EU lawmakers have reached a provisional deal to introduce a new binding target under the European Climate Law, committing to a 90% reduction in greenhouse gas emissions by 2040 compared to 1990 levels.
The agreement was reached after several compromises, including allowing a substantial use of international carbon credits to meet the target, adding biennial progress reviews, and postponing the expansion of the EU ETS to road transport and buildings. The European Commission described the outcome as “a pragmatic and flexible pathway to 2040,” reflecting current economic and geopolitical conditions.
The Commission first proposed the 2040 target in July through amendments to the EU Climate Law, which currently embeds the EU’s goals of climate neutrality by 2050 and at least a 55% emissions reduction by 2030. According to the Commission’s latest assessment, the EU has already cut emissions by 37% as of the end of 2023, placing it nearly on track for the 2030 target.
A major shift in the Commission’s proposal involves allowing carbon credits to count toward the 2040 goal. Under the new deal, international credits under Paris Agreement Article 6 can contribute up to 5% of the target from 2036, requiring a minimum 85% domestic reduction. A pilot phase from 2030 to 2035 may also be introduced to help develop a credible international carbon market. Domestic permanent removals under the EU ETS may also be used for hard-to-abate sectors.
The agreement follows pushback from several member states—including Poland, the Czech Republic, and Hungary—and some MEPs, who raised concerns about economic competitiveness and the feasibility of the target. Additional flexibilities were added to secure consensus.
The deal also mandates biennial reviews of progress by the European Commission, considering scientific updates, technology, energy prices, net removals, and competitiveness. Where needed, the Commission would be required to propose updates to the Climate Law.
Other key elements include delaying the launch of the revised ETS2 carbon pricing system to 2028—one year later than planned—which will eventually cover road transport fuels and building heating. The deal also grants member states greater flexibility to balance sector-level shortfalls while meeting national climate targets.
The provisional agreement will now proceed to formal adoption by the European Parliament and Council.
