The European Union has set a 2040 goal to raise the share of electricity use from about 23 percent to 46 percent across transport, heating and industrial processes. Achieving that ambition depends on households switching from gas to electric solutions such as heat pumps.

Electricity remains far more expensive for households

In most member states, electricity for direct household use costs more than twice as much as gas. Eurostat data show that taxes, levies and regulated charges make up roughly 25‑29 percent of the average household electricity bill across the EU, rising to about 35 percent in Italy. By contrast, direct household consumption of gas is subject to relatively low fiscal charges.

Renewables have lowered wholesale prices, but taxes blunt the benefit

Christophe Jost, energy policy coordinator for Climate Action Network Europe, explained that after Russia's invasion, wholesale electricity prices have dropped in many EU states due to fast growth of renewables and a reduced role for gas in power generation. He warned that rising taxes and levies have eaten into those price gains and called for swift government action to end the fiscal advantage for gas while protecting low‑income consumers from higher electric costs.

Heat‑pump uptake hinges on price gaps and upfront costs

Sales of electric heat pumps are strongest in Sweden and Finland, where the electricity‑gas price gap is narrow. Heat pumps can achieve up to four times the efficiency of traditional gas boilers, and the Cool Heating Coalition notes that even when electricity costs about two and a half times more per kilowatt‑hour than gas, the efficiency advantage can make heat pumps financially appealing. Nevertheless, the high upfront cost of installing a heat pump remains a major barrier for many households, especially those with low incomes.

Calls for a fiscal rebalancing

Eurelectric, the electricity industry association, has urged a shift of fiscal charges from electricity to fossil fuels, particularly gas. The EU can set overall direction, but the design of taxes and levies is decided by each member state's budget authority. Some states have begun to adjust their fiscal frameworks, yet progress is uneven and many still rely heavily on electricity‑related revenues to fund the energy transition.

Consequences of inaction

Higher electricity prices increase household utility bills, reduce disposable income and may widen inequality. Continued reliance on cheap gas keeps the bloc exposed to volatile import markets and slows the development of domestic renewable capacity. Analysts warn that without a rapid rebalancing of taxes, the EU may miss its 2040 electrification target.