On Tuesday, negotiators from the European Parliament and the Council reached a provisional agreement to amend the EU Climate Law. The new deal sets a binding target for reducing net greenhouse gas emissions by 90% by 2040 compared to 1990 levels. This target is intended as an intermediate step toward achieving climate neutrality in the European Union by 2050.
The agreement introduces new flexibilities for member states in how they can meet the 2040 target. From 2036, up to five percentage points of emissions reductions may come from high-quality international carbon credits that are compatible with the Paris Agreement. This is two percentage points higher than what was initially proposed by the European Commission. Additional safeguards have been included to prevent funding projects in partner countries that could conflict with EU strategic interests.
The European Commission will examine various options regarding the use of international credits in future climate legislation aimed at reaching the 2040 target. The Commission also emphasized maintaining stability within the EU Emissions Trading System (EU ETS).
Under this agreement, domestic permanent carbon removals can be used to offset emissions that are difficult to eliminate within sectors covered by the ETS. There will also be increased flexibility across sectors and instruments, aiming for cost-effective achievement of climate targets.
Another aspect of the deal is a one-year postponement of ETS2, which regulates CO2 emissions from fuel combustion in buildings and road transport; its introduction will move from 2027 to 2028.
Progress toward meeting these goals will be reviewed every two years by the Commission, taking into account scientific data, technological advancements, and impacts on EU competitiveness. The review will also look at energy price trends and their effects on businesses and households. Based on these reviews, amendments to the law or additional measures may be proposed if needed.
The next steps include a vote in Parliament on this informal agreement followed by endorsement from the Council. If approved, it will become effective 20 days after publication in the EU Official Journal.
“The European Climate Law makes the goal of climate neutrality by 2050 a legally binding obligation for all EU member states. It also establishes a legally binding target for the EU to reduce net GHG emissions by at least 55% by 2030, compared to 1990 levels.”
