There have been suggestions that the European Commission (EC) has bowed to political pressure and has "made the 2040 emissions reduction target easier to achieve" by including so-called flexibility or adjustment mechanisms, such as international carbon credits. As is known, the EC proposed reducing the European Union's (EU) net emissions by 90% by 2040; the target for 2030 is to cut net emissions by 55%, while by 2050 Europe wants to achieve climate neutrality. The above will be taken into account in the EU's emissions reduction targets for 2035, which, under the Paris Agreement, must be submitted this autumn, in September.

What is the European Union's 2040 climate target?

So, the European Union's 2040 emissions reduction target is a legally binding amendment to the European Climate Law, which was agreed in 2021 and which sets the EU's goal of cutting net emissions by 55% by 2030 and achieving net zero emissions by 2050.

The proposal submitted on 2 July calls for emissions to be reduced by 90% by 2040 compared with 1990. This matches the European Union's independent Scientific Advisory Board recommendation to set a climate target in the range of 90-95%. The original plan to put it forward at the start of this year was postponed as political pressure mounted. The proposal now includes certain flexibility options in order to make the target as a whole more politically acceptable.

One of the options on offer is the use of a limited volume of international carbon credits towards meeting the target – the first such case in the context of EU climate targets, since both the 2030 and the 2050 targets have to be met through so-called domestic measures alone. The second option is a commitment to include the European Union's permanent carbon removal measures in the emissions trading system and to allow greater freedom of action between sectors after 2030. Individual sectors could be allowed to fall short of their targets, with the shortfall offset accordingly in other sectors. Although the Scientific Advisory Board acknowledges that flexibility in the targets could help drive the transition to climate neutrality, it points out that such an approach must not weaken the will to meet the targets.

How will international carbon credits be involved?

For the first time, the EC has allowed the use of international carbon credits towards meeting the emissions reduction target. They will be obtained outside the European Union and traded under the Paris Agreement. That, in turn, means that carbon credits will be regarded as measures contributing to the achievement of the EU-wide target, not just that of the country in which they are implemented. The EC stresses that a so-called safety net will be put in place to guarantee that the target is met. The contribution will apply only from 2036 to 2040 and will be capped at 3%, which the Commission has described as "the right balance" between domestic measures and international cooperation.

According to the EU's climate policy chief Wopke Hoekstra, carbon credits must be "high quality", verifiable and certifiable; they will be subject to an impact assessment and to rules on their permanence, origin and use. The types of credits could include credits from direct carbon capture and storage from the air and bioenergy with capture and storage.

The decision to include carbon credits is being called contentious, and environmental organisations have once again criticised it, calling it a weakening of the target and voicing concerns both about the environmental integrity of the credits and about green investment being diverted outside the EU. Naturally, a decision of this kind worries environmental organisations, because it could potentially reduce the scale of their generous funding... Despite the "cares and concerns" of environmental organisations, the European Union's climate policy chief Wopke Hoekstra has defended the decision on carbon credits.

Cutting emissions also requires removals...

The "net" element of the target refers to the total amount of emissions reaching the atmosphere – or gross emissions minus the human activities and natural processes that remove them. Removal can be nature-based, where forests, soil and various natural processes absorb carbon from the atmosphere, or it can be technical, permanent removal, where carbon is "taken" using new technologies and stored permanently, for example through direct carbon capture and storage (DAC).

According to the European Commission's impact assessment of the target, the European Union will achieve a 75-85% reduction in gross emissions by 2040, which shows that alongside emissions reductions, removals are also definitely needed. Unlike the 2030 target, where it was agreed to limit the contribution of removals, the European Commission notes that so-called domestic removals will become ever more important in meeting the climate targets.

The European Commission has been criticised for failing to heed calls to make the target more credible and measurable by splitting it into three sub-targets – gross emissions, temporary removals and permanent removals. The calls came from "the most active advocates of climate action" – around 100 academics, companies, non-governmental organisations, a group of research institutions and the Scientific Advisory Board.

A recent study carried out by Carbon Gap showed that separate targets are both feasible and necessary. Carbon Gap criticised the European Commission for not including such an aspect.

The European Commission also wants to include domestic permanent carbon removals in the European Union's carbon pricing system, in order to offset residual emissions from hard-to-abate sectors and build a stronger economic case for new technologies and methods. This proposal, too, has drawn criticism from environmental NGOs, including, of course, the World Wide Fund for Nature and Climate Action Network Europe.

A realistic approach. The reaction to the 2040 target

Many environmental organisations persist in the view that introducing flexibility will weaken the climate targets, casting doubt on the inclusion of international carbon credits. One of the most consistent demands is for the European Union to ensure that credits meet strict criteria if they are used.

Environmental organisations such as Climate Action Network Europe are emphatic in wanting the European Union to reach its climate neutrality target 10 years earlier than planned, which is an absurd and realistically unachievable demand. Environmental activists constantly criticise the European Union for not trying to reach the target sooner. It has to be said that pressing for unrealistic targets is a way for organisations to attract yet more funding without taking on any responsibility if the targets are not met.

It should be stressed, though, that the stance and pressure of environmental activists has eased of late (it is not all-encompassing or "absolutely prevailing"). Many civil society organisations, think tanks, and also scientists, business people and opinion leaders in Europe have welcomed the message sent to the international community. Strategic Perspectives has expressed the view that it is a clear signal for combining economic prosperity, quality of life for people and a just transition away from fossil resources in a logical and acceptable way. The Centre for European Policy Studies points to the significance of this target ahead of the Europe-China summit in July. China, of course, has yet to set a new climate target, and there is still a great deal of uncertainty in this regard.

The wind energy sector wants annual targets to be set for the use of wind and other renewable energy sources, and for the main obstacles, such as problems with transmission grids and permitting, to be removed. The solar energy sector has called the new approach to setting and meeting targets an important signal, namely: decarbonisation is not a cost but an investment in competitiveness, security of energy supply and industrial development, and it has urged the EC to work on a framework for the period after 2030 and on targets for the use of renewable energy sources, electrification and flexibility. The "carbon-intensive" steel industry, meanwhile, warns of a lack of the conditions needed to meet the target. Steel producers are urging the implementation of the Steel and Metals Action Plan and additional measures to support the sector

In the business sphere, the Institutional Investors Group on Climate Change has called for swift agreement on the proposed target ahead of COP30, which would be a very important long-term signal to investors about Europe's path to climate neutrality. The Cambridge Institute for Sustainability Leadership welcomed the link with the Clean Industrial Deal, noting that it provides the much-needed alignment between the target and competitiveness.

The 2040 target is linked to European countries' nationally determined contributions

The European Union must submit its 2035 emissions reduction target as part of an updated climate plan under the Paris Agreement. These are the Nationally Determined Contributions, or NDCs. Europe missed the original deadline (February 2025). The UN has set a new deadline – September 2025 – for the plan to be submitted ahead of COP30 in Brazil.

The European Commission has announced that the 2035 target will be only an interim target, derived accordingly from the 2040 target. The 2035 target will have to be agreed by all 27 European Union member states, rather than by the qualified majority needed to adopt the 2040 target.

Both the 2035 and the 2040 commitments are important for setting international climate goals. If these targets are important, achievable and urgent... They look particularly important following the United States' withdrawal from the Paris Agreement and the criticism directed at countries for submitting insufficiently ambitious NDCs.

What comes next?

For the amendments to become law, they must be approved by the European Union member states and the European Parliament. Although the usual procedure will be followed, under which Parliament and the member states each develop their own position and then agree a common one, it should be stressed that this process will most likely be faster, because agreement needs to be reached before COP30 in Brazil.

Denmark, holder of the EU presidency, is currently leading the negotiations on behalf of the member states and has committed to working towards a political agreement at an extraordinary meeting of the Environment Council on 18 September on the 2040 target and the resulting European Union 2035 nationally determined contributions for achieving it.

In the longer term, the European Union will have to assess what policy changes are needed to meet the 2040 target, which will form the basis of climate policy after 2030, much as the "Fit for 55" package was drawn up to meet the 2030 climate target. Given the realities on the ground, the geopolitical situation and the uncertain economic outlook, the EC is emphasising simplification and flexibility as the right solution. The timing for when this legislation can be expected will be set out in the European Commission's 2026 work programme. Let us hope that decision-making grounded in today's situation and in an assessment of the true circumstances will also prove to be the right solution...