Accelerating EU electrification across buildings, transport and industry
Electrification is the most effective long-term strategy for protecting consumers from future fossil fuel crises while positioning Europe as a global cleantech leader. Agora’s paper shows how electrification can be accelerated across the main demand sectors.
Renewables-powered electrification tackles the underlying causes of energy price volatility and supply insecurity by systematically reducing fossil fuel dependence. The approach simultaneously cuts emissions, making it a policy solution that addresses both economic and environmental concerns at once.
Ahead of the upcoming Electrification Action Plan – expected mid-July – a new Agora paper assesses the current state of electrification across industry, buildings and transport. The interactive online publication draws on existing Agora analyses and outlines policy solutions to advance electrification in each sector.
Currently, electricity accounts for just 23 percent of final energy consumption across the bloc, a figure that has remained largely stagnant despite years of climate ambition.
At the same time, looking at developments in 2025, some indicators point to genuinely dynamic growth.
In heat pumps, Europe saw more than 2.2 million installations in 2025; in Germany, they accounted for almost half of the heating market, and UK sales rose by 27 percent.
Similarly, electric vehicle registrations have accelerated across Europe, even doubling in Slovakia, Slovenia, Iceland and Poland in 2025. Their overall market share in Europe climbed from 15 to 19 percent.
The Action Plan represents an opportunity to further accelerate adoption across all sectors of the economy.
Setting targets that work
As part of the Electrification Action Plan, the European Commission is expected to announce plans for a new electrification target. It is crucial that such a target includes national and sectoral electrification indicators and complements a strong clean and renewable energy target, the authors underline.
Equally important is the data infrastructure to track progress. Currently, policymakers lack the granular information needed to monitor electrification's advance across different sectors.
Agora proposes establishing a simple set of regularly updated Eurostat indicators. They should track key metrics such as electricity shares in industry, buildings and transport, alongside heat pump stock and sales figures and EV registration numbers. This would close a critical data gap that currently hampers effective policymaking, allowing regulators to identify where progress is lagging and adjust course accordingly.
Beyond data and targets, concrete policy measures are essential to translate ambition into actual change on the ground.
Practical solutions already exist
Technically feasible and economically viable solutions already exist across the three major demand sectors: industry, buildings and transport.
In the industrial sector, several levers could accelerate uptake. Faster grid connection processes would remove a significant bottleneck that currently delays projects. Carbon contracts for difference, which provide price certainty for low-carbon industrial processes, offer another proven mechanism. A key condition for scaling electrification – across sectors – is that electricity prices must be competitive with gas. This can be achieved, for example, by lowering electricity taxation where relevant. This would further tip the economic balance toward electrification and away from fossil fuel alternatives.
For residential heating, a dedicated clean heat market instrument could drive heat pump deployment at the scale needed to meet climate targets, moving this technology to mainstream standard.
Crucially, the transition must be equitable as well as fast. Targeted support mechanisms for low-income households, such as social leasing schemes for both heat pumps and electric vehicles, would ensure that the benefits of electrification reach everyone. This focus on a "fast and fair" transition reflects growing recognition that climate policy must maintain public support by distributing costs and benefits equitably.
A global race
The stakes extend well beyond Europe's borders. While China has surpassed Europe in electrification already 10 years ago, the rest of the world is also closing the gap with electricity accounting for around 21 percent on average in 2024.
For European policymakers, acting decisively now represents both sound domestic policy and strategic global positioning.
The EU's electrification agenda forms part of a broader international momentum. Notably, an anticipated target expected to emerge from COP31 suggests that electrification is becoming a defining feature of global climate negotiations.
This worldwide shift is simultaneously creating new markets for cleantech manufacturing, a sector where competition among global powers is intensifying. By securing strong and predictable domestic demand for clean technologies, Europe has an opportunity to strengthen its own cleantech manufacturing base.
The strategic logic is straightforward: robust home markets provide the foundation for export competitiveness. If Europe successfully builds this domestic demand, it could position itself to lead globally in cleantech manufacturing and innovation, while simultaneously reinforcing its own economy through job creation and industrial growth.
As the EU finalises its Electrification Action Plan, the message is clear: this is a moment for ambitious, coordinated action, one that serves European consumers today while securing the continent's competitive position for decades to come.
The interactive publication Affordable, sustainable, secure: the EU’s electric future is available on our website. It is a accompanied by a slightly shorter downloadable slide deck, covering the main data and recommendations for measures across industry, buildings and transport.
