After more than two years, it's done. EU countries approve emissions targets for 2040

EU member states have committed to cutting greenhouse gas emissions by 90% by 2040 compared with 1990 levels. The Commission must now prepare specific policy revisions that will lead to this target.

EU ministers responsible for climate and the environment formally adopted the interim target of reducing net greenhouse gas emissions by 2040. Member states are therefore tasked with cutting emissions by 90% compared with 1990 levels. This amendment to the Climate Law is intended to strengthen the EU's progress towards achieving climate neutrality by 2050.

International credits

Since the Commission published its proposal, there has been discussion about the extent to which so-called carbon credits can be used. They offer a degree of flexibility in meeting targets through the use of international credits. These allow EU countries to invest in third countries and then count the resulting emissions reductions towards meeting their target. At the request of member states and industry, EU lawmakers increased the initial proposal for 3% flexibility.

As a result, from 2036 it will be possible to use international credits for up to 5% of the EU's net emissions in 1990. The credits must still be based on credible activities aimed at reducing greenhouse gas emissions in partner countries in line with the Paris Agreement. Emissions within the EU are to be cut by 85%.

“The European Union remains committed to leading the global fight against climate change while protecting our competitiveness and ensuring that no one is left behind. Today's adoption of the historic 2040 climate target will give industry, citizens and investors the certainty they need for the clean transition over the next decade,” said Maria Panayiotou, Minister of Agriculture, Rural Development and Environment of the Republic of Cyprus.

The amended Climate Law also sets out other key elements that the Commission must take into account when preparing its legislative proposals for the period after 2030.

The amendment also introduces a new requirement to review the European Climate Law every two years. The Commission will carry out the assessment, taking into account selected criteria including EU competitiveness, energy prices, emissions reductions at EU level, and the flexibility of EU member states to use high-quality international credits to meet their targets after 2030.

The fate of EU ETS 2

The amendment also postpones by one year, from 2027 to 2028, the launch of the widely criticized EU ETS 2 system, which introduces emissions trading for road transport, buildings and other sectors.

The regulation is expected to enter into force by the end of March at the latest, but the Commission still needs to prepare a proposal setting out how countries should meet the target. This will amount to creating a successor to the “Fit for 55” package, which included all the measures intended, at the time of its adoption, to ensure a 55% emissions cut by 2030.