The European Commission is developing a large-scale plan for the accelerated electrification of the European Union's economy. The initiative aims to reduce the bloc's critical dependence on oil and gas imports. The document, expected to be published on July 17, is a direct response from Brussels to the energy crisis triggered by the escalation of the conflict between Israel and Iran.

The Cost of Geopolitical Instability

The escalation of the war in the Middle East has led to a sharp spike in energy prices, hitting European consumers and businesses hard. According to official EU data, since the end of February, the cost of oil and gas imports for the European Union has risen by 50 billion euros. Given that Europe relies heavily on external fuel supplies, the bloc's leadership sees the solution in a radical change of the energy model.

The draft document emphasizes that in an era of recurring geopolitical turbulence, energy independence becomes a matter of sovereignty. Brussels aims to create an energy-independent Union powered by clean, affordable, and domestic energy.

Electrification Goals by 2040

A key element of the strategy will be the establishment of a mandatory minimum share of electricity consumption in the EU economy. The specific percentage has not yet been disclosed, but the target year is 2040. The plan implies deep changes in various sectors:

  • Transport: accelerated transition from petrol and diesel cars to electric vehicles.
  • Housing and Utilities: mass replacement of gas boilers with heat pumps in residential buildings.
  • Industry: electrification of production processes, including the transition to electric furnaces instead of fossil fuels.

State Incentives and New Rules

To implement these ambitious plans, the European Commission proposes a package of support measures. As part of the update to public procurement rules, the possibility of mandating the installation of heat pumps in public buildings will be considered. There are also plans to strengthen targets for the purchase of electric vehicles for state needs.

The financial aspect of the reform includes proposals for mechanisms allowing the governments of EU member states to reduce VAT on household batteries, electric vehicles, and heat pumps. Furthermore, an auction for financing industrial projects generating heat using electricity and renewable sources is planned to launch later this year.

Phasing Out Fossil Fuel Subsidies

An important step will be the gradual phase-out of subsidies for oil and gas. The EU executive body will propose corresponding measures designed to make electricity more price-competitive compared to traditional energy carriers.

The necessity of such measures is dictated by the current situation with gas reserves. Europe risks facing a heating shortage this year: storage levels could drop to a minimum not seen in the last 15 years. This creates a threat to price stability for both businesses and households, making the transition to electricity not just an ecological, but also an economic necessity.