Renewables and electrification: key to cutting costs and powering EU’s clean industry and competitiveness

The EEA report ‘Renewables, electrification and flexibility — for a competitive EU energy system transformation by 2030’ finds that the European Union has already demonstrated its ability to shift away from fossil fuels, with electricity-sector CO₂ emissions dropping significantly over recent decades. In comparison, progress in decarbonising heating and transport, where gas and oil consumption dominate, is slower.

In 2022,  higher gas prices doubled the EU energy import bill, bringing it up to 4% of GDP. The report underscores that renewables, particularly solar and wind, offer a sustainable path toward increased energy independence.

Renewables, electrification and flexibility - For a competitive EU energy system

By investing in domestic renewable electricity generation, alongside stronger efforts to improve energy and resource efficiency, Member States can replace volatile fossil fuel imports with available, lower-cost and cleaner energy sources. 

Leena Ylä-Mononen

EEA Executive Director

This is not just about achieving climate targets. Shifting to more renewables and electrification is an opportunity to reduce dependence on imported fossil fuels. That would  lower wholesale electricity prices in the medium term, and reinforce Europe’s resilience and strategic autonomy in an increasingly uncertain geopolitical context.

Costs savings for electricity generation 

A forward-looking analysis of the European grid finds that variable electricity generation costs in the EU could fall by up to 57% compared with 2023 levels, if EU 2030 benchmarks for renewables and energy efficiency are met. In the long term, this can translate into lower consumer prices, while in the shorter term, the savings are likely to be at least partially offset by investment needs for a more flexible European grid and other national expenses. In this respect, the report's findings point to renewables and electrification as a pathway towards greater energy independence in Europe and towards maintaining sustainable energy prices, by counteracting the price-setting influence of imported gas.  

 To reap the benefits, the report identifies three urgent priorities: 

1. Unlocking capital for renewables: Electric capacity from renewables must rise to 77% of total installed capacity by 2030 (compared with over 50% today). Attractive fiscal and regulatory frameworks could support an increased level of near-term investment.

2. Doubling system flexibility: Smart, inter-connected grids, demand response and storage solutions must scale up rapidly to maintain the energy system constantly in balance.

3. Boosting EU-wide coordination: Cross-border cooperation on infrastructure and planning is essential to balance regional disparities, reduce inefficiencies and maximise the resilience of Europe’s energy system. 

Need for a targeted, sectoral approach 

Electrification of home heating and industry, powered by heat pumps and deep renovation of inefficient buildings, will be vital to phase out fossil fuels already in the short term. In industry, predictability under the EU Emissions Trading System — the main economic instrument addressing emissions from this sector will incentivise further emission reductions. In transport, accelerating the adoption of electric vehicles — combined with infrastructure for walking, cycling and collective transport — will drive both decarbonisation and consumer savings. 

The report also encourages Member States to coordinate policy and technology efforts. This will require aligning taxation and pricing signals across the whole energy system and phasing out fossil fuel subsidies, which reached record levels in 2022–2023. Turning around the stagnating electrification trend by 2030 requires clearer economic signals from across the whole energy system. Guiding private consumers’ decisions regarding buildings and transport are likely to require more comprehensive policy packages, in addition to price signals.