Q&A: EU proposes 2040 emissions reduction target
What is the EU’s 2040 climate target?
The European Union’s 2040 emissions reduction target is a legally binding amendment to the European Climate Law, agreed in 2021, which sets out the EU’s 55 percent net emissions reduction target for 2030 and its 2050 net-zero emissions goal.
The proposal tabled on 2nd July is for a net emissions reduction of 90 percent by 2040, based on 1990 levels. This follows a recommendation from the EU’s independent scientific advisory board to have a target of 90-95 percent.
Originally due to be proposed at the beginning of the year, the target faced delays and mounting political pressure. It now contains certain flexibilities, aimed at making it more politically palatable.
This includes allowing a capped amount of international carbon credits to help reach the goal - a first for EU climate targets, as both the 2030 and 2050 targets have to be met with only domestic action. Another flexibility is a commitment to integrate domestic permanent carbon removals into the emissions trading system and provide more leeway between sectors after 2030 to allow for falling short in some sectors and compensating in others.
While the scientific advisory board has acknowledged that flexibilities could help facilitate the transition towards climate neutrality, it says this must not weaken ambition.
How will international carbon credits be included?
For the first time, the European Commission has permitted the use of international carbon credits in achieving an emissions reduction target. These are achieved outside of the European Union but traded under the Paris Agreement, so that they count as action towards the EU’s target, rather than that of the country in which they occur. This can provide a “safety net” to ensure the target is achievable, the Commission says.
Their contribution will only be applicable between 2036 and 2040 and will be capped at 3 percent, which the Commission has described as striking the right balance between domestic action and international cooperation.
According to the EU climate chief Wopke Hoekstra, these need to be “high-quality” as well as verifiable, certifiable and additional. They will also be subject to an impact assessment and rules on their robustness, origin and use. Types of credits could include those from direct air carbon capture and storage and bioenergy with capture and storage.
However, the decision to include them is controversial and environmental organisations have criticised it as watering down the target. There are concerns about the environmental integrity of these and that they might drive green investment outside of the European Union. In June, the scientific advisory board flagged both these concerns and the chair of the board has reiterated them since.
EU climate chief Wopke Hoekstra has since defended the decision.
What is the role of removals?
The “net” element of the target refers to the total amount of emissions that end up in the atmosphere - or gross emissions minus human and natural activities to remove them. These removals could be nature-based, where trees, soils and other natural processes take carbon from the atmosphere, or technical, permanent removals, where carbon is removed by technology and permanently stored - for instance, direct air carbon capture and storage (DAC).
According to the European Commission’s impact assessment for the target, the EU will achieve a gross emissions reduction of 75-85 percent by 2040, showing that removals are needed alongside emissions cuts.
Unlike the 2030 target, where there was an agreement to cap the contribution of removals, the Commission simply says that domestic removals will play “an increasingly important role” in reaching climate targets.
The Commission has been criticised for not adhering to calls to boost the target’s credibility and measurability by breaking it into three sub-targets: gross emissions, temporary removals and permanent removals. These calls included those from a group of over 100 academics, businesses, civil society organisations and research institutions and the scientific advisory board.
A recent study by Carbon Gap showed that separate targets were feasible and necessary and the group has criticised the Commission for not including this.
The European Commission also wants include domestic permanent carbon removals in the EU’s carbon pricing system to compensate for residual emissions from hard-to-abate sectors and build a stronger business case for these technologies and methods. This has also drawn criticism from NGOs, including WWF and Climate Action Network Europe.
What are the reactions to the 2040 target?
Many environmental organisations see the inclusion of flexibilities as a weakening of the target. There is a lot of hesitation about including international carbon credits but one consistent call is for the EU to ensure these meet strict criteria, if they are used.
Environmental groups, like Climate Action Network Europe, also want the EU to reach its climate neutrality goal 10 years earlier than planned and have criticised the EU for not aiming for this.
However, several think tanks have applauded the message sent to the international stage. Strategic Perspectives has said that it sends a strong signal that combining economic prosperity, safeguarding people’s well-being, and a just transition away from fossil fuels is doable. Meanwhile, the Centre for European Policy Studies points to its importance ahead of the EU-China summit at the end of this month, as China is yet to produce its new climate goal.
On the business side, the Institutional Investors Group on Climate Change has said that agreeing on the proposed target quickly ahead of COP30 would send an important long-term signal to these investors on the EU’s path to climate neutrality. Meanwhile, the Cambridge Institute for Sustainability Leadership welcomed the link with the Clean Industrial Deal, saying this brings much-needed coherence between the target and competitiveness.
The solar sector has called it a key signal that decarbonisation is not a cost but an investment in competitiveness, energy security and industrial development and has called for the Commission to work on the post-2030 framework, including targets for renewable energy deployment, electrification, and flexibility. The wind industry also wants annual targets for wind and other renewables deployment, as well as work on key hurdles, like grids and permitting.
Meanwhile, carbon-intensive industry steel has warned that the enabling conditions to meet the target are still missing and calls for the implementation of the Steel and Metals Action Plan and more work to support the sector.
How is the 2040 target linked to the EU's NDC?
The European Union also needs to submit its 2035 emissions reduction target as part of its updated climate ambition plan under the Paris Agreement - known as a Nationally Determined Contribution (NDC). Like many countries, it missed the original February 2025 deadline and the United Nations has now given it until September 2025 to hand this in ahead of the UN climate change conference COP30 in Brazil.
The European Commission has said that the 2035 target will be an interim target, derived from the 2040 target. This will need to be agreed on by all 27 EU countries – rather than the qualified majority required to pass the 2040 target.
Both the 2035 and 2040 targets are important to set a high bar for international climate ambition. This is particularly important following the United States pulling out of the Paris Agreement and as other countries are criticised for not handing in ambitious enough NDCs.
What happens next?
The amendment needs to be agreed by EU countries and the European Parliament before it can become law. While it will follow the normal process by which the Parliament and member states form their positions and then come together to agree their position, it is likely to be a quicker process due to the pressure to have it agreed ahead of COP30 in November.
The Danish Presidency, which currently leads negotiations for member states, has pledged to work to reach political agreement on the 2040 target and derive the EU's 2035 nationally determined contribution from this at an extraordinary Environment Council meeting on 18 September.
In the long term, the EU will need to assess what policy changes are required to reach the 2040 goal. The target will form the basis of post-2030 climate policy framework, similar to the Fit for 55 package, which was put together to reach the 2030 climate target. However, this time around, the Commission is emphasising simplification and flexibility. The timing of when to expect this legislation will be laid out in the Commission’s work programme for 2026.
