EU sets binding climate target of 90% by 2040

The European Commission (EC) has published a proposal to amend Regulation 2021/1119/EU (the "European Climate Law") to set a binding climate target in the European Union to reduce net greenhouse gases by 90% (GHG) by 2040, compared to 1990 levels, as an intermediate step toward the achievement of climate neutrality in 2050.

Context and objectives

The European Climate Law introduced the legally binding objective of reaching climate neutrality by 2050, and achieving negative emissions after that. As an intermediate objective for 2030, it set a reduction of net GHG emissions (i.e., of emissions minus removals) of at least 55% compared to 1990 levels, leaving the definition of the objective for 2040 for later.

In its communication of February 6, 2024, the Commission recommended a net reduction of 90% of GHG emissions by 2040, in line with the scientific advice by the European Scientific Advisory Board on Climate Change, which identified a 90% reduction as the most efficient and proportionate way of working toward climate neutrality.

Key elements of the proposal

• Binding objective for 2040. The proposal includes a 90% reduction of net GHG emissions by 2040, compared to 1990 levels, to ensure that the EU follows it path toward climate neutrality by 2050. 
• Revision of legal framework applicable from 2030. To reach the objective set for 2040, the Commission must review the current legal framework, designed for achieving the climate target by 2030, whose main regulations are as follows: (i) Directive 2003/87/EC establishing a system for greenhouse gas emission allowance trading;  (ii) Regulation (EU) 2018/842 on binding annual greenhouse gas emission reductions by Member States from 2021 to 2030 contributing to climate action;  and (iii) Regulation (EU) 2018/841 on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry in the 2030 climate and energy framework.
• Contribution of international carbon credits to national efforts. The planned revision of this regulatory framework must reflect, from 2036, the contribution of high-quality international credits in line with article 6 of the Paris Agreement to reach the climate target in 2040. This contribution of international carbon credits will be limited to 3% of the net emissions in 1990.
  
  These credits are aimed at complementing national efforts and at supporting the global climate action, but they will not be used to comply with the EU Emissions Trading System (“EU ETS”). The use of international carbon credits will be subject to the development of EU regulations that establish when and how these credits could be incorporated into the EU’S climate legislation.
  
• Role of permanent removals in EU ETS. This regulatory revision must also reflect the role in the EU ETS of GHG permanent removals, whether through natural or industrial processes, to offset the residual emissions from sectors where reduction is difficult. Regarding this, we must remember that current EU legislation contains references to the permanent carbon removals in (i) Directive 2003/87/EC, of October 13, 2003, establishing a system for greenhouse gas emission allowance trading; and in (ii) Regulation (EU) 2024/3012 of the European Parliament and of the Council of November 27, 2024 establishing a Union certification framework for permanent carbon removals, carbon farming and carbon storage in products.

Next steps

The European Parliament and the Council will discuss the proposal under the ordinary legislative procedure. If the proposal is adopted, the amended regulation will come into force 20 days after its publication in the Official Journal of the European Union and will be directly applicable in all the Member States.

Once the climate target is set for 2040, the Commission must design the climate policy framework for beyond 2030, by issuing the corresponding proposals from 2026.