The European Commission has formally presented its proposed 2040 climate target, aiming for a substantial 90% net reduction in greenhouse gas (GHG) emissions compared to 1990 levels. This ambitious target, outlined on July 2, 2025, is intended to provide predictability for investors, foster innovation, strengthen industrial leadership, and boost Europe’s energy security.

A key development in this strategy is the planned integration of high-quality international carbon credits, which could contribute to up to 3% of the 2040 emissions reduction target. These credits, expected to be phased in starting in 2036, would be sourced from a U.N.-backed carbon market, potentially including initiatives like forest restoration in Brazil.

This approach introduces broader flexibilities, addressing concerns from member states such as Italy, Poland, and the Czech Republic regarding the cost and competitiveness of climate measures. By allowing the use of these offsets, the EU aims to ease pressure on domestic industries and offer cost-effective compliance options, thereby reducing the direct investment required from European industries while maintaining the overall 90% target. The proposal emphasizes enabling countries more flexibility in choosing which sectors shoulder reductions in a cost-effective and socially fair manner.

However, the inclusion of carbon credits is not without scrutiny. While advocates highlight their role in supporting emissions reductions in developing nations and channeling climate finance abroad, critics warn of potential credibility issues. Concerns stem from past scandals where some carbon credit projects reportedly failed to deliver their claimed climate benefits. To address this, “additional EU legislation” will be developed to set out the specific origin and quality criteria for these credits.

The Commission’s proposal will now proceed to the European Parliament and the Council for discussion and adoption under the ordinary legislative procedure, where key elements could still be modified or challenged before finalization. This 2040 target builds on the existing legally binding goal of at least a 55% net GHG emissions reduction by 2030, charting a pragmatic and flexible course towards a decarbonized European economy by 2050.

Sources:  

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

https://ec.europa.eu/commission/presscorner/detail/en/ip_25_1687