The European Union is preparing to integrate high-quality international carbon credits into its 2040 climate framework, marking a strategic shift in its ESG and carbon neutral strategy approach. The upcoming proposal, set to be unveiled on July 2, is expected to call for a 90% reduction in net greenhouse gas emissions from 1990 levels by 2040—one of the most ambitious climate targets globally. 

To address member state concerns over cost and competitiveness, the European Commission plans to allow up to 3% of this target to be met using UN-backed international carbon credits, beginning in 2036. These credits could support reforestation or renewable energy projects in developing countries, such as Brazil, while also easing the pressure on EU industries to meet domestic reduction targets. 

The proposal outlines that specific legislation will follow, defining the origin, quality standards, and purchase mechanisms for the eligible carbon credits. This move aligns with the EU’s broader goal of maintaining climate ambition while offering flexibility and cost-effective compliance options for member states like Poland, Italy, and the Czech Republic. 

In addition, the Commission is considering the integration of carbon removal credits into the EU Emissions Trading System (ETS), allowing European companies to purchase these offsets as part of their decarbonization strategy. 

While proponents argue this approach mobilizes climate finance and promotes global cooperation, critics caution against potential integrity issues surrounding the effectiveness of certain offset projects. 

The proposal reflects the EU’s evolving strategy to balance environmental leadership with economic realities, reinforcing its ESG commitments and long-term carbon neutral strategy. Negotiations with EU governments and the European Parliament will follow, potentially shaping the final structure of Europe’s climate roadmap to 2040. 

Source: 

https://esgnews.com/eu-to-integrate-carbon-credits-into-2040-emissions-target/