Dispatch from the European Union | June '25

In cooperation with Carbon Pulse.

The Commission’s 2040 climate target will inform the bloc’s updated Nationally Determined Contribution (NDC) to the Paris Agreement, a wider list of efforts to be made between 2025 and 2035, which must be submitted to the UNFCCC by September. Before submitting its NDC, however, the EU needs to make another closely linked decision on setting overarching greenhouse gas reduction targets for 2035. All of these will build on the reduction goals already enshrined in the European Climate Law – 55 percent by 2030 compared to 1990, and net zero by 2050. The Commission has already indicated its intention to propose a 90 percent emissions cut by 2040, but crucial details still need to be worked out in the months ahead.

Stories to watch in the weeks ahead

• To allow or not to allow international credits: The shape of the 2040 target is not merely a technical matter - it has become a litmus test for the EU’s climate credibility, especially in how it chooses to meet that target. At the heart of this debate is whether the EU should allow the use of international carbon credits under Article 6 of the Paris Agreement to count towards its 2040 goal. Under Article 6, countries can purchase credits representing emissions reductions or removals from abroad to help meet domestic targets. Although rules for this mechanism were only agreed in late 2024 and no new credits of this type have yet been issued, some EU countries (notably Germany) would like to use them to offer flexibility. The new coalition government in Berlin has backed a three percent margin for Article 6 credits within the 90 percent target.
  But the European Scientific Advisory Board on Climate Change (ESABCC) has firmly warned against this approach and insists that the EU’s 90-95 percent emissions cut by 2040 should be achieved entirely through domestic reductions and removals. Jette Bredahl Jacobsen, vice-chair of the advisory board, said that “relying on international carbon credits would risk missing vital opportunities to modernise the EU’s economy, create quality jobs and reinforce Europe’s position in clean tech leadership.” She also noted that the technologies required to meet the target domestically already exist: "We need to reduce our dependence on fossil fuels, and the necessary technologies are largely available."

• ETS2 calling: Another urgent deadline is looming: the submission of Social Climate Plans (SCPs) by 30 June. These plans are essential to access the 86.7-billion-euro Social Climate Fund (SCF), designed to support vulnerable households through the impacts of the new Emissions Trading System (ETS2). Set to take effect in 2027, the ETS2 will impose a carbon price on fuels used for road transport and building heating. Since it would be applied upstream, at the point of fuel production, the system could increase petrol and diesel prices by up to 0.50 euro per litre, according to Veyt, a carbon market analytics firm. SCPs should then detail how each country intends to cushion this impact, using their share of the SCF to fund social support schemes and ensure a fair transition.
  However, delays in drafting these plans have raised concerns about whether all member states will meet the deadline. Without timely submission, countries risk losing access to the first tranche of funding, due for disbursement in 2026. After submission, the Commission will review the SCPs, request clarifications where necessary, and issue a decision within five months.
  An increasing number of national ministers are calling for a review of the EU ETS2, with the Polish presidency of the Council of the EU notably assertive on the matter. The European Commission has firmly restated its commitment to a 2027 launch of the EU ETS2, underlining that the “legislation is already adopted and in force” and that no revision of its provisions is foreseen before 2028.

• On the way to Brazil: Looking ahead to the international stage, EU positions on emissions targets and Article 6 will feed into global negotiations at COP30 in Brazil this November. Although intersessional talks in Bonn (16-26 June) are ongoing, expectations for immediate breakthroughs are low, especially with many major economies (including China and India, alongside the EU) yet to submit updated NDCs. So far, only 22 countries have done so. Civil society groups, including CAN Europe, have warned that this is a “defining moment” for the EU to demonstrate its leadership and commitment to fair, effective decarbonisation. Catherine Abreu from the International Climate Politics Hub stressed the importance of "quality NDCs," not just quantity. The EU’s submission is especially high-stakes, as it hinges on agreement over the 2040 emissions target.
  In addition to mitigation, climate finance will be a central and contentious issue in Bonn. Developing countries were disappointed by last year’s New Collective Quantified Goal (NCQG), which pledged 300 billion dollars annually in public/private finance by 2035, and a broader goal of 1.3 trillion dollars per year. They’re now demanding concrete steps to clarify how and when that figure will be reached. Parties in Bonn will focus on adaptation and the just transition, especially via the Global Goal on Adaptation (GGA) and the so-called UAE Dialogue, which aims to track progress on key mitigation goals like renewables expansion and fossil fuel reduction. Negotiations are also complicated by the absence of the US delegation. Some observers say this could allow other nations to step up and much hope goes to Brazil, positioning itself as a diplomatic bridge-builder.

The latest in EU policymaking – last month in recap

• Cutting ties: The European Parliament has endorsed Energy Commissioner Dan Jorgensen's long-awaited roadmap to phase out Russian fossil fuels, unveiled last month, and discussed the issues linked to the Nord Stream 2 gas pipeline in the Baltic. The EU is proposing an import quota of zero for Russian gas, as the bloc prepares for a full ban by the end of 2027. The quota would then need qualified majority support from national governments as well as majority backing from the European Parliament. The REPowerEU Roadmap came as a response to an increase in Russian gas imports over the past year. Since the beginning of the war in Ukraine, the EU’s gas imports from Russia have exceeded 100 billion euros, according to estimates.

• Battle against greenwashing: An agreement on the EU's Green Claims Directive was delayed from 10 June and is now expected by the end of June. Final talks between the European Parliament, the Council and the Commission are set for June 23, easing fears that talks might be pushed beyond the summer break.

Emanuela’s picks:

• EU Council (26-27 June in Brussels): To watch because leaders are likely to discuss security, including energy security.

• Fourth International Conference on Financing for Development (30 June-3 July in Spain): To watch because - as umbrella organisation Climate Action Network (CAN) Europe said - "sovereign debt and tax injustice are locking countries into fossil dependency and pushing 1.5°C out of reach."

• UN clock ticking: September will be time to submit all updated NDCs, just before COP30. Journalists in Bonn heard that countries are waiting on the EU NDC before they submit, which is causing a big delay. See the Carbon Pulse's portal tracking the plans as they come.