The European Parliament and EU Council have reached a provisional agreement to introduce a binding intermediate climate target for 2040 of a 90% reduction in net greenhouse gas emissions compared to 1990 levels.
The amendment of the EU Climate Law is seen as an important crucial step towards the EU’s long-term goal of achieving climate neutrality by 2050.
It also sets out certain areas of flexibility to support the achievement of the 2040 target and several key elements that should be reflected in the post-2030 climate framework. These will steer the Commission’s future legislative proposals to enable the EU to achieve the 2040 target, while helping European industry and citizens throughout the transition.
“The target delivers on the need for climate action while safeguarding our competitiveness and security,” said Denmark’s climate minister Lars Aagaard, for the EU presidency: “And with the 2040 target in hand, we can now focus on delivering the policies and cooperation needed to move Europe toward a more sustainable, safe and prosperous future.”
The deal also postpones the application of the EU Emissions trading system for buildings, road transport as well as small industries (ETS2) by one year, from 2027 to 2028. The postponement does not affect the monitoring, reporting and verification requirements under ETS2, which have started as planned in 2025.
The co-legislators’ agreement includes:
- setting a binding 90% reduction target for net GHG emissions by 2040 as proposed by the Commission
- further clarification and additions to the flexibilities proposed by the Commission, including on the contribution of high-quality international carbon credits to the target, the role of domestic permanent carbon removals under the EU ETS, and enhanced flexibility within and across sectors and instruments.
- further developing the principles of the enabling framework for the post-2030 climate architecture, with a focus that includes competitiveness, simplification, social fairness and national circumstances, energy security and affordability, support for innovation and investment, the realistic contribution of carbon removals to achieving the overall target, and maintaining, managing and enhancing natural sinks in the long term
- reinforcing the review mechanism, including with regular assessment of the progress made towards achieving the targets on competitiveness, energy prices and the level of net removals, as well as a requirement for the Commission to propose revisions to the climate law or additional measures where needed in order to strengthen the enabling framework
- postponing the start of the EU ETS2 by one year, from 2027 to 2028
The provisional agreement includes a balanced approach to the role of international carbon credits in the post-2030 climate framework. The co-legislators agreed to allow, from 2036 onwards, the use of high-quality international credits to make an adequate contribution towards the 2040 target, up to 5% of 1990 EU net emissions. This corresponds to achieving domestic emission reductions of 85% by 2040. A pilot phase for 2031–2035 may also be established to support the development of a high-integrity international credit market.
Furthermore, the co-legislators introduce additional safeguards to guide the Commission in preparing the future rules on the use of international credits under the post-2030 climate architecture to ensure the integrity of credits. Where appropriate, the Commission must consider complementing the criteria laid out in the Paris Agreement when establishing the rules for international credits.
The co-legislators also reached a compromise on the scope of potential flexibilities to be examined in the context of the review of the climate law. Among other things, the review will cover the potential use by member states of additional high-quality international credits to fulfil up to 5% of their post-2030 targets and efforts.
