What is the European Union's pathway to limit global warming to 1.5°C?

Under the HPA scenario, electricity as a share of the energy mix grows to 31% by 2030, up from 24% in 2023. This falls within the estimated range of what existing policies would deliver: 36%.²2 Green hydrogen emerges as an important fuel from 2035, contributing 12% of the energy mix, growing to 17% by 2040. Coal is completely eliminated by 2035. Measures that increase the demand for cheaper, more energy-efficient electricity pushes the need for fossil fuels down. Fossil fuels are completely phased out from industry between 2040 and 2050. As a result, final energy demand falls 19% from 2023 levels by 2030 due to the energy efficiency gains from electrification. By 2040, energy demand falls 33% compared to 2023 levels.

The EU’s most energy- and carbon-intensive industries are the iron and steel, cement, petrochemicals, and oil refinery sectors. These sectors are covered by the EU Emissions Trading Scheme (EU ETS). Iron and steel accounted for 45% of the EU ETS emissions in 2023 – though steel production in Europe has also fallen in the past decade.³3 At the same time, most steel is still produced by conventional fossil fuel powered blast furnaces ,with only 45% produced by electric arc furnaces.⁴4

Today, policy efforts to decarbonise the EU’s industry sector have largely focused on addressing fossil fuels used in energy related activities. It has not taken sufficient efforts to shift sourcing of alternative feedstocks for products that presently rely on fossil fuels. For example, 99% of the EU’s plastics are still produced from fossil fuels which is one of the largest emitting manufacturing industries.⁵5 Despite several policies in place to increase circularity, demand for new plastic has not been reduced.⁶6

In 2026, the EU published the Industrial Accelerator Act. It aims to de-risk investments and create a demand-side driver for low carbon steel, concrete, metals and net zero technologies. It will also cut red tape by streamlining permitting processes for net zero technology projects specified under the Net Zero Industry Act.⁷7

Clear and coherent industrial electrification targets are still lacking at the European level and are subject to the discretion of member states. The EU Electrification Action Plan,⁸8 expected in 2026, is an opportunity to set 1.5°C aligned targets for the sector, such as those set out by the HPA scenario.

In addition, carbon capture utilisation and storage (CCUS) is among the technologies the Net Zero Industry Act seeks to promote. Under the HPA Scenario, CCS equipped to fossil fuels plays a negligible role in the transition. Instead, electrification and other zero-carbon options are able to eliminate fossil fuels entirely from the energy system.