EU Allows International Carbon Credits for the First Time in 2040 Climate Target
The EU sets a 2040 climate goal with a 90% emissions cut, allowing international carbon credits for the first time to ease pressure on industries.
EU Sets New 2040 Climate Target
EU Sets New 2040 Climate Target
On Wednesday, July 2, the European Commission proposed the European Union’s climate target for 2040. For the first time, the EU will allow member states to use carbon credits from developing countries to meet part of their emission reduction goals.
The Commission proposed cutting net greenhouse gas emissions by 90% by 2040 compared to 1990 levels — a legally binding milestone on the pathway to the EU’s ultimate climate goal of net-zero emissions by 2050.
Facing opposition from France, Germany, Italy, Poland, and the Czech Republic, the Commission also introduced more flexible measures to ease the 90% emissions reduction requirement for European industries.
Reflecting Germany’s public stance, up to three percentage points of the 2040 target may be met through carbon credits purchased via UN-backed carbon markets. This would help reduce the burden on domestic industries.
The use of carbon credits will be phased in starting in 2036. Next year, the EU will propose legislation to define the quality criteria these credits must meet and set rules for eligible buyers.
Previously, EU climate targets relied entirely on domestic emission cuts, making this change a significant shift.
EU Climate Commissioner Wopke Hoekstra stated that the target was designed in an “extremely challenging geopolitical context” but would provide investment certainty for industries. “Economically, strategically, and geopolitically, this is the right move to stay on course. The goal is to protect people from extreme weather events,” he added.
The European Parliament and a majority of EU countries must negotiate and approve the 2040 target.
Polish government spokesperson Adam Szlapka criticized the proposal as “completely unrealistic,” saying: “What Europe needs today is support for competitiveness and growth drivers, not actions like this.”
Meanwhile, Finland expressed its support for the 90% target.
Europe: The Fastest-Warming Continent
Climate change has made Europe the fastest-warming continent in the world. This week’s extreme heatwaves triggered wildfires and disruptions across the region.
However, Europe’s ambitious climate policies have fueled tensions among the EU’s 27 member states. The strict implementation of these policies faces challenges, especially after U.S. President Donald Trump withdrew the United States from global climate talks earlier this year, complicating Washington’s position on the issue.
Some governments and lawmakers fear that industries already under pressure from U.S. tariffs and high energy costs will struggle to comply with tighter emissions rules.
German Environment Minister Carsten Schneider said the 2040 target sends a strong signal to other major economies, indicating that Europe remains committed to high climate ambition. He believes this could encourage China, India, Brazil, South Africa, and others to take stronger action.
The Commission’s proposal also gives countries more flexibility in how they contribute to the 2040 target. For example, if national forests cannot absorb enough CO2, they may compensate by cutting car emissions more quickly.
Scientific Debate on Carbon Credits
EU climate science advisors have opposed including carbon credits in the 2040 target. They argue that buying credits abroad could divert investment away from domestic industries.
Carbon credits are usually generated by greenhouse gas reduction projects in developing countries, such as forest restoration in Brazil, which receive financial support through credit sales. However, some credits have been criticized for not delivering the environmental benefits they claim.
Next Steps
The EU must present its updated 2035 climate target to the United Nations in September this year. According to the European Commission, the 2035 goal must complement the 2040 target.
