EU agrees on 90% emissions cut by 2040 in major climate law revision

BRUSSELS

The European Council and the European Parliament on Wednesday reached a provisional agreement to revise the European Climate Law, setting a binding target to reduce net greenhouse gas emissions by 90% by 2040 compared to 1990 levels.

The agreement introduces new flexibilities to support member states and industries during the transition and further develops the post-2030 climate framework to ensure competitiveness, social fairness, energy security, and long-term investment conditions, according to an official statement.

As part of the compromise, negotiators also agreed to postpone the launch of the EU Emissions Trading System for buildings and road transport (ETS2) from 2027 to 2028.

Under the deal, the EU will set a binding 90% net emissions reduction target for 2040, as well as clarify and expand flexibilities, including the use of high-quality international carbon credits, the role of permanent domestic removals under the EU ETS, and cross-sector flexibilities.

It aims to strengthen the enabling framework, focusing on competitiveness, simplification, innovation, investment, energy affordability, and maintaining natural carbon sinks.

The deal also includes reinforcing the review mechanism, requiring regular assessments of competitiveness, energy prices, and net removals, and mandating the commission to propose revisions or additional measures if progress falls short.

From 2036 onwards, the use of high-quality international carbon credits will be allowed for up to 5% of 1990 EU net emissions, ensuring that 85% of reductions by 2040 must be realized domestically.

A 2031-2035 pilot phase may be launched to support the development of a high-integrity global carbon credit market. A future review will also assess whether member states should be permitted to use additional credits – again up to 5% – to meet their post-2030 national targets.

The agreement is provisional and requires formal endorsement by both the European Parliament and the council before it can be adopted.

The European Climate Law, adopted in 2021, set the EU's binding targets of climate neutrality by 2050 and at least 55% net emissions reduction by 2030.