Electrification Action Plan: EBE’s response to the public consultation

Efficient buildings are key to delivering a competitive, resilient and decarbonised economy with electrification at its core.

Achieving climate neutrality by 2050 will require most sectors of the economy to increase their electrification rate. As the share of decarbonised energy sources in power generation continues to expand, each additional end-use electrified delivers greater emissions reductions.

Buildings are a critical front as they account for around 40% of final energy use and 34% of energy-related greenhouse gas emissions in the EU. Today, roughly 75% of the EU building stock is energy inefficient and around 75% of our heating and cooling needs are supplied from fossil fuel sources.

However, recent studies show that even though final energy consumption in buildings is expected to decrease in the coming years, electrification will drive electricity consumption up in this sector. This must be anticipated and addressed, as electrification-led demand increases are already proving to be challenging in the EU:

• Over 14,000 companies are now waiting for a new or expanded electricity connection in the Netherlands (Oct 2025).
• In Germany, grid congestion management costs increased more than threefold from 2020 to 2022, surpassing EUR 4bn. In most cases, these costs are passed on to the consumers via network charges.
• In 2024, 1,700 GW of renewables were stuck in grid connection queues across 16 countries, and €7.2bn of renewable power was wasted across seven countries.

While electrification is widely recognised as a driver of energy efficiency, the reverse relationship—how energy efficiency can accelerate and reduce the costs of electrification—often receives less attention. These mature solutions can be quickly deployed to ease the pressure on grids.

By lowering overall energy demand, energy efficiency solutions make electrification more affordable and easier to implement, helping to keep energy costs under control. This is particularly relevant for vulnerable households living in inefficient buildings. A sound addition of measures to both lower the energy demand and electrify the usages will result in a win-win for citizens – lower energy bills, healthier living conditions and
lower GHG emissions.

Combining thermal efficiency measures, electrification and smart energy management tools will reduce reliance on imported fossil fuels, boost competitiveness and cut household energy bills. For every 1% of energy efficiency improvements, gas imports are reduced by 2,6%. The EU’s fossil fuel import bill is projected to drop by €33 billion by 2030 and €70 billion by 2040, thanks to energy efficiency gains.

Buildings are also progressively becoming more important for the management of a decarbonised energy system relying on variable renewable energy sources. Electrification, coupled with energy efficiency and digitalisation, will enable buildings to support energy system integration: A higher renovation rate can cut grid curtailment by up to 3 times and save €44.2 billion in network upgrades. It will also enable buildings to play a more active role in energy markets through demand-side flexibility, and ensure that decarbonised and affordable energy is available to decarbonise harder-to-abate sectors.

Clear opportunities and challenges

Energy efficiency and electrification products and equipment for buildings are already available, and the sector is already a large contributor to the economy:

• It provides direct local jobs for 1.2m Europeans and more than 6.5m when including the broader building renovation supply chain. Investments in building renovations can create up to 30 jobs per million euros
• This industry runs more than 600 manufacturing sites in the EU
• Its turnover is estimated at around €150bn per year.

However, current taxation policies, slow implementation and limited access to affordable private finance negatively affect the electricity-to-gas price ratio and limit the sector’s potential to scale up.

Our Recommendations

• Put the Energy Efficiency 1st principle at the core of the upcoming Electrification Action Plan and acknowledge the role of the sector in facilitating and making electrification more affordable
  • Introduce incentives for TSOs and DSOs to adopt and support efficiency measures.
    
• Support the implementation of the revised EPBD, EED and the ETS2. Mandate the use of ETS2 revenues beyond the Social Climate Fund to renovate worst worst-performing buildings and shelter vulnerable households.
  
• Rebalance energy taxation to favour energy efficiency and electrification, while supporting energy intensive industries in their transition with adequate subsidies and tax reduction measures such as tax credits and accelerated depreciation, as recommended in the latest Commission’s guidance on tax incentives to accelerate the Clean Industrial Transition
  • Support the adoption of a review of the Energy Taxation Directive. EU fossil fuel subsidies averaged €110 billion annually over the past couple of years, posing a key barrier to the energy transition and distorting public incentives.
    
• Review the VAT Directive so that the minimum rate for energy efficiency products and equipment is lowered to zero, including for renovation works.
  
• Facilitate consumers’ access to real-time energy consumption data and encourage their active engagement and data-driven optimisation of energy flows in buildings.
  • Support the implementation of the Electricity Directive.
  • Mandate the installation of interoperable smart meters in all Member States by 2030.
    
• Allow energy efficiency projects to compete in national capacity reserve mechanism schemes.
  
• Support the electrification of energy efficiency products and equipment manufacturing plants.
  • Simplify permitting and grid access to speed up our EU-based production.
  • Ensure energy efficiency products and technologies manufacturing are covered by the CISAF, NZIA and Innovation Fund, and the upcoming Industrial Decarbonisation Bank under the Competitiveness Fund.
  • Launch tripartite contracts on energy efficiency solutions to upscale efficient building construction and energy renovations.