EU agrees on a 2040 Climate target that sets a clear path towards a decarbonised and competitive economy

This article is brought to you in association with the European Commission.

The EU is setting a legally binding climate target of 90% reduction in net greenhouse gas (GHG) emissions for 2040. The Commission welcomes last night’s provisional political agreement between the European Parliament and EU Member States on this headline target and the amendment of the EU Climate Law. The deal also includes the possibility to use high-quality international credits to reach the 90% GHG emissions cut by 2040, compared to 1990 levels, with an adequate contribution of up to 5%.

The agreed climate target secures a clear and steady trajectory towards a decarbonised European economy by 2050. It provides certainty to investors and businesses to drive forward the EU’s clean transition, industrial competitiveness, energy security and independence.

At international level, the EU is showing its firm commitment to achieving the Paris Agreement and its leadership as a front-runner and reliable partner on global climate action. 

President of the European Commission, Ursula von der Leyen, said: “Today, the EU is showing our strong commitment to climate action and the Paris Agreement. One month after COP30, we have turned our words into action – with a legally binding target of 90% emissions reduction by 2040. We have a clear direction of travel towards climate neutrality. And a pragmatic and flexible plan to make the clean transition more competitive.”

A pragmatic and flexible way to 2040

This provisional agreement sets out a pragmatic and flexible pathway to 2040 that reflects today’s economic and geopolitical realities. It provides the enabling conditions to deliver the 90% agreed target, including full implementation of the Clean Industrial Deal.

It sets out some flexibilities and key elements for the 2040 target and for the post-2030 climate framework that will steer the Commission’s upcoming legislative proposals:

• The law foresees the possibility to use high-quality international credits to make an ‘adequate contribution’ towards the 2040 target, starting in 2036. This amount can be up to 5% of 1990 EU net GHG emissions, corresponding to a domestic reduction of net GHG emissions by 85% compared to 1990 levels by 2040. This needs to occur in a way that is ambitious and cost-efficient. It must ensure important safeguards that complement those under Article 6.4 of the Paris Agreement, and must ensure the consideration of a pilot period for the period 2031-2035.
• The use of domestic permanent removals in the EU Emissions Trading System (EU ETS) to compensate for residual hard-to-abate emissions is included in the agreed climate law.
• There will be greater flexibilities within and across sectors and instruments to help achieve targets in a simple and cost-effective way. Concretely, this could give a Member State the possibility to compensate for shortfalls in one sector without compromising overall progress.

The provisional agreement also highlights elements to be reflected in the post-2030 framework. These elements include giving an enhanced focus on the competitiveness of European industry and economy; a fair, pragmatic, cost-effective and socially balanced transition for all; innovative and clean technologies based on technology neutrality; and renewable energy solutions.

The co-legislators have introduced a biennial assessment on the implementation of the intermediate targets to take into account the latest scientific evidence, technological developments and the EU’s global competitiveness. The review provision has also been strengthened, so that the Commission in a future review will take stock of impacts to EU industries’ competitiveness, the evolution of energy prices, the status of net removals at EU level, and the flexibility for Member States to use high-quality international credits to fulfil their post-2030 targets and efforts.

The deal also postpones the application of the EU Emissions trading system for buildings, road transport as well as small industries (ETS2) by one year, from 2027 to 2028. The postponement does not affect the monitoring, reporting and verification requirements under ETS2, which have started as planned in 2025.

Next steps

Following this provisional agreement, the European Parliament and the Council of the EU will have to formally adopt the text. Thereafter, the amendment of the European Climate Law will be published in the Official Journal of the EU and enter into force.

Background

By staying the course on decarbonisation, the EU will drive investment in innovation, create more jobs, growth, increase our resilience to impacts of climate change and become more energy independent.

The European Climate Law, in force since July 2021, legally anchors the EU’s commitment to climate neutrality by 2050 and to reducing net GHG emissions by at least 55% by 2030, compared to 1990 levels. The EU has adopted a 2030 legislative package known as ‘Fit for 55′ and its implementation by EU Member States is underway. The Commission’s assessment of national energy and climate plans confirmed that the EU remains on track to collectively meet its 2030 goals, reinforcing the credibility of its long-term trajectory.

The Climate Law legally requires an intermediate 2040 climate target to set the pace towards climate neutrality. The Commission tabled its proposal for an amendment on 2 July 2025 and this has formed the basis for the new EU Nationally Determined Contribution (NDC) under the Paris Agreement submitted for COP30.