European Commission Sets 46% Electrification Goal for 2040 and Reviews ETS and CBAM

The European Commission has presented an Electrification Plan setting an indicative target for electricity to account for 46 per cent of final energy consumption by 2040, doubling the current rate of around 23 per cent. The initiative is in line with global trends towards electrification, including the COP31 target of increasing the share of electricity to 35 per cent of final energy demand by 2035 and international initiatives such as Electrify Now, launched by a coalition comprising the European Commission, COP presidencies and energy agencies.

The Plan also reinforces the need for an energy system based on renewable sources. Portugal already aims to achieve 93 per cent renewable electricity by 2030, demonstrating its ambition. Similar trends are observed in other Portuguese-speaking countries, with Brazil maintaining one of the highest shares of renewable energy in the world and other Portuguese-speaking countries demonstrating strong potential through diversified energy mixes.

The Commission has also proposed a review of the EU Emissions Trading System (ETS), updating the linear reduction factor — 3.7 per cent for 2031–2035 and 1.7 per cent for 2036–2040 — which sets out a more gradual path for reducing emissions, to give industry greater flexibility. Up to 2% of compliance may be achieved through high-quality international credits, opening up opportunities for Portuguese-speaking countries that are developing regulated carbon markets.

Furthermore, MEPs supported the Commission’s proposal to extend the scope of the Carbon Border Adjustment Mechanism (CBAM) beyond basic materials to cover various processed products, including finished steel and aluminium goods. Portuguese-speaking exporters of these products may face greater challenges in accessing the market once the revised CBAM comes into force.