On 17 July 2026, the European Commission presented an Electrification Action Plan, accompanied by a review of the EU Emissions Trading System (EU ETS), with the aim of strengthening competitiveness, accelerating decarbonisation and reducing dependence on imported fossil fuels. For the construction sector, the Plan positions buildings as one of the main drivers of electrification, introducing measures that will influence the design, renovation and energy management of the building stock. The Commission estimates that achieving an indicative electrification target of 46% of final energy consumption by 2040 could reduce the EU's fossil fuel import bill by €260 billion per year, while lowering energy costs and strengthening Europe's energy security and resilience.

For buildings, the Action Plan focuses on five key areas:

• Heat pumps, as the flagship technology for heating and cooling, replacing fossil fuel boilers.
• Smart electrification, integrating buildings with the electricity grid through flexibility, demand response and digitalisation.
• Sector coupling, linking heating, cooling and electricity so that buildings operate as coordinated energy assets.
• Building-level energy storage, incorporating batteries and thermal storage as part of the building's energy system.
• Active cooling, recognising cooling as essential infrastructure for both the energy transition and climate change adaptation.

The Plan also proposes measures to narrow the cost gap between electricity and fossil fuels by reviewing network charges and certain taxes, accelerating the rollout of smart meters, and expanding and modernising electricity grids to facilitate new connections and make better use of existing infrastructure. In parallel, it seeks to reduce the upfront cost of electrification through financial instruments such as the Social Climate Fund, the Industrial Decarbonisation Bank and new initiatives supporting the clean heat market. Together, these measures are expected to encourage the uptake of technologies such as heat pumps and smart control systems, improve occupant comfort and enable more flexible electricity consumption in response to grid signals.

At the same time, the review of the EU ETS seeks to maintain its role as the EU's main climate policy instrument by strengthening its capacity to mobilise investment through new financing mechanisms, adjustments to the carbon market and a closer link between the free allocation of emission allowances and industrial decarbonisation investments. Among the proposed measures is the reinforcement of the Industrial Decarbonisation Bank, with planned funding of up to €100 billion, together with the continued support of the Innovation Fund to accelerate the deployment of clean technologies.

Alongside the initiative, the Commission has published a comprehensive legislative and technical package setting out the proposed measures. The documents include the proposal to revise the EU ETS Directive, amendments to the rules on monitoring, reporting and verification of emissions, updated benchmark values for heat and fuels, a proposal for a Regulation to promote the electrification and digitalisation of the electricity system, as well as the Communication on the Electrification Action Plan and a range of staff working documents, impact assessments, factsheets and technical guidance.

_{Source of the picture: European Commission (©AdobeStock / Ginasanders)}