Chapter 4

Policy recommendations

Reduce electricity taxes to a minimum, as recommended by the European Commission’s Action Plan for Affordable Energy. Electricity remains disproportionately taxed. For example, taxes and levies on (mid-sized) industrial electricity consumption are on average triple those of gas consumption across the EU. Other policy costs too – especially those unrelated to energy – should be shifted off electricity to either general taxation or fossil fuel consumption.
Incentivise smart consumption: reward households and businesses for providing flexibility, for example through dynamic or time-of-use tariffs that lower their electricity costs at off-peak times. The European Commission could issue guidance for Member States to implement the existing legislation to unlock smart consumption.

Support a 90% climate target for 2040, with clean electrification at its core.
Align energy policy decisions and deals with third countries with the reality of declining fossil fuel demand, which is set to continue.
Resist further weakening of the vehicle fleet emissions targets and maintain the 2035 combustion engine vehicle ban.
Recognise that clean, electric alternatives to fossil fuel consumption are ready and proven, and avoid assigning a significant role to unproven alternatives, such as carbon capture and storage.
Release the European Commission’s heating and cooling strategy and use it to tackle specific barriers to heat pump deployment.

Align energy system planning with the indicated electrification benchmarks, namely 32% by 2030 and 50% by 2040, and a continued decline in gas demand.
Use the upcoming grids package to recognise electricity grids as strategic infrastructure, streamline grid financing, reform grid planning, and incentivise better use of the existing grid.
Strategically prioritise grid access for new types of demand that will boost electrification, i.e., by displacing fossil fuel consumption, such as large industrial consumers, EV charging stations, and electrified housing.
Explore flexible grid connection options (as in the Netherlands), such as capacity-limited or non-firm connections, or phased connection approaches for large facilities.
Ensure infrastructure is ‘smart’ as standard, enabling flexible use of devices and delivering savings to consumers. This includes taking a regulatory approach based on total expenditure, not just capital expenditure, i.e., equally rewarding the use of flexibility and non-wire solutions to balance the grid.