only  in  2025,  saving  more  than  EUR  5  bn  in  fuel  costs.  As 
electrification increases demand for electricity, more rapid growth of renewable and nuclear 
generation will be needed39. Therefore, Europe needs to move even faster.  

The EU has put in place a supportive framework for accelerating the growth of clean electricity 
capacity40, including the EU ETS carbon price. Implementation and enforcement of the EU 
energy legislation towards the achievement of the agreed 2030 targets, including the renewable 
energy  framework,  is  a  priority.  The  integration  of  renewable  generation  in  the  system  is 
hampered  by  insufficient  planning,  lack  of  location  signals,  grid  congestion, lack  of  energy 
storage capacities and a general lack of flexibility resulting in regular curtailment. Although 
the Renewable Energy Directive (RED III) addresses some of the barriers to electrification and 
the  deadline  for  its  transposition  expired  on  21  May  202541,  no  Member  State  has  fully 
transposed the respective parts of this framework yet. This slows down the roll out of renewable 
capacity, contributing to persistently high electricity prices. In addition, SMRs can strengthen 

38 In 9 Member States, the share of nuclear generation was above the EU average of 23% in 2024: Belgium, Bulgaria, Czechia, Finland, 
France, Hungary, Slovakia, Slovenia and Sweden. 
39 This displacement of fossil fuels also pushes down the primary energy factor (PEF), which reflects the higher efficiency of electricity in 
final uses. The PEF is defined through the Energy Efficiency Directive and is set to be revised by the end of 2026. 
40 Affordable energy action plan, AccelerateEU as well as Renewable Energy Directive and Electricity Market Design, with Power Purchase 
Agreements and two-way Contracts for Difference growth, and acceleration of permitting through the Grids package 
41 Except for some provisions related to permitting for which there was an earlier deadline of July 2024. 

9 

 
 
 
 
 
EU’s energy security and autonomy by reducing reliance on fossil fuels, while complementing 
renewable sources. 

In addition, further actions are needed. Across the board, Europe can improve predictability 
and coordination of clean energy supply investments and help leverage the unique density of 
the European electricity grid. Coordination of these investments in generation with flexibility 
should also be improved as this plays a key role for the affordability of electricity prices. At 
EU  level,  an  existing  platform  provides  transparency  for  all  stakeholders  on  upcoming 
renewable energy auctions. By adding a database with detailed information on these auctions 
and flexibility support schemes, the Commission will support Member States in making best 
use  of  public  funds  to  accelerate  renewables  deployment  for  the  benefit  of  electricity 
consumers.     

Action 4 

The Commission will 

• 

• 

• 

• 

• 

reinforce support to Member States in implementing Directive (EU) 2023/2413 on the 
promotion  of  energy  from  renewable  sources  (REDIII)  with  the  aim  to  have  full  and 
adequate transposition by Summer 2027. 
support cross border cooperation amongst national authorities in the interest of faster 
nuclear  reactor  licensing  decisions.  In  full  respect  of  Member  States'  prerogative  to 
determine their own energy mix, lifetime extension of existing reactors should be pursued 
unless uneconomical or incompatible with highest safety standards. 
 review  relevant  EU  legislation  to  facilitate  the  conclusion  of  long-term  cross-border 
electricity contracts, including between low-carbon generators in one Member State and 
off-takers in another and launch, by Q2 2027, a map-based tool to help energy-intensive 
industries  and  investors  assess  the  location-specific  factors  that  inform  their  energy 
investments  decisions  (“GeoDep”),  such  as  proximity  of  generation,  available 
infrastructure or favourable electricity-to-gas price ratios42; 
set  up  a  detailed  auction  design  database  by  2027  to  complement  the  existing  RES 
auction platform43, to make the best use of public support; 
adopt guidance on NZIA non-price criteria in renewable energy auctions to ensure a 
secure and diversified industrial base for clean energy technologies.  

Geothermal energy remains an underutilised resource for high efficiency renewable electricity 
and a heating and cooling solution with reduced network costs. According to recent estimates 
it  could  cost-effectively  meet  at  least  10%  of  Europe’s  electricity  needs44  and  25  %  of  its 
heating  and  cooling  demand,  if  an  enabling  framework  were  put  in  place.  In  addition, 
geothermal as well as solar thermal have the potential to contribute to passive cooling. 

Action 5 

The Commission will create a Geothermal Stakeholder Partnership by Q1 2027 to help lifting 
regulatory, technical and investment barriers and accelerating the deployment of geothermal 

42 This tool could also provide support for the establishment of Industrial Manufacturing Acceleration areas in the context of the legislative 
proposal for an Industrial Accelerator Act. 
43 https://union-renewables-development-platform.ec.europa.eu/auctions/auctions-table-overview  
44 Ember estimates that 43GW of enhanced geothermal could be developed in the EU at costs below €100/MWh, Ember February 2026. 

10 

 
 
 
 
 
energy.  The  Geothermal  Stakeholder  Partnership  will  gather  skilled  professionals  from 
Member  States  and  the  industry  to  exchange  best  practices  on  data  collection,  national 
geothermal development strategies, financing, permitting, skills and public acceptance. 

2.  Lowering upfront costs for electrification of end-use sectors  

To accelerate electrification, upfront technical, administrative and financial costs need to be 
tackled. While ETS145 already drives the business case for decarbonisation in the electricity 
sector  in  industry  and  maritime  transport,  ETS246  will  play  a  crucial  role  in  incentivising 
electrification  in  road  transport  and  buildings,  including  for  SMEs,  while  generating  the 
revenues  to  accelerate  much-needed  investments  to  support  users´  transition  towards  more 
clean energy sources. The Social Climate Fund will accompany the implementation of ETS2 
through  targeted  support  for  vulnerable  households,  transport  users,  and  micro-enterprises. 
Member States can also address this barrier through tax reforms, such as providing preferential 
tax regimes for investments in electrification. Only six Member States apply to heat pumps a 
VAT rate below that for gas boilers47, and the Commission encourages other Member States to 
follow suit. Member States can offer reduced registration taxes for electric vehicles, shorter 
depreciation times or tax incentives for company EVs or heat pumps48. Member States may 
make use of targeted fiscal flexibility by requesting a broadening in the scope of the National 
Escape Clause (capped at 0.3% of GDP annually and 0.6% of GDP on a cumulative basis) to 
introduce energy security measures reducing dependence on imported fossil fuels, including 
electrification49.  The  Commission  will  engage  with  national  promotional  banks  within  the 
context of the Energy Transition Investment Council to provide guidance. It will also provide 
best practices to national promotional banks, including on financing electrification projects. 

In  Annex  II,  the  Commission  proposes  guidance  to  Member  States  on  social  leasing  and 
support schemes for e.g., household batteries, clean energy and heating and cooling products, 
as well as for BEVs. On this basis, the Commission will support Member States to direct funds 
under the Social Climate Fund to these mechanisms. 

Action 6 

Member  States  are  encouraged  to  make  use  of  the  options  already  laid  down  in  the  VAT 
Directive50  to  support  electrification  by  applying  lower  VAT  rates  to  electrification 
technologies,  e.g.,  heat  pumps,  solar  panels  and  residential  batteries,  and  to  offer  reduced 
registration taxes for electric vehicles, shorter depreciation times or tax incentives for company 
BEVs. 

As part of the Circular VAT initiative announced in the Clean Industrial Deal, the Commission 
will present an EU framework for Member States to encourage electrification of corporate 
fleets.  

45 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a system for greenhouse gas 
emission allowance trading within the Union and amending Council Directive 96/61/EC 
46 Directive (EU) 2023/959 of the European Parliament and of the Council of 10 May 2023 amending Directive 2003/87/EC establishing a 
system for greenhouse gas emission allowance trading within the Union and Decision (EU) 2015/1814 concerning the establishment and 
operation of a market stability reserve for the Union greenhouse gas emission trading system 
47 European Heat Pump Association EHPA – “European countries failing to make heat pumps affordable” 
48 The Commission recommended such tax incentives in the Clean Industrial Deal, and set out design principles for them 
49 2026 European Semester - Spring Package - COM(2026) 200 final. 
50 Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 

11 

 
 
 
2.1 Industry 

While  the  EU’s  industry  sector  has  achieved  major  energy  efficiency  improvements,  it 
represents almost a quarter of the EU’s energy demand and the sector’s shift from fossil fuels 
to  electricity  remains  slow.  Industrial  waste  heat  recovery  also  offers  a  large  potential, 
estimated at 300 TWh/year51, to bring down energy costs. 

With  the  right  conditions,  industrial  electrification  represents  an  opportunity  for  European 
industry to modernise, further increase its efficiency and productivity and reinforce its global 
competitiveness.  Electrification  is  technically  already  feasible  for  60%  of  industrial  energy 
demand that relies on fuels52, using in particular industrial heat pumps.  

In  many  cases,  new  equipment  needs  to  be  adapted  to  be  rolled  out  for  specific  industrial 
applications. Accelerating this transformation requires an approach that coordinates all relevant 
actors across the value chain to jointly address obstacles. Electrifying industrial processes in 
the most energy-intensive industries will lead to a substantial increase in the EU’s electricity 
demand, with the demand from the steel sector alone potentially more than doubling to 165 
TWh by 2030 and further major increases in aluminium, cement and chemicals by 205053. For 
instance, a case study in the dairy sector concluded that investments in high-temperature heat 
pumps can break even with gas systems in 10 years if the electricity-gas price ratio is around 
254. 

Immediate  efforts  should  focus  on  applications  with  the  highest  potential  for  electrification 
with  commercially  available  technologies.  Electrification  technologies  can  already  deliver 
process heat up to 400-500°C, for industries such as food and beverages, pulp and paper or 
textiles, using industrial heat pumps or electric boilers55. Economic gains are achievable in 
processes  requiring  such 
temperatures.  Certain  higher-temperature 
applications56 can to a large extent be electrified through resistance heating and electric arc 
furnaces. For other high temperature processes, e.g. petrochemicals production, electrification 
is at a demonstration stage. 

to  medium 

low 

The reuse of excess heat, either on site in the same plant, in a data centre or in an industrial 
cluster,  or  through  district  heating,  combined  with  electrification  will  further  improve  the 
efficiency  of  industrial  processes.  As  data  centres  are  already  electrified,  their  growing 
consumption goes hand in hand with electrification; its smooth integration with the grid can be 
improved,  through  digitalisation,  flexible  connection  agreements,  additional  renewable 
generation capacity, including on-site, and the use of microgrids. 

Some of the initiatives launched under the Clean Industrial Deal, notably the Clean Industrial 
Deal State Aid Framework and the related recommendation on tax incentives can already be 
relied upon by Member States for lowering costs for electrification for industry. Furthermore, 
the Industrial Accelerator Act would create lead markets strengthening the demand for low-
carbon and “Made in EU” products. The Commission encourages co-legislators to adopt the 
legislative proposal promptly and anticipate its implementation. 

Action 7:   

•  The proposal for the revision of the ETS Directive supports the decarbonisation of industry, 
including energy-intensive industries, inter alia through ensuring the Member States spend 

51 The equivalent of the heating needs of 15 to 20 million homes RE-WITCH, 2025, Understanding the regulations governing waste heat & 
cooling technologies, Danfoss Impact, 2023, The world’s largest untapped energy source – Excess heat 
52 Fraunhofer ISI/Agora “Direct electrification of industrial process heat” 
53 Eurofer (2026), Position Paper EU Electrification Action Plan 
54 Future Cleantech Architects - Case Study: Electrification and Thermal Energy Storage in the Dairy Industry, 2025 
55 The direct use of renewable heat can also be a cost-effective solution for many of these processes, where available. 
56 And further industries like ceramics, building materials or glass manufacturing. 

12 

 
 
 
more  of  the  national  ETS  revenues  on  the  decarbonisation  of  the  industrial  sector  and 
making  the  transitional  free  allocation  of  allowances  conditional  to  investments  into 
emissions reductions, including electrification. 

•  The proposal for a revised ETS framework includes the establishment of the € 100 billion 
Industrial Decarbonisation Bank including the €30 billion ETS Investment Booster. Both 
mechanisms can support investments in industrial electrification, as the critical pathway 
for industrial decarbonisation, grid connection infrastructure, on-site energy management 
systems  and  battery  or  thermal  storage,  benefiting  system  integration.  The  calls  for 
proposals will be launched immediately after the legislation is adopted. 

The Commission will 

• 

launch a second industrial heat auction under the Innovation Fund in 2026 and further 
support  the  rollout  of  electrified  and  renewable  heat  solutions  and  industrial  flexibility 
solutions to reduce reliance on imported fossil fuels; 

•  examine the case for an EU-level mechanism to pool industrial electricity demand and 
improve access to diversified low-carbon energy to reduce financial risks associated with 
PPAs; 

•  support exploring the potential and barriers for deploying direct-use renewable heating 
technologies  (including  thermal  energy  storage)  for  certain  types  of  industries  and 
geographies where direct heat might be plausible and more efficient than electrifying57; 
•  collaborate  with  industrial  sectors,  technology  suppliers  and  Member  States  to  develop 
sector-specific electrification roadmaps along the value chain, including the scale-up of 
electrification technologies, standards, modularisation of components, demand flexibility 
and  protocols  for  the  effective  integration  of  these  technologies  in  industrial  processes, 
innovative business models and access to financing; 

•  work with industry to facilitate cluster-based partnerships for electrification and waste 
heat reuse of industrial sites, involving industrial actors, including data centres58, as well 
as providers of energy and flexibility services59.  

2.2 Transport 

Road transport consumes almost a third of the EU’s energy60. Whilst the number of BEVs has 
grown more than sevenfold since 2020 only 2.9% of cars are battery electric. Across the EU, 
more than 8 million BEVs are already leading the transformation of the sector which depends 
the most on imported fossil fuels. In 2025, even before the conflict in the Middle East, BEVs 
saved EUR 4.1 billion in avoided oil imports61. Passenger BEVs sales have climbed to a record 
20.7% of new sales in April 202662, notably driven by the CO2 emission standards as the main 
EU-wide policy tool, tax incentives, new support schemes including social leasing and a lower 
total cost of ownership than comparable petrol and diesel vehicles. Nevertheless, progress is 
still  required,  notably  in  the  battery  electric  heavy-duty  vehicles  (e-HDV)  sector.  The 
Commission therefore encourages Member States to exempt zero-emission lorries from tolls 

57  The  Commission  has  launched  the  Call  for  Tenders  ‘European  medium  temperature  heat  for  industrial  processes:  needs,  barriers,  and 
opportunities for direct use renewable heat technologies’ to assess Europe's medium-temperature industrial heat demand, identify the potential 
and barriers for deploying direct-use renewable heating technologies (including thermal energy storage), and produce best-practice examples 
to support the decarbonisation of industrial process heat across EU Member States 
58 Building on new initiatives such as Eurelectric’s « power couples » plan. 
59 Possible priorities for these partnerships include demand aggregation for PPAs or heat storage services or engagement with electricity grid 
operators to facilitate grid access. 
60 Eurostat 
61 EMBER - A clean break: leaving fossil volatility for clean tech security 
62 European Alternative Fuels Observatory.  

13 

 
 
 
 
and  apply  reduced  toll  rates  for  zero-emission  vehicles  in  line  with  the  Eurovignette 
Directive63. The Commission proposed a Clean Corporate Vehicles Regulation to accelerate 
the  registration  of  electric  cars  by  large  companies,  which  are  also  a  source  of  affordable 
vehicles for the second-hand EV market, due to their high turnover64. Some Member States use 
taxation  of  corporate  cars  to  incentivise  electrification,  which  the  Commission  encourages: 
Belgium did so in 2021 and the BEV share in new corporate car registration reached 54% in 
202565. Other Member States are encouraged to follow suit.   

Member  States  can  direct  Social  Climate  Fund  and  ETS  revenues  to  finance  social  leasing 
schemes  for  EVs  for  lower  and  middle-income  households,  or  toll  exemptions.  Fiscal 
incentives, subsidies or low-interest loans, including for second-hand EVs, are also effective 
tools for Member States to increase EV affordability.  Beyond road transport, the electrification 
potential  of  maritime  transport  is  also  growing  and  the  framework  to  enable  the  necessary 
investments  deserves  attention.  Finally,  in  the  decarbonisation  of  the  aviation  sector, 
electrification can play a growing role alongside sustainable aviation fuels (SAF), contributing 
to a stronger industrial base in the EU.  

Action 8 

The Commission will 
•  review the Clean Vehicles Directive to assess targets and possibly further strengthening 

public procurement of zero emission vehicles by Q4 2027;  

•  put forward a recommendation on Fiscal and Non-fiscal demand-side incentives for zero-

emission vehicles by Q4 2026; 

KPI: By 2040, sufficient grid connections for publicly accessible HDV recharging and HDV 
depot charging will have to be deployed to enable 40% battery electric propulsion of EU truck 
fleet. 

2.3 Buildings 

Commercial  and  residential  buildings  account  for  half  of  the  EU’s  gas  consumption  and 
progress  towards  renovation  and  electrification  remains  slow.  In  residential  buildings  and 
collective heating systems, heat pumps can fully cover space heating, cooling and hot water 
needs-  about  80%  of  energy  use.  The  EU  renewable  energy  framework  foresees  simplified 
permitting  rules  for  their  installation.  Electrifying  energy  consumption  in  buildings  and 
improving their energy performance leads to multiple benefits for consumers, from lower bills 
to a healthier indoor environment. The switch from gas boilers to heat pumps can cut the EU 
household’s heating bill by 20% to over 60%66. The benefits of heat pumps can also increase 
if combined with solar photovoltaic, solar thermal, ambient or waste heat and cold and other 
clean energy or storage solutions such as batteries, including through local heat networks. An 
efficient and decarbonised building stock would also cut peak demand, thus helping to lower 
costs across the wider energy system. With longer and more intensive heat waves, heat pumps 
have the additional advantage, on top of heating, of providing cooling capabilities, with a high 
efficiency contributing to improve EU climate resilience. Shifting heating or cooling demand 

63 Directive - 1999/62 - EN - EUR-Lex. Member States may provide for reduced tolls or user charges, or exemptions from the obligation to  
pay tolls or user charges for: zero-emission vehicles with a technically permissible maximum laden mass up to 4,25 tonnes, any vehicle 
covered by the conditions set out in Article 6(2), points (a) and (b) (notably national or civil defence cars, or cars that only occasionally use 
public roads), or any vehicle used or owned by persons with disabilities. 
64 60% of new cars in Europe are purchased by corporate entities. Proposal for a Regulation on clean corporate vehicles COM(2025)994. 
65 Transport and Environment - Weak corporate car taxes risk intensifying the EU’s oil dependency, 31 May 2026 
66 “5 things you should know about heat pumps”, DG ENER article of 5 Dec. 2025 

14 

 
 
 
from peak hours to hours with high renewable production would decrease the overall costs of 
the  energy  system  while  maintaining  thermal  comfort.  However,  the  cost  of  acquiring  and 
installing a heat pump can vary widely across and even within Member States. Social leasing 
and  other  support  measures,  including  subsidies,  zero-  or  low-interest  loans,  and  on-bill 
financing schemes for heat pumps and other clean energy and heating products, can facilitate 
the transition of low- and middle-income households away from fossil-based heating systems. 
Cohesion  Policy  funds,  Social  Climate  Fund,  the  Modernisation  Fund  and  Recovery  and 
Resilience Plans can support the electrification of buildings, such as in Belgium, where some 
social housing units are being equipped with a combination of solar panels, batteries and heat 
pumps.  

The Commission will explore ways to mobilise public demand for heat pumps, including under 
the public procurement, for example by bringing public buyers into a community of practice to 
coordinate and consolidate their demand while strengthening the value chain through Made in 
Europe requirements. 

To  deliver  meaningful  cost  savings  and  other  benefits  for  consumers,  deployment  of  these 
technologies  should be coordinated with  building  insulation and renovation, prioritising the 
worst-performing buildings. Member States have an opportunity to structurally transform their 
building stock into zero-emission buildings, with their National Building  Renovation Plans. 
The Energy Efficiency Financing Coalition can help scale up private financing for renovations, 
as well as the good use of revenues generated by ETS2. 

Action 9 

The Commission will 

•  explore the possibility to introduce a clean heat market mechanism to incentivise rising 
shares of  heat  pump sales from  manufacturers, redirect  installers  and manufacturers  to 
clean heating  and cooling  solutions  and boost competition, narrowing the upfront  costs 
difference for heat pumps by 2027; 

•  examine ways to accelerate deployment of heat pumps in public buildings through public 

• 

procurement; 
to  ensure  heat  pump  cost  transparency,  facilitate  the  rollout  of  national  online 
comparison  tools  allowing  consumers  to  easily  secure  a  tailored,  transparent  and 
comparable “heat pump quote” from different brands and installers; 

•  promote  innovative  financing  and  business  models  for  heat  pumps  within  integrated 
packages of renovation and adaptation works in residential buildings through the Better 
Homes Partnerships, to accelerate uptake, replication and access to finance; 

•  mobilise  the  Heat  Pump  Accelerator  platform  and  the  Energy  Efficiency  Financing 
Accelerator  to  derisk  and  finance  investment  in  heat  pumps  and  connections  to  district 
heating and cooling systems with related to solar thermal and geothermal projects; 

•  adopt  a  Cooling  and  Heating  Action  Plan,  including  to  address  the  growing  need  for 

efficient cooling for EU citizens and economy. 

KPI: increase installation rate of heat pumps to around 4 million per year in 2030 compared 
to 2025 of 2.4 million.   

15 

 
 
 
3. Access to infrastructure  
To speed up electrification, grids productivity needs to be significantly enhanced. Difficulties 
in connection and access to the electricity grid, linked to delays in grids build-out, is another 
clear  constraint  on  electrification.  The  EU  has  already  taken  action  to  address  this  with 
transparency  in  grid  hosting  capacity,  flexible  connection  agreements  and  grid  connection 
regimes, including prioritisation frameworks or anticipatory investments. In addition, the Grids 
Package  proposed  new  measures  on  grid  planning  and  productivity  through  grid-enhancing 
technologies  and  smart  solutions.  As  part  of  the package,  measures  on  electricity  grids  and 
renewables  permitting,  storage  or  recharging  points  are  also  under  negotiation  by  co-
legislators.  

Member States should boost investments in grids and streamline permitting in the acceleration 
areas created by EU legislation. System operators are encouraged to involve in their network 
planning and grid capacity expansion processes the key actors in electrification investments, 
including industrial sites and parks such as the Industrial Manufacturing Acceleration Areas, 
data centres, district heating operators, charging point operators, airports and ports. The mid-
term review of Cohesion Policy resulted in additional resources allocated by Member States to 
investments  in  electricity  grids  and  interconnectors  (1.2  billion  EUR)67.  With  a  consistent 
application of the energy efficiency first principle across all infrastructure planning processes, 
these developments will help lower system costs and improve grid productivity and access. In 
the context of the Clean Energy Investment Strategy68, the European Investment Bank intends 
to deliver over €75 billion of financing over the 3 years, with grids as a key priority. 

Member States should also help improving the interface between the electricity grids and users. 
As regards the expansion of transport recharging infrastructure, multiple measures and support 
have  been  provided;  as  a  result,  there  are  now  more  than  1.1  million  publicly  accessible 
recharging points in the EU69. While Europe’s e-HDV fleet is growing70, scaling it up requires 
addressing infrastructure gaps by providing investors and operators greater certainty to unlock 
investments. The Alternative Fuels Infrastructure Facility focusses on financing recharging e-
HDV stations, for which Member States can also make use of regional funds to support these 
investments.  Nevertheless,  additional  financial  support  is  needed  to  reassure  charging  point 
operators and convince consumers that electric mobility will rapidly become the most reliable 
and accessible form of transport, even in less densely populated areas. 

Port infrastructure has great potential to facilitate the electrification of maritime transport and 
fisheries  through onshore power supply (OPS). The deployment  of an adequate high-power 
charging infrastructure in ports, including small ports in remote areas, remains a priority, while 
timely integration into grid planning processes, electricity demand forecasting, deployment of 
energy storage, integration into local energy systems or access to funding can all contribute to 
turn them into energy hubs. The EU policy framework for ports puts particular focus on the 
role  of  OPS  and  on  the  potential  of  ports  to  become  energy  hubs71.  Transparent  and  non-
discriminatory pricing of OPS services is also essential to support this transformation, as well 
as  determining  ports  as  industrial  acceleration  areas  in  line  with  the  proposed  Industrial 
Accelerator Act. The Commission invites relevant stakeholders, including within the European 
Sustainable Shipping Forum, to develop best practices on transparent and non-discriminatory 

67 Inforegio - Results of the Mid-Term Review of cohesion policy 
68 Clean Energy Investment Strategy (COM/2026/116), March 2026 
69 European Alternative Fuels Observatory 
70 In 2026 to date, there are 29,000 battery electric trucks on EU roads, compared to 2,500 in 2020, which is elevenfold increase between 
2020 and 2025. In 2025: 28,726 and in 2024: 15,758. Source: European Alternative Fuels Observatory 
71 In particular AFIR, FuelEU Maritime and the March 2026 EU Port Strategy. 

16 

 
 
 
pricing  of  OPS  services,  including  tariff  structures  and  cost  components.  If  needed,  the 
Commission  will take further measures to  enhance price transparency and comparability of 
OPS services across the EU.  

Action 10:  

The Commission will 
•  review the Alternative Fuels Infrastructure Regulation (AFIR) in 2026 to further support 
the accelerated roll-out of charging infrastructure, including for e-HDV, while ensuring 
no region  is  left  behind. The review will  address  data  collection  on  current  and future 
needs on depots charging, and further support the accelerated roll-out of OPS; 

•  update common technical specifications for publicly accessible and private recharging 
points  under  AFIR  to  ensure  technical  interoperability  and  ensure  bi-directional 
recharging capabilities; 

•  ensure a coordinated European deployment of e-HDV charging infrastructure as part of 
the whole value chain approach to e-HDV in 2026 and expand e-HDVs Clean Transport 
Corridors initiative to other TEN-T corridors, and design with Member States a European 
financial tool for the derisking of investment in e-HDV recharging stations; 

•  work with Member States and industry to identify remaining enabling conditions for the 
deployment of zero-emission HDVs, including incentives for the demand for the vehicles 
and agree on joint action plans  for the enabling framework for the transition under the 
2030 CO2 targets for HDVs; 

•  work on removing barriers for the electrification of ferries and inland navigation vessels, 

such as lack of recharging infrastructure in ports. 

Member States should consider the frontloading of credits under the RED credit mechanism 
to facilitate investment in recharging points, including depots charging72. 

KPI:  By  2040,  deployment  of  sufficient  port  grid  capacity  and  shore-side  charging 
infrastructure to enable battery-electric propulsion for one third of the EU ferry fleet. 

District heating and cooling (DHC) systems using heat pumps or e-boilers, urban heat networks 
and  thermal  storage  can  offer  large  amounts  of  flexibility  and  reduce  the  burden  on  the 
electricity grid. They can mobilise direct sources of clean heat (geothermal and solar thermal, 
waste heat73) to complement electrification. The Commission will support investments in DHC 
and  waste  heat  recovery  projects,  address  the  lack  of  awareness  by  promoting  replicable 
approaches to match supply and demand and promote technical capacity at local level. 

Action 11:  

The Commission will 
• 

launch an EU Waste Heat initiative to provide investment certainty and support business 
models for waste heat recovery and use in DHC (by Q2 2027); 

•  mobilise the Energy Efficiency Financing Coalition and the Energy Efficiency Financing 
Accelerator to derisk and finance DHC investment and strengthen the EU supply chain; 
•  support  the  European  City  Facility  to  fund  municipal  heating  and  cooling  plans  and 
launch by in summer 2026 a first pilot action of EUR 15 million funding up to 180 plans 

72 While ensuring that the credits that have been frontloaded are cancelled if the corresponding renewable electricity is not finally supplied. 
73 The Commission set the objective to supply 11% of EU heat demand from waste heat recovery by 2050 

17 

 
 
 
 
 
 
launched,  with  the  aim  to  expand  to  turn  1000  local  heating  and  cooling  plans  into 
investible business. 

KPIs: Supply 11% of EU heat demand from waste heat recovery by 2050; DHC systems to 
supply 15% of total heating and cooling supply by 2030 and DHC networks to grow 6-7% per 
year by 2030.  

4. Accelerating innovation in electrification solutions  

With  constantly  improving  solutions,  electrification  technologies  cover  an  ever-larger 
spectrum of the EU’s energy needs. The majority of today’s fossil fuel consumption can be 
electrified, but there are still some energy uses and processes which require further research 
and innovation, in particular long-distance transport and certain industrial processes. The EU 
already commits EUR 18.6 billion to support the development of electrification technologies, 
through Horizon Europe, the Modernisation Fund and the Innovation Fund. For 2026-2027, 
Horizon Europe dedicates almost EUR 2 billion to address issues such as energy storage, new 
breakthrough energy technologies, renewable energy, grid technologies and energy systems, 
electrification of buildings and industry, heating and cooling and solutions for the transport 
system.  The  Commission  also  supports  innovative  nuclear  technologies,  including  through 
small modular reactors (SMR) to deliver clean electricity to industrial consumers in a safe way, 
as reflected in the EU’s SMR Strategy74.  

Digitalisation, data sharing and AI are drivers of innovation in electrification solutions and key 
enablers  of  demand-side  flexibility,  including  vehicle-to-grid  (V2G),  heat  pumps  and 
buildings.  In  addition,  full  decarbonisation  of  some  industrial  processes  would  require  the 
development of other options, such as the use of biogas, hydrogen or carbon capture utilisation 
and storage.  

The regulatory, infrastructure, and operational requirements for electric aviation demand real-
world testing. The Commission will launch a pilot to establish regional centres of excellence 
for zero-emission aviation, bringing together Member States, regions, and the industry. 

Action 12:  

The Commission will 

•  reinforce within the SET Plan  the support of the uptake of clean energy technologies 
central  to  electrification  of  certain  industrial  processes,  by  developing  and  endorsing 
Common Investment and Implementation Plan for these technologies by Q1 2027; 

•  work  with  the  European  Industrial  Alliance  on SMRs  to  conclude  the  second  call  for 
projects  in  the  context  of  the  objective  of  first  SMR  projects  becoming  operational  in 
Europe by early 2030s; 

•  update  the  EU  hydrogen  strategy  to  ensure  the  availability  of  complementary 
decarbonisation  solutions  for  industrial  processes  where  direct  electrification  is  not 
feasible or cost-effective. 

74 COM/2026/117 

18 

 
 
 
 
5. Aligning value chains with the ambition: Skills and manufacturing 
Reaching  the  EU’s  energy  goals,  increasing  electrification,  modernising  infrastructure  and 
ensuring the security of the growing electricity system is challenging. Delivering on the targets 
and KPIs requires skilled human capital and action all along Europe’s value chains; growing 
and  diversifying  access  to  materials,  scaling  up  manufacturing  capacities,  constantly 
developing  labour  supply  and  stimulating  demand.  The  workforce  in  the  energy  sector  is 
projected to increase by 50% by 2030 to deploy renewable energy, grid and energy efficiency 
technologies.75 On the manufacturing side, the needs assessment accompanying the Net-Zero 
Industry  Act  projects  30,000–100,000  additional  jobs  by  2030  to  produce  wind  and  solar 
technologies.  The  largest  employment  effect  materialises  downstream.  The  installation  and 
deployment  of  wind  and  solar  generation  could  require  a  further  130,000–145,000  skilled 
workers by 2030, around 90% of them in construction and services76. Investment in distribution 
grids alone is estimated to sustain 440,000–620,000 quality, local jobs per year77 while the IEA 
identifies the shortage of skilled grid workers as an emerging bottleneck for delivering new 
infrastructure on time78.  

Beyond  the  deployment  phase,  electrification  assets  generate  lasting  employment:  a  study 
commissioned by the JRC projects close to 110,000 ongoing operation and maintenance jobs 
for charging infrastructure alone.79. The European Centre for the Development of Vocational 
Training (Cedefop) points to employment gains in machine operation and in metal, machinery 
and electrical trades — occupations mainly supplied through vocational education and training, 
confirming its centrality to the electrification workforce80. 

The IEA further estimates that the EU needs 500,000 skilled workers, up from 165,000 in 2024, 
to deliver on its heat pump installation ambitions. In view of the shortages, there is a need for 
substantial skilling and upskilling. Under the Union of Skills, the EU provides a comprehensive 
including  funding81.  The  EU  Council 
framework 
Recommendation  on  human  capital  calls  on  Member  States  to  address  skills  shortages  by 
investing in STEM education82. Further actions can still help. The diversity of certification and 
permit  systems  across Member States also  represent  a barrier to  the development  of an EU 
market of installation and maintenance of electrification solutions.  

to  support  skills  development, 

Action 13:  

The Commission will: 

• 

support Member States and industry in the context of the upcoming European Strategy 
for  Vocational  Education  and  Training  (VET)  with  a  stronger  sectoral  focus  and 
awareness raising to attract a new generation of skilled workers across the electrification 
value chain; 

75 Union of Skills, COM(2025) 90 final. 
76 Fulvimari, A. et al. (2025), Estimating labour market transitions and skills investment needs of the green transition 
77 Eurelectric/E.DSO, Connecting the dots: Distribution grid investment to power the energy transition (Monitor Deloitte analysis), January 
2021 — figure covers EU27 and UK. 
78 IEA, World Energy Employment 2025 
79 CE Delft (2026), Labour demand energy transition 
80 Source: Cedefop scenario modelling (Skills Forecast 2026) 
81 European Social Fund Plus and Erasmus+ (including the Platform for Electrification Skills), Large-Scale Skill Partnerships on Renewable 
Skills and on the Digitalisation of the Energy System, battery and net-zero industry skills academies and the EU Talent Pool. 
82 Council Recommendation on human capital in the European Union, ST 6081/1/26 REV 1 

19 

 
 
 
• 

• 

• 

through 

adopt an initiative to support the portability of qualifications and skills across the EU, 
including dual use technologies and cyber protection applications for electricity grids; 
provide 
incentives  for 
the  Clean  Heat  Market  Mechanism  sufficient 
manufactures to support training of electricians and installers through vocational and 
educational  training  partnerships  between  companies  and  technical  schools  to  share 
equipment and develop real-life cutting-edge equipment; 
explore  support  for  access  to  certifications  for  energy-efficient  construction  and 
installation services and electrification by design in the upcoming Construction Services 
Act. 

The  EU  is  among  the  global  leaders  in  manufacturing  the  technologies  this  electrification 
transition  needs.  Minimising  cybersecurity  risks  for  the  electricity  grid  also  needs  to  be 
addressed and requires greater use of homegrown technology and suppliers for key IT assets 
such as inverters.  

Building on the Net-Zero Industry Act, the Commission proposal for an Industrial Accelerator 
Act steers public investments in electrification towards resilient and “Made in EU” products, 
so  European  manufacturers  can  benefit  from  and  lead  Europe’s  electrification  efforts.  To 
contribute  to  this  effort,  Member  States  are  encouraged  to  advance  their  application  for 
electrification technologies.  

The European SMR Industry Alliance is taking steps to increase the capacity of the EU SMR 
industry;  and  Italy  used  at  least  EUR  400  million  from  its  RRP  to  establish  the  “Net  Zero 
Technologies” Facility, mobilising private investment in clean technology manufacturing such 
as batteries, solar and wind and clean heating and cooling technologies. Member States also 
allocate resources to research, innovation, knowledge-sharing and technology transfer to other 
companies across clean tech value chains under the Strategic Technologies for Europe Platform 
(STEP) - EUR 15.2 billion under the new competitiveness priority83. Similar actions are needed 
across  the  EU  for  all  clean  energy  technologies.  More  generally,  strengthening  the  single 
market and Energy Union will improve the competitiveness of industry and the development 
of dynamic and integrated markets based on harmonised rules. 

Where  feasible,  electrification  can  also  create  opportunities  for  Europe’s  maritime 
manufacturing base, in line with the EU’s industrial maritime strategy’s 2030 vision84, serving 
as a lead market for the uptake of electric ferries, barges and tugboats. The Commission will 
also cooperate with Member States and stakeholders in the upcoming EU Industrial Maritime 
Value Chains Alliance. 

Action 14: 

The Commission will 
• 

• 

adopt  guidance  on  NZIA  provisions  on  public  procurement  procedures for  net-zero 
technologies. 
create an Electrification Action Plan Alliance with national authorities in synergy with 
the  Energy  Union  Task  Force  and  bringing  together  all  stakeholders  across  the  value 
chain with a special focus the swift electrification. 

83 Inforegio - Results of the Mid-Term Review of cohesion policy 
84 COM/2026/111 final. 

20 

 
 
 
 
6. Accelerating clean electrification globally  

Clean electrification globally helps to advance international climate action. IRENA estimates 
that “to  remain on a 1.5°C-compatible pathway,  electricity must account  for 35% of global 
total  final  energy  consumption  by  2035  and  more  than  50%  by  2050”.  The  European 
Commission, the COP30 Presidency (Brazil), the COP31 Presidency (Australia, Türkiye), the 
COP32  Presidency  (Ethiopia),  Canada,  the  Philippines,  the  Republic  of  Korea,  the  United 
Kingdom, the International Energy Agency and the International Renewable Energy Agency, 
joined  forces  with  international  partners  and  industry  to  launch  ‘Electrify  Now'  on  23  June 
2026, a global platform to accelerate the electrification of the global economy.   

Global clean electrification will be accompanied by substantial socioeconomic benefits from a 
massive build-out of infrastructure, the global scaling up of manufacturing capacity and cost 
reductions for clean technologies. It can also create export markets for European innovations 
and technologies, while early development and international promotion of technical standards 
can give European companies a head start on export markets. 

Finally, electrification helps shift globally from a fragile energy security landscape based on 
fossil  fuels  extraction  towards  a  cleaner,  resilient,  predictable  system  based  on  technology 
cooperation. Especially for energy-poor nations, clean electrification can alleviate the effects 
of conflict and instability multipliers, such as the collapse of networks and fuel price volatility, 
and foster regional economic stability.   

In line with  the  Joint Communication on the EU global climate and energy vision85, global 
clean electrification is part of the EU’s international strategy to secure Europe’s competitive 
role in world markets. 

Action 15: 

The Commission will 

• 

• 

seek to unlock ambition across all regions of the globe with its partners of the Electrify 
Now Initiative by showcasing successes, identifying opportunities, securing commitments 
and strengthening delivery plans; 
build  a  wide  coalition  of  countries  that  are  willing  to  commit  to  global  clean 
electrification, rooted in the tripling of renewable energy capacity globally and the new 
global  objectives  to  reach  35%  of  electrification  by  2035  promoted  by  the  COP31 
presidency.   

85 JOIN/2025/25 final. 

21 

 
 
 
 
 
 
 
Annex I – Matrix of barriers and actions for the industry, transport and buildings sectors 

(Actions are preceded by the action box number) 

Industry 

Transport 

Buildings 

Barriers 

Unfavourable 
electricity-fossil 
price ratios 

X 

High upfront costs 

X 

delays 

Long 
to 
access  the  electricity 
grid 

still 
Innovation 
required  for  certain 
uses 

X 

X 

Skilled  workforce 
shortages 

X 

Actions 

X 

X 

X 

(for charging stations) 

X 

X 

X 

X 

Sector-specific 
actions 

2.  Methodology  to  assess  industrial 
flexibility potential 

2. V2G Regulatory sandbox 

9. Clean Heat Market Mechanism 

2.  Common  Union  rating  scheme  for 
data centres 

2.  Smart  charging  by  default 
contracts 

in 

9. Acceleration  of  deployment  of  heat 
pumps in public buildings 

22 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Industry 

Transport 

Buildings 

4.  GeoDep  tool  for  energy-intensive 
industries 

7. ETS Directive revision to incentivise 
electrification 

2. V2G requirements for new EVs 

9.  Facilitate 
comparison tools for heat pumps 

the 

rollout  of  cost 

8. Revision of Clean Vehicles Directive  9. Better Homes Partnerships roll-out 

7.  ETS  funds:  IDB  and  Investment 
Booster 

8.  Recommendation  on  demand-side 
incentives for zero-emission vehicles. 

9.  Derisk  and  finance  heat  pump 
investments through Accelerators 

7. Second industrial heat auction 

7.  Examine  the  case  for  an  EU-level 
industrial  electricity 
mechanism  on 
demand 

Sector-specific 

7. 
roadmaps 

electrification 

7. Cluster-based partnerships 

10.  Review  of  AFIR  on  charging 
stations,  depots  charging  and  onshore 
power supply 

9. Adopt a Cooling and Heating Action 
Plan 

10.  Update  technical  specifications  for 
interoperability and V2G 

11. European City Facility 

10. RED credit mechanism frontloading  13. Skills in Construction Services Act 

expand 

10. 
charging 
infrastructure  clean  transport  corridors 
and  

e-HDV 

enabling framework for e-HDVs 

10.  Identify  remaining  conditions  for 
deployment  of  zero  emission  HDVs, 
and joint action plans 

23 

 
 
 
 
 
 
 
 
 
 
 
 
Industry 

Transport 

Buildings 

10.  Remove 
the 
electrification  of  ferries  and  inland 
navigation vessels 

barriers 

for 

7.  Potential  and  barriers  for  deploying 
direct-use 
heating 
technologies 

renewable 

Annex II. Guidance on social leasing 

Cross-sector action 

12. Hydrogen Strategy update 

9.  Derisk  and  finance  District  Heating 
and Cooling investments 

11. EU Waste Heat initiative 

1- Electrification target 

12. Electrification Action Plan Alliance 

Horizontal 
supply side actions 

and 

11. Derisk and finance District Heating 
and Cooling investments  

11. EU Waste Heat initiative  

 2. Legislative proposal on future-proof electricity bills, including provision regarding the tax differential between electricity 
and gas; 

3. Measures on progressively phasing out fossil fuel subsidies 

2.Proposals on network codes adoption and revision 

2. Implementation of the Tripartite Agreement on Storage 

2.High-level conference to assess barriers and solutions for storage 

2. Assessment of the EU’s long-duration flexibility needs for 2030, 2040 and 2050 
4. Support for MSs to implement the Renewable Energy Directive 

24 

 
 
 
 
 
 
 
 
 
Industry 

Transport 

Buildings 

4. Support for cross border cooperation for faster nuclear reactor licencing 

4. Review EU legislation for conclusion of long-term cross-border electricity contracts 
4. Renewable energy auction design database 

4.NZIA guidance on non-price criteria for renewable energy auctions and 14. On Public procurement 

5. Geothermal Stakeholder Partnership 

6. Make use of the options already laid down in the VAT Directive 
12. European Industrial Alliance on SMRs second call for projects  

12.  SET  Plan  Common  Investment  and  Implementation  Plan  for  clean  technologies,  including  innovation  in  industrial 
processes 

13.  In  the  upcoming  European  Strategy  for  Vocational  Education  and  Training  (VET),  stronger  focus  on  skills  across 
electrification value chain 
13. Skills portability initiative 

15. Electrify Now Global Initiative 

25 

 
 
 
 
 
 
 
Annex II – Guidance on social leasing and support schemes for clean energy, cooling and 
heating products  

1.  Introduction  

Social leasing can be an effective system to increase the uptake of clean energy, heating and 
cooling  products.  A  social  leasing  scheme  usually  means  a  government-backed  programme 
providing low- and middle-income households with affordable, subsidized long-term leases to 
help  with  high  upfront  costs  of  products.  It can  cover,  for  example,  battery  electric 
vehicles (BEVs), heat  pumps,  photovoltaic  (PV)  installations, solar  thermal  installations 
and batteries. Unlike  conventional  leasing,  social  leasing  schemes  are  publicly  supported  to 
meet broader social and environmental policy goals at the same time. They make low-emission 
mobility and energy-efficient solutions more accessible86. 

Switching to clean technologies implies an upfront investment, the operating costs are usually 
low. While most often, technologies such  BEVs and heat  pumps pay off over time through 
lower  energy  bills,  the  households  that  would  benefit  most  often  cannot  afford  the  initial 
investment. This leaves them locked in inefficient and increasingly costly fossil-fuel system. 
Social  leasing  breaks  this  lock-in  by  replacing  high  upfront  costs  with  affordable  monthly 
payments, which can be partly offset by lower running costs, making clean technologies more 
accessible. Social leasing schemes can build lasting public support for the transition. 

To provide suitable incentives for the uptake of clean and energy efficient energy, heating or 
cooling products, such as heat pumps, larger PV installations, social leasing schemes should 
be designed in accordance with the type of product, e.g.  movable or non-movable product. To 
address specificities of some fixed energy assets, additional support schemes suitable for non-
movable products, including subsidies, low- or zero-interest loans, standardised rent surcharge 
mechanisms, and on-bill financing, could be considered. 

2.  Social,  economic  and  environmental  benefits  of  social  leasing and  support 

schemes  

transport 

Building on the experience of existing schemes in Member States, social leasing schemes for 
BEVs can deliver  substantial  social  and  environmental  benefits. Across  the  EU, more 
than 90% of around five million low and lower-middle income households in rural areas with 
social 
high 
leasing scheme for BEVs87. Receiving a  monthly  lease  rate  of approximately EUR  100  for 
electric mobility, households with high transport needs could save around EUR 1,800 in Spain, 
and EUR  1.300  in  Germany. In  addition,  each BEV, replacing  an equivalent  internal 
combustion engine vehicle, could reduce direct emissions by about two tonnes of CO2 in the 
first year and around ten tonnes over its full use period88. 

would financially benefit from a 

expenditures 

86  The  Clean  Industrial  Deal  announced  guidance  on  social  leasing  for  EVs,  heat  pumps  and  other  clean    energy  and  heating  products, 
COM(2025) 85 final. Other Initiatives including the Industrial Action Plan for the European automotive sector (COM(2025) 95 final), the 
Citizens Energy  Package  (COM/2026/115  final.)  and  AccelerateEU  (COM(2026) 370  final.)  refer to  social  leasing and  similar  financing 
support schemes. 
87 Commission estimations based on Green EUROMOD. 
88 Commission estimations that do not account for emissions related to EV production. Estimates account for the general trend towards road 
transport electrification and quantify the additional potential of a social leasing scheme. 

26 

 
 
 
 
 
of 

beneficiaries (16 out 

Switching  to  a  heat  pump  can also deliver significant savings under  the  right  conditions,  as 
well  as  more  resilience  to  heatwaves.  A  subsidy scheme5 covering  the  costs of  the  heat 
pump installation and targeting  households with  high  energy  expenditures  relative  to  their 
income in  the  lower  half  of  the  income  distribution would generate savings for around two-
thirds 
households). Among these 
households, average savings could exceed 2%  of  disposable  income, but with  strong  country 
variation. In the 
800. 
In Croatia, they are closer to  EUR 10089. Benefits are higher where the  ratio  of electricity 
prices to fossil fuel prices is low.   However, savings also depend on the efficiency of the heat 
pump system, which is influenced by factors such as the required water temperature in the heat 
emitters  and  how  well  the  buildings  are  insulated. The  measure  would  also  deliver  clear 
environmental  gains: Replacing  a  fossil- fuel based  heating  system  with  a  heat  pump  could 
cut direct emissions by around 4 tonnes of CO₂ per year per household in the target group.  

Netherlands, annual savings 

of 23 million 

around EUR 

reach 

can 

French social leasing scheme 

French  social  leasing  allows  most  modest  households  to  have  an  BEV  by  paying  a 
monthly rent, without being obliged to purchase it at the end of the lease. The lease must 
last at least 3 years. This mechanism was first introduced in 2024, and it was renewed 
for a third edition in July 2026. 

The amount of rent to be paid depends on the car model, amounting to less than €200 
per month for a mileage of at least 15,000 km/year at no additional cost (this does not 
include the cost of insurance, nor the price of options or additional services). 

The aid granted shall be equal to 29% of the purchase cost of the vehicle up to €6,500. 

This limit may reach a maximum amount of €9,000 whether the vehicle manufacturing 
site and the battery production site are located in the European economic area. If the 
electric motor was manufactured in the European Economic Area, a flat-rate surcharge 
of €500 may be granted. 

3.  Designing social leasing and support schemes and financing options 

Commission’s action  

The Commission will monitor the uptake and impact of social leasing and support schemes for 
clean energy, heating and cooling products. It will do so through the European Fair Transition 
Observatory, a  flagship  initiative under the  Clean  Industrial  Deal.    Monitoring  may  include 
elements  moving  from  uptake,  and  socio-economic  profile  of  beneficiaries,  to  potential 
household savings and emission reductions.  

The Commission will also support Member States in channelling revenues under the Social 
Climate Fund to social leasing schemes.  

Member States’ actions  

Design of the scheme and financing options  

89 Corresponding to 4% of income in the Netherlands and 1% of income in Croatia. 

27 

 
 
 
 
 
Social leasing  

In  designing  social  leasing  schemes  for  BEVs, PV  installations,  heat  pumps,  solar  thermal 
installations and batteries, Member States could promote a standardised model that offers:  

•  A two-part subsidy: A fixed amount for  all  households,  plus  an  additional income-
based  top-up.  This  ensures  lower-income  households receive  more support and  can 
afford the resulting monthly payments.  Monthly payments could be calibrated at the 
country level so that, for the typically targeted household, the lease payment combined 
with running costs is expected to be lower than the current expenditure on the fossil-
based alternative. 

•  Bundled monthly payments (e.g. installation, maintenance, insurance, repair).   

 Social leasing type of financing for non-movable technologies 

In  designing support  schemes beyond social 
following options and combinations thereof:  

leasing, Member  States could consider the 

•  Subsidies to reduce upfront costs, with higher support for lower-income households.  

•  Low- or zero-interest loan schemes with repayments capped at an affordable share of 

households’ incomes (e.g. ≤5% of monthly earnings).   

•  On-bill  financing,  where  installation  costs  are  covered  upfront  and  repaid  over  time 
through  a  small  charge  on  the  (lower)  energy  bill  (pay-as-you-save).  Repayment 
instalments could be set below the expected energy bill savings, so that beneficiaries 
see a net reduction in monthly expenditure from the start of the scheme. Where schemes 
rely on projected rather than actual energy savings, safeguards should be introduced to 
prevent households from bearing any shortfall90.  

 Additional financing aspects  

•  Member  States are  encouraged to put  in  place  measures  and  investments  to  finance 
social  leasing  and  other  support  schemes,  drawing  on  EU  funding under  the  Social 
Climate Fund as well as to use their revenues from ETS2.91    

•  Member  States are  encouraged to ensure long-term  stability of  the  social  leasing  and 
and 

other 
establishing public-private partnerships for scalable, predictable delivery.  

schemes  by securing multi-year 

commitments 

funding 

support 

•  For  schemes  run  by  private  providers, Member  States could reduce 

the  risk 
loan 
through public 
guarantees, low- or zero interest loans, and tax breaks (e.g., reduced VAT) to attract 
providers and lower costs.  

encourage the use of government-backed 

guarantees and 

Eligibility criteria for beneficiaries  

90 In Latvia, the LABEEF scheme applies a similar logic for building renovations, where costs are repaid over time through energy 
payments, linked to achieved savings and without upfront household investment. On-bill financing has also been recommended under 
Commission Recommendation (EU) 2026/537 on unlocking private investment in energy efficiency and by the Energy Efficiency Directive 
(Directive (EU) 2023/1791). 
91 See Regulation (EU) 2023/955 establishing a Social Climate Fund and AccelerateEU (COM(2026) 370 final.). 

28 

 
 
 
 
•  Member States are encouraged to target support primarily at low- and middle-income 
households that  would  otherwise be  unlikely to  switch  to  clean  energy,  heating  and 
cooling products.   

•  The income-based targeting could be combined with additional criteria:  

o  Social leasing schemes for BEVs could prioritise households with high expenditure on 
private  transport,  such  as those  in  rural or remote  areas  with  limited  public 
transport and high mobility needs.  

o  Social  leasing  and  support  schemes  for clean  energy and  heating products in the 
building  sectors could target households reliant  on  carbon-intensive  heating  (e.g.  oil, 
coal, old gas boilers) that are not within reach of an existing or planned district heating 
system92. Social housing and households with obsolete heating equipment could also 
be prioritised.  

•  Member  States could extend  support 

to micro-enterprises and  social  economy 

actors with high energy or transport needs.   

 Technical,  social and  environmental  requirements for  clean  energy,  heating  and 
cooling products  

•  Member States are strongly encouraged to apply Made-in-EU requirements in line with 
the proposed Industrial  Accelerator  Act, by  setting  local  content  rules  to  boost  EU 
manufacturing and jobs.  In this way, social leasing schemes can also provide a stable 
and  predictable  demand  signal  for  EU  manufacturers  of  BEVs,  heat  pumps  and  PV 
components. 

•  Member States are required to apply the resilience and sustainability requirements from 
Article 28 of the Net-Zero Industry Act to social leasing and support schemes of net-
zero technologies93. 

•  As regards BEVs Member States are encouraged to:  

•  Prioritise support for vehicles under  the  Small  Affordable  Cars  initiative, covering 
BEVs with up  to  4.2  metres  in  length94, and  grant exceptions for  larger families and 
people with disabilities.  

•  Assess  the  inclusion  of  second-hand  BEVs  to  improve  accessibility  and  cost-

efficiency.   

•  Assess whether to link BEV support to scrappage schemes which require retirement of 

internal combustion engine (ICE) vehicles.  

 Terms and conditions of social leasing and other support schemes  

To ensure high uptake of social leasing and other support schemes Member States could:  

92 Local heating and cooling plans will provide a reference in municipalities above 45,000 inhabitants. 
93 https://eur-lex.europa.eu/eli/C/2026/123/oj 
94 European Commission (December 2025) – Commission takes action for clean and competitive automotive sector. 

29 

 
 
 
 
•  Reach  and  support targeted households  through  awareness  campaigns,  personalised 
guidance, and clear information on how schemes can be combined with other grants or 
incentives.  

•  Ensure simple application  processes with  minimal  paperwork,  supported  by one-stop 
shops95, and allow providers to handle applications on behalf of households to speed up 
access. Where  possible,  eligibility  verification  should  rely  on  data  already  held  by 
public administrations (e.g. tax or social security records) rather than documentation 
requirements placed on applicants. 

•  Develop user-friendly contracts  that transparently include  all  costs and termination 
procedures. In the case of social leasing, include an option to purchase the asset at the 
end of the lease period at a predefined residual value.  

• 

Include expert guidance on building technology choices (e.g., better insulation, larger 
pumps) to ensure 
of 
heat 
solutions match household needs and building efficiency.   

emitters, 

proper 

choice 

heat 

size 

and 

Complementary measures  

Member States could combine  social  leasing  and  support  schemes  for clean  energy,  heating 
and  cooling products with complementary  measures  and  investments to  maximise  uptake 
and improve affordability. For example:  

•  Consider preferential  electricity  tariffs to  reduce  operating  costs,  alongside broader 
efforts to  lower  electricity  prices  (e.g.  by  reducing  taxes  and  levies)  and  remunerate 
flexibility.  

•  Consider support for shared PV installations  and  solar  thermal,  batteries,  and  heat 

pumps for households in multi-apartment buildings and small communities.   

•  Ensure that renters can  benefit 

from 

clean 

products by addressing 
targeted 
while protecting tenants against unjustified rent increases or 
upgrades.  

landlord-tenant  split 
incentives 

and 

energy,  heating 

cooling 
incentives (e.g. through regulation or 
landlords), 
eviction linked to 

for 

•  Consider 

linking BEV social leasing 

to  subsidised  home  chargers and  access 

to affordable public charging networks to reduce overall running costs.  

•  Where relevant, pair support for heat pumps with energy efficiency renovations and PV 

installations.  

•  Where  relevant, pair  support  for PV  installations with  batteries  to maximise  self-
consumption,  reduce  reliance  on  grid  electricity,  and  lower  energy  bills, especially 
during peak hours. 

As regards heat pumps, Member States are encouraged to consider social leasing schemes in 
their  climate  adaptation  plans,  as  reversible  heat  pumps  can  provide  affordable  cooling  for 
vulnerable households during heatwaves. 

95 European Commission - One-stop shops - renovation and energy efficiency - Energy. 

30 

 
 
 
 
Overall implementation  

In terms of implementation, Member States are encouraged to monitor and assess the impact 
and  implications  of  the  comprehensive  set  of  social  leasing  and  support  measures.  This  is 
important  to  ensure  overall  consistency  between  the  different  measures,  i.e.  to  avoid 
duplication and overlaps, and to ensure cost-efficient policies.  

31