Negotiators from the European Parliament and the European Council have reached a preliminary political agreement to amend the EU Climate Law, setting a new binding interim climate target for 2040. Under the agreement, the EU will cut net greenhouse gas emissions by 90 percent by 2040 compared to 1990 levels, strengthening the bloc's path to climate neutrality by 2050.
The agreement provides additional flexibility in how member states can achieve the 2040 target, reflecting the view of both Parliament and the Council that "green" the transition must be carried out in parallel with efforts to improve the EU's competitiveness. From 2036, up to five percentage points of the required emissions reduction can be achieved through the use of high-quality international carbon credits compatible with the Paris Agreement. This represents a higher premium than originally proposed by the European Commission. At the insistence of Parliament, guarantees were added to ensure that such loans will not finance projects in partner countries that are contrary to the strategic interests of the EU.
Commission to assess the role of carbon credits and protect the integrity of the ETS
In parallel, the Commission has committed to continue reviewing the role of international carbon credits in upcoming climate legislation linked to the 2040 target. However, he stressed the need to maintain the stability and integrity of the EU Emissions Trading System (ETS).
The agreement will also enable permanent domestic carbon removal to offset emissions that are difficult to reduce under the ETS, while increasing flexibility across sectors and policy instruments to achieve cost-effective emissions reductions.
ETS2 is delayed until 2028 year
As part of the compromise package, negotiators agreed to delay the launch of ETS2 by one year. The new system, covering emissions from fuel combustion in buildings and vehicles, will now come into effect in 2028 rather than 2027. The postponement is intended to provide additional time for implementation and to allow households, businesses and Member States to adapt to the new system.
Biennial review mechanism built into the revised climate law
The amended Climate Law introduces a structured
