EU: Commission proposes new 2040 climate target

On 2 July 2025, the European Commission published a proposal to amend the existing European Climate Law so as to introduce a new climate target for 2040 (see press release and Q&A).

The proposal sends a strong signal that the EU remains committed to its decarbonisation agenda. The Commission is hoping to give investors and businesses (including those outside the EU) the predictability and stability they need in the EU’s clean energy transition. 

Proposed new 2040 target 

The Commission is proposing a 90% reduction in net greenhouse gas (GHG) emissions by 2040 (compared to 1990 levels). 

The current target is a reduction of at least 55% by 2030 and net zero by 2050 (see Background section). 

These are legally binding targets but as they are collective targets it means one or more Member States could underachieve provided the EU as a whole meets the targets. 

The Commission is also proposing to allow the following flexibilities when meeting the 2040 target:

• limited role for the use of high-quality international credits under Article 6 of the Paris Agreement starting from 2036;
• the use of domestic permanent removals in the EU Emissions Trading System (EU ETS); and
• greater flexibilities across sectors to support cost-effective achievement of targets.

The use of international carbon credits would be limited to 3% of the EU’s emissions and would need to come from third countries with targets and climate action that align with the objectives of the Paris Agreement. The Commission intends to develop rules setting when and how the use of international credits might be integrated into existing or future EU climate legislation. These rules will need to include robust and high integrity criteria and standards, and conditions on origin, timing and use of such credits, to ensure the international credits come from credible and transformative activities, such as direct air carbon capture and storage (DACCS) and Bioenergy with carbon capture and storage (BioCCS) in partner countries.

The Commission envisages carbon removals (both nature-based and industrial) playing an increasingly important role in reaching net GHG emissions targets, including domestic permanent carbon removals in the EU ETS to compensate for residual emissions from hard-to-abate sectors. The use of carbon removals will need to scale up significantly by 2040. For example, under the proposal, a European factory that stores CO2 from bioenergy could generate and sell allowances under the EU ETS.

The Commission will need to prepare proposals for a post-2030 climate and energy policy framework to deliver the new 2040 target - similar to what the Commission did with its “Fit for 55” package when it adopted the 2030 climate target. It remains to be see what will be included in a “Fit for 90” package but the Explanatory Memorandum to the proposal for a 2040 target makes it clear that the Clean Industrial Deal (see below) will play a key role in meeting the new climate target, and that technological neutrality, cost-effectiveness and a “just transition” will form part of the core guiding principles for the post-2030 climate and energy policy framework. Investors and companies will be particularly keen to see what that new post-2030 framework entails.

Role of Clean Industrial Deal in delivering the new 2040 target 

The 2040 proposal was accompanied by a Communication on progress so far towards delivering on the Clean Industrial Deal (CID) that was published in February 2025. 

The CID sets out the Commission’s roadmap to enhance competitiveness and accelerate the decarbonisation of industry in Europe, with a focus on energy-intensive industries, the clean-tech sector and the circular economy. The Commission sees the CID as an engine for growth and decarbonisation which provides support to clean tech manufacturing and energy-intensive industries, including through carbon management infrastructure, simplification of permitting, and dedicated financial instruments. 

Implementation of the CID will be crucial towards meeting the new 2040 target. 

For more information on the CID, see our previous blog post. 

Next steps

The proposal will now need to be debated and agreed by the European Parliament and the Council under the ordinary legislative procedure. This means that the Commission’s proposal could change. 

Normally this procedure would take at least 18 months. However, the Commission is hoping the co-legislators will fast-track this proposal as the EU also needs to submit a new 2035 climate target as part of its updated Nationally Determined Contribution (NDC) under the Paris Agreement before the global UN climate summit, COP30, starts in November (see below).  The Commission says it will work with the Council to finalise the EU’s updated NDC. Those discussions will need to take place alongside negotiations on the proposal for a new 2040 target. 

We are expecting heated debate on the new 2040 (and 2035) target, in particular in the current political climate where EU competitiveness and simplification are top of the agenda.  

Background: Current targets under EU Climate Law and the need for a new NDC 

The European Climate Law sets out the EU’s legally-binding climate targets, as follows:

• a target to reduce GHG emissions across the EU by 55% by 2030 (below 1990 levels);  and 
• a target for the EU to achieve net zero GHG emissions by 2050.

These are collective targets for the EU as whole, so it requires the EU institutions and member states collectively to take the necessary measures at EU and national level to meet the targets. After 2050, the EU should aim for negative emissions. 

The 2030 climate target was followed by a “Fit for 55” package of proposals, including changes to existing EU laws and new EU laws, to implement the 2030 target. That package was accompanied by National Energy and Climate Plans (NECPs) which set out what each EU country plans to do to achieve the EU’s 2030 climate and energy targets.

The priority is for GHG emissions to be reduced at source. After that, GHG emissions can be offset by removals - for example, by natural sinks (such as forests, soils, agricultural lands and wetlands) or carbon removal technologies (such as carbon capture and storage (CCS) and carbon capture and utilisation). 

The EU adopted a Carbon Removal Certification Framework Regulation in 2024, which will enable operators carrying out eligible industrial activities, carbon farming and carbon storage in products to apply for certification of the net carbon removal benefits or net soil emission reduction benefits generated by their activity, provided they meet the relevant criteria set out in certification methodologies adopted by the Commission.  The Commission will adopt secondary legislation to bring the scheme into operation, including delegated acts establishing technical certification methodologies for eligible activities and implementing acts setting out harmonised rules for certification procedures and for the Commission to recognise certification schemes.

The Climate Law requires the Commission to propose a new EU climate target for 2040 within six months of the first global stocktake under the Paris Agreement, which took place in December 2023. 

In February 2024, the Commission adopted a Communication (and accompanying Q&A) setting out the Commission's recommendation for a 90% net GHG emissions reduction by 2040 compared to 1990 levels. That Communication was then discussed by the Council, the European Parliament and various stakeholders. 

The Commission was then meant to have published a legislative proposal by the end of Q1 2025. However, there are ongoing concerns (including among a number of Member States) about how the EU will be able to meet a new 2040 target in light of the current economic headwinds and concerns over the EU’s competitiveness. 

In addition to coming up with a 2040 climate target, the EU also has to come up with a new climate plan under the Paris Agreement - known as a Nationally Determined Contribution or NDC - showing what GHG reductions it intends to make until 2035, in order to achieve the goal in the Paris Agreement of limiting global temperature rise to well below 2C and preferably to 1.5C. 

The original deadline for submission of revised NDCs was February 2025 so that these plans can be discussed at COP30 – which will be held this year on 10-21 November in Brazil. However, seeing as most countries (apart from the UK and a handful of others) missed the original deadline, the UNFCCC Secretariat extended the deadline to September 2025. 

The Paris Agreement requires countries to submit updated NDCs every five years, outlining their plans for reducing GHG emissions and adapting to climate change so that the UNFCCC can track global progress towards the goals of the Paris Agreement. The current round of NDCs focuses on the period up to 2035 and should reflect more ambitious action than previous NDCs.