EU Electrification Plan Targets 46% Power Share by 2040, Cutting Gas Imports 70%
The European Commission's new Electrification Action Plan sets a legally soft 46% power target that analysts are already calling overly ambitious.
The European Commission unveiled its Electrification Action Plan on Friday (2026-07-18), setting a target for electricity to account for 46% of the EU's total final energy consumption by 2040 — double the current 23% share that has barely moved in a decade.6,5
The Commission frames the plan as a supply-security measure as much as a climate one. The EU imports over 80% of its natural gas and over 90% of its oil, leaving it exposed to price shocks from geopolitical disruptions. Reaching the 46% target, the Commission calculates, would cut gas imports by more than 70% and reduce the bloc's fossil fuel import bill by up to €260 billion annually by 2040.5,8
Getting there requires a pace of change the EU has not demonstrated in recent years. Electrification has been stagnant at roughly 23% for close to a decade — the same level seen across much of the past decade — while China, Japan and South Korea have each already exceeded 30%, according to Oilprice.com. The EU's own National Energy and Climate Plans, as compiled by clean energy think tank Ember, point to an implicit electrification rate of only 32.5% by 2030, leaving a substantial gap between where existing policy leads and where the 2040 target sits.4
An earlier draft of the plan, reported by Montel News on 9 July (2026-07-09), pointed to 100 GW of annual renewable capacity additions up to 2030 — about 40% faster than the current build rate — as the primary mechanism for compressing gas demand by two-thirds over the period. The final plan's 70% gas import cut figure is sharper still.3
Industry observers quoted by Montel have already characterised the target as "overly ambitious," and the Commission has structured the 46% figure as a "floating" target to be assessed formally as part of the post-2030 energy union package in the fourth quarter of 2026. That framing gives member states significant room to contest or water down the number before it acquires binding legal force.7,6
The structural obstacles are real. High electricity-to-gas price ratios for consumers have historically slowed demand-side switching, particularly in heating and industrial processes where capital replacement cycles are measured in decades. Member states with existing coal or gas infrastructure have also consistently resisted new carbon pricing instruments that would accelerate fuel switching from the supply side.5
ICE Endex TTF front-month settled at €57.51/MWh as of Friday's (2026-07-18) morning fixing. At that level, gas remains competitive against electricity for many industrial end-users, which illustrates the difficulty. Halving gas demand requires either sustained high gas prices that make switching economic, or direct policy intervention — subsidies, mandates, building codes — that forces structural change regardless of the price signal.
The geopolitical backdrop gives the Commission some political cover for aggressive targets. Acer, the EU agency for energy regulators, urged earlier this year that Europe reduce gas dependence in the context of ongoing Iran tensions and heavy reliance on US LNG cargoes. Iran sanctions have lifted a Hormuz risk premium into crude markets, with ICE Brent crude front-month at $88.10/bbl as of Friday (2026-07-18). Any sustained Hormuz disruption would compress available LNG volumes globally, directly raising the delivered cost of gas into European terminals and strengthening the economic case for the electrification push.1
Yet the Iran risk cuts both ways for European energy planners. A supply crunch that spikes TTF would accelerate the economic logic for electrification but simultaneously strain household budgets and industrial competitiveness in the near term, making member states less willing to absorb the capital costs of grid upgrades, heat pump rollout and industrial electrification simultaneously. The transition requires cheap and abundant power, while the crisis scenario that motivates it tends to produce the opposite.2
What the market will want to see now is whether the Q4 2026 post-2030 energy union review translates the floating 46% into a binding obligation with sector-level sub-targets — particularly for buildings, transport and heavy industry, which together account for the bulk of the gas demand the Commission wants to displace. Without that binding architecture, the plan remains a directional statement on a trajectory Europe has failed to accelerate for ten years.6,4