Introduction

The European Union is currently on a trajectory to achieve climate neutrality by 2050. This research explores the historic and necessary efforts required to align Europe’s electricity, heating, and transport systems with transformative EU benchmarks for 2030. CO2 emissions have declined significantly in the EU electricity subsystem over recent decades, providing a critical opportunity to decarbonise rapidly while strengthening energy independence and competitiveness. Through accelerated gains in energy efficiency and the alignment of Member State efforts, the rapid electrification of buildings, transport, and industry can significantly reduce Europe’s reliance on foreign fossil fuels. For 2030, most countries have outlined renewed ambitions in updated National Energy and Climate Plans (NECPs), putting the EU on track to meet agreed targets if full implementation is ensured.

Rethinking the EU energy system – a transformation at the crossroads

Nearly a quarter of EU energy consumption in 2023 was supplied by renewable sources, yet the energy system remains largely dependent on fossil fuels. In 2022, low gas supplies caused prices to soar, propelling the EU’s energy import bill to 3.8% of GDP, which is roughly double the levels seen since 2014. Fossil fuels held the largest share of EU gross available energy use at 70% in 2022. Much of this energy content is lost as waste heat, particularly during conversion to electricity and in transport mechanical work. The EU energy system today is at best 65% efficient, with over a third of all energy wasted as reject heat.

To meet 2030 climate targets, fossil fuel use must decrease from 70% in 2022 to 57% in 2030 and 15% by 2050. Concurrently, the share of renewables in gross available energy must increase from 17% to 31% by 2030 and 71% by 2050. Achieving the 2030 benchmark requires a 42% reduction in GHG emissions from energy use compared to 2022 levels. While energy supply emissions fell by 37% between 2005 and 2022, domestic and international transport recorded only modest reductions of 5% and 4% respectively.

Essential shifts needed in electricity, heating and transport

The EU electricity subsystem presents the most significant historic progress. To meet benchmarks, EU electricity generation must increase by at least 17% by 2030, 38% by 2040, and 56% by 2050 compared with 2022. Scenarios indicate renewables must increase to 77% of all installed power capacity by 2030. Wind output needs to grow roughly three times by 2030 compared with 2022, while solar needs to quadruple. Upscaling renewable electricity generation could lower annual spot power prices by up to 57% below 2023 levels, provided benchmark levels for capacity, demand, and storage are met. However, non-fossil flexibility resources must more than double by 2030 to manage increased intermittency.

Decarbonising the heating subsystem is a significant test for the EU. Fossil fuel use for direct heating dropped 28% between 2005 and 2022, while biomass use surged 58%. Deep renovations of buildings must increase fifteenfold by 2030 to reach a 3% annual rate. Heat pumps are a key component, with the potential to raise the share of electric heating from 9% in 2022 to 15% by 2030. In industry, roughly 90% of current demand for fossil fuels for thermal purposes could be electrified by 2035. Policymakers must improve the gas-to-electricity price ratio and develop a skilled workforce to overcome current investment barriers.

In transport, oil products accounted for 93% of energy supply in 2022. To meet targets, oil use must fall by 8.4% between 2022 and 2030. Electrification of the overall transportation sector needs to increase from around 2% in 2022 to 5% in 2030 and 27-28% by 2050. While adoption of battery electric vehicles (BEVs) increased between 2020 and 2023, the annual uptake of zero-emission passenger vehicles must rise eightfold to reach climate targets. Managing peak load demand through vehicle-to-grid (V2G) technologies and smart charging will be essential to ensure grid stability.

A balanced approach: targeted actions within comprehensive policy frameworks to reform the EU energy system

Balanced national policy mixes are required to drive a socially cohesive transformation. Future measures must secure supply chains for critical raw materials; for instance, demand for lithium is expected to rise twelvefold by 2030. Aligning tax rates to promote electricity over fossil fuels is vital, as high electricity taxes currently increase consumer bills and dissuade electrification. Regulators should strengthen cross-border planning to account for the vulnerabilities of quasi-isolated or peripheral regions. Addressing non-financial barriers, such as low energy literacy and complex administrative procedures, is equally important. Reliable policymaking that provides consistent short-term signals aligned with long-term goals will be necessary to bridge the investment gap, estimated at an additional EUR 477 billion annually until 2030.