The European Council has approved a binding climate target requiring the European Union to reduce greenhouse gas emissions by 90% by 2040 compared with 1990 levels.
The interim goal, established under the European Climate Law, provides a milestone between the bloc’s previously established targets of cutting emissions by at least 55% by 2030 and achieving climate neutrality by 2050 under the European Green Deal.
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Under the new rules, up to five percentage points of the 2040 emissions reduction may be achieved through the purchase of international carbon credits beginning in 2036. This means that EU member states will need to reduce domestic emissions by at least 85%, with the remaining share potentially covered by certified climate mitigation activities abroad.
“Credits must be based on credible activities of GHG reduction in partner countries, in line with the Paris agreement,” the European Council said.
The share of international credits is higher than originally proposed by the European Commission, which had suggested a 3% cap. Negotiations between EU institutions later increased the limit to 5%.
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Separately, EU policymakers confirmed that the launch of the bloc’s second emissions trading system, known as EU Emissions Trading System 2 (ETS2), will be postponed by one year to 2028.
The new system will apply to emissions from road transport, buildings and other sectors not currently covered by the existing EU Emissions Trading System. The delay is intended to reduce the risk of sharp increases in fuel and heating costs for consumers.
Under ETS2, fuel suppliers—including oil and gas companies—will be required to purchase emissions certificates corresponding to the carbon content of the fuels they sell. The total number of available allowances will gradually decline, falling by about 5.1% annually, which is expected to push carbon prices higher over time.
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The European Commission will now propose additional measures to implement the 2040 target, including policies related to carbon removal and long-term storage technologies.