Europe Energy Transition - 2026

Europe's energy transition is entering a new phase, with renewables forecast to reach 75% of total power capacity by 2035, increasing the need for energy storage and grid flexibility while gas retains a role in balancing variable generation.

Decarbonization is broadening across transport and industry, with EV adoption accelerating, renewable-fuel mandates supporting SAF growth, and CCUS increasingly targeting hard-to-abate sectors.

Policy is increasingly focused on overcoming implementation barriers and strengthening European competitiveness, with greater emphasis on demand creation, domestic clean-tech manufacturing, and infrastructure development.

Europe's renewable power buildout is set to continue, with renewable capacity forecast to reach 75% of total power capacity by 2035, up 16 percentage points from 2025, and renewable generation is forecast to exceed 50% of total power generation by 2029. Coal and oil-fired capacity will continue to be decommissioned, but gas is expected to see further additions as its flexibility helps balance growing volumes of variable renewable generation.

Europe's energy storage market is accelerating alongside renewable deployment, with capacity forecast to grow at a 27% CAGR between 2020 and 2030. Growth reflects the increasing need for flexibility as wind and solar penetration rises, with storage playing a greater role in balancing supply and demand. However, rapid deployment is sharpening the focus on domestic battery manufacturing, with the EU's NZIA setting out to reduce import dependence despite uncertainty around planned European production capacity.

Europe's EV transition is set to accelerate sharply towards 2035, with combined electric, hybrid and fuel-cell vehicles expected to exceed 50% of light-vehicle sales by 2029. Growth is being driven by tighter emissions requirements, expanding model availability and charging infrastructure, although the pace of adoption continues to vary significantly between European markets.

Europe's renewable fuels capacity is forecast to reach almost 6,500mmgy by 2030, but RD and SAF are following different development trajectories. RD is already comparatively mature, with the vast majority of projected 2030 capacity already active, supporting near-term decarbonisation of the existing diesel fleet. SAF is at an earlier stage but is set for significant growth, with upcoming projects accounting for 58% of expected 2030 capacity, as rising blending mandates across the region create a stronger demand signal.

Europe has the world's second-largest CCUS pipeline after North America, with around 356mtpa of upcoming capacity compared with only 15.7mtpa active. However, execution remains a key challenge: of the roughly 165mtpa expected by 2030, around 96mtpa remains at feasibility stage. The UK leads Europe with 73.4mtpa of expected 2030 capacity, while power and cement dominate targeted applications, accounting for 35% and 27% of prospective capacity, respectively.

Europe leads globally in low-carbon hydrogen development, but deployment remains well behind ambition, as around 60% of expected 2030 capacity remains at feasibility stage. Amid rising industry criticism of strict RFNBO requirements, the EU is actively reconsidering its approach and, in some cases, broadening its policy support. For example, the third European Hydrogen Bank auction, which awarded over €1 billion to nine projects, included dedicated funding for offtakers of both RFNBO and non-RFNBO hydrogen.

Key Highlights

• Europe's renewable capacity is forecast to reach 75% of total power capacity by 2035, up 16 percentage points from 2025, and renewable generation is forecast to exceed 50% of total power generation by 2029.
• European energy storage capacity is forecast to rise from 7.8GW in 2020 to over 84GW by 2030.
• Europe's EV transition is set to accelerate sharply towards 2035, with combined electric, hybrid and fuel cell vehicles reaching over 50% of light vehicle sales by 2029.
• Binding SAF mandates are shifting Europe's renewable fuels investment towards aviation, with established refining hubs and access to feedstocks positioning the Netherlands as the region's dominant production centre.
• Europe has the world's second-largest CCUS pipeline after North America, but its 2030 outlook remains heavily dependent on early-stage projects progressing to construction.
• Europe leads globally for active and upcoming low-carbon hydrogen capacity, with a pipeline of around 19.2mtpa, ahead of Africa at 16.6mtpa and Asia at 11.5mtpa. However, only around 0.15mtpa is currently active, highlighting the significant gap between Europe's project ambitions and deployment to date.

Scope

• European climate targets, CO2 emissions, renewable energy potential, leaders in renewable energy, renewable energy policies, power consumption and demand, renewable power capacity and generation, decommissioning of thermal power, energy storage capacity, electric vehicle and hybrid vehicle sales, upcoming renewable refineries, biodiesel, ethanol, RD, SAFs, CCUS outlook, upcoming CCS projects, hydrogen policies, upcoming hydrogen capacity by stage, type and end use.

Reasons to Buy

• Assess the current regional emissions, thermal and renewable capacity, and generation share, and identify which countries are driving the energy transition in Europe.
• Identify market trends within the industry, including expected 2030 capacities for a range of technologies.
• Identify who the leading countries and regional players are in renewable energy capacity and energy transition technologies such as hydrogen and CCUS.
• Understand the legislative framework laid out by the region's governments and the European Commission aimed at accelerating the region's race to net-zero by 2050.