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

To align with the Highest Possible Ambition scenario, the EU’s domestic transport sector (excluding international bunker fuels) would need to achieve a 15% share of electrification by 2030, up from 2% in 2023. This share grows to 60% in 2040 and 90% by 2050 and beyond. These strong electrification targets will be driven by the road and rail sectors for both passenger vehicles and freight trucks. By 2050, oil will be completely phased out from the EU’s transport sector. These benchmarks fall in line with other studies, which indicate electrification would need to reach 55% by 2040 or 80%. ⁴4^{, 5}5

Under the HPA scenario, energy demand will fall by 39% by 2040 and by 45% by 2050 compared to 2023 levels. This reduction comes from the increased energy efficiency offered by electricity as a fuel. Accelerating electrification and shifting transport would greatly reduce reliance on inefficient and costly fossil fuels and shield consumers from the costly impacts of price fluctuations.

Biofuels can be used to reduce the carbon intensity of the remaining fossil fuel fleet on the road until full penetration of EVs has been achieved, and in so-called hard-to-abate sectors like domestic aviation and shipping. However, due to the sustainability and scalability limitations of biofuels, their use should be limited, and policies should set strict eligibility criteria to prevent competition for crops and land. While the EU has set sustainability criteria in the Renewable Energy Directive, the criteria do not go far enough to ensure that biofuel feedstocks do not cause significant environmental harm due to the high risk of deforestation.⁶6

By 2040, synthetic fuels will need to play a role in domestic aviation and maritime transport, given the technological limitations of battery use in these modes. However, in the case of domestic shipping, fully battery powered vessels have now been demonstrated to be technologically feasible and economical for short coast and river transport.⁷7

The EU has been a leading regulator in transport decarbonisation, primarily through CO₂ standards for new cars and vans sold on the market that tightened over time and originally aimed to phase out new fossil fuel vehicles by 2035. However, in 2025, the EU chose to weaken its 2025 CO₂ standard target and roll back the 2035 phase-out date on the sale of new internal combustion engine (ICE) vehicles. These policy changes shift the EU in the wrong direction and contradict the accelerated EV uptake and an expected market tipping point in favour of EVs before 2030.⁸8

Passenger EVs are increasingly becoming cost-competitive with conventional vehicles across member states – mostly for larger cars. When considering the total cost of ownership over the vehicle’s lifetime, the cost gap closes further.⁹9 The CO₂ standards regulation has been successful in driving down the price of EVs, and if it remains in place, smaller EVs could reach price parity before 2030.¹⁰10 Cost savings from EVs compared to ICE vehicles are attributed to fuel use – electricity is far cheaper than petrol and diesel.¹¹11 Electricity prices are also somewhat shielded from fuel price shocks, such as those experienced following the Russian-Ukraine war and the US-Iran war, compared to the high petrol and diesel prices commuters experienced at the pumps.¹²12

Passenger travel by rail remains low. Rail will be a crucial modal shift needed to reduce not only emissions but also limit overall investments in the transport sector. The EU’s rail system remains fragmented across member states, and the EU is also working on creating a harmonised ticketing system to streamline rail travel across EU member states

Additional EU measures include ETS II (the EU’s revised emissions trading scheme), which from 2028 will price emissions from transport fuels via fuel suppliers, increasing fossil fuel costs. This will in turn further encourage an accelerated shift to EVs. Revenues will be partly channeled through the Social Climate Fund, intended to support vulnerable households to cope with the added costs. However, current national plans across most member states have not yet developed adequately comprehensive measures to support these groups.¹³13 The 2025 Greening Corporate Fleet proposal sets targets for zero- and low-emission vehicle shares in new corporate registrations by 2030, strengthening demand for EVs and boosting second-hand supply. However, alignment with the HPA scenario would require limiting uptake to 100% zero-emission vehicles (BEVs). The forthcoming Electrification Action Plan (2026) aims to scale up electrification across sectors and offers an opportunity to set 1.5°C-aligned transport targets consistent with the HPA Scenario.