EU: Council reaches agreement on new 2035 and 2040 climate targets

On 5 November 2025, the Council of the EU reached agreement on a new 2040 climate target (see press release and Council position). It maintained the binding intermediate climate target of a 90% reduction in net greenhouse gas (GHG) emissions by 2040 compared to 1990 levels, as proposed by the European Commission. However, it is also seeking a number of concessions. Now that the Council has agreed its negotiating position on the Commission’s proposal for a new 2040 target, the European Parliament also needs to agree its own position before trilogues can start. 

The agreement has also allowed the Council to approve an updated nationally determined contribution (NDC) of the EU and its Member States ahead of COP30 (see press release). The NDC reiterates the EU's goal of achieving a net reduction of 55 per cent in GHG emissions by 2030 and introduces an indicative contribution of 66.25 to 72.5 per cent for 2035 on the path towards carbon neutrality by 2050. For more information on COP30, see our previous blog post.

Although the Council agreement saved the EU from the international embarrassment of arriving empty-handed at the COP30 summit, achieving it required significant concessions to secure support from reluctant Member States.

Background: Commission proposal for a new 2040 climate target

First adopted in 2021, the European Climate Law provides the legal foundation for the EU's long-term climate policies, in line with the Paris Agreement. It sets a binding climate neutrality target for 2050 and a 2030 objective of reducing net emissions by at least 55 per cent. The Law required the Commission to make a legislative proposal on the 2040 climate target no later than six months after the first global stocktake under the Paris Agreement (which concluded at COP28 in December 2023).

On 2 July 2025,  the Commission put forward a proposal to amend the European Climate Law to set a 2040 target (see our previous blog post). This proposal now needs to be negotiated and adopted by the European Parliament and Council under the “ordinary legislative procedure”.

Council position on Commission proposal for a new 2040 target

Key flexibilities

Whilst the headline 90 per cent target remains intact, the Council is seeking the following “flexibilities” (i.e. concessions):

• International carbon credits: One of the most controversial aspects of the amendment to the European Climate Law concerns the use of international carbon credits. The Council agreed that high-quality international carbon credits may be used to make an 'adequate contribution' towards the 2040 target, quantified as up to 5% of 1990 EU net emissions from 2036 onwards, including a pilot period for 2031-2035. This represents an increase from the Commission's proposal of up to 3%. The media (see, for example, here) reported that the final agreement could also allow countries to claim a further 5% of the goal through international credits in case of emergencies, such as wildfires; however, that provision did not make it into the final Council position.
• Domestic carbon removals: The Council clarified that domestic permanent carbon removals under the EU emissions trading system (ETS) should play a role in compensating for residual hard-to-abate emissions.
• Cross-sectoral flexibility: The Council is also seeking enhanced flexibility within and across sectors and instruments. Achievements by Member States in one sector can balance gaps in others in a cost-efficient way, whilst ensuring that each sector contributes to overall efforts. This flexibility mechanism is designed to accommodate the diverse economic structures and circumstances across the EU’s Member States.

Review mechanisms

The Council also wants the European Climate Law to be amended so that the Commission is required to review the 2040 target every two years and report on the implementation of the intermediate targets and decarbonisation trajectories set out in the Law, taking into account the latest scientific evidence, technological advances and evolving challenges to and opportunities for the EU’s global competitiveness. Where appropriate, the assessment may be accompanied by legislative proposals.

This review is in addition to the report already envisaged by the Law, which the Commission must submit within 6 months of each global stocktake under the Paris Agreement (the next stocktake will be in 2028). The Law requires the Commission to consider the best available and most recent scientific evidence, international developments, and efforts undertaken to achieve the long-term objectives of the Paris Agreement. The Council added some practical consideration and suggested that the Commission should consider additional factors such as the global competitiveness of European industries, the evolution of energy prices and their impact on European industries and households and the estimated level of net removals at EU level in relation to the 2040 target. Based on the findings of the review, the Commission may propose a revision of the Law, which may include adjusting the 2040 target.

ETS2 postponement

In a further concession, the Council introduced a provision to postpone the entry into application of the new EU emissions trading system for buildings and road transport (ETS2) by 1 year, from 2027 to 2028. 

The ETS2 is a new, separate ETS for fuel used for road transport and heating buildings (see Commission website for more information). 

The one-year delay reflects political sensitivities around extending carbon pricing to sectors that directly affect households. 

Next steps

The agreed text sets out the Council's negotiating position on the Commission’s proposal for a new 2040 target. 

The European Parliament now needs to agree its own negotiating position before trilogues can start. 

The Environment, Climate and Food Safety Committee of the Parliament adopted its position on 10 November. According to the press release, this position is largely in line with the text agreed by the Council. The Committee also wants that, from 2036, up to 5% of net emissions reductions could come from high-quality international carbon credits from partner countries. However, the Committee wants assurances that this will be subject to robust safeguards. A plenary vote at the Parliament is expected on 13 November 2025 - after which trilogues (negotiations) between the Parliament and Council can start. 

The EU’s new 2035 climate target in the updated NDC is not subject to the same procedure. NDCs form part of the UN Paris Agreement and COP30 process and so this was a decision for the heads of state of the EU Member States alone. The European Parliament is not involved in that process.   

Reports on EU climate progress

The Council’s agreement comes against the backdrop of two reports published by the European Commission on 6 November 2025: the State of the energy union report 2025  and the accompanying EU Climate Action Progress Report 2025.  

The State of the Energy Union Report is published annually to review the EU's progress towards the objectives of the EU. The Climate Action Progress Report shows progress towards the EU's emission reduction targets, covering actual emissions and projected future emissions for the EU as a whole and for every Member State.

The reports confirm that the EU is well on track to meet its 2030 climate target, with a 2.5 per cent decrease in GHG emissions in 2024 compared to 2023. Newly installed renewable energy capacity in 2024 is estimated at around 77 GW. The EU electricity mix already included 47 per cent renewables in 2024. According to the Commission’s EU-wide assessment of the final updated National Energy and Climate Plans, if Member States implement these plans alongside EU policies, the EU will be closing in on its 2030 objectives for GHG emission reductions and renewable energy.

Despite this progress, significant challenges remain. There is still a notable gap in energy efficiency. Additional measures and stronger implementation are required to meet the EU's 2030 energy savings targets, alongside further actions to secure the necessary investment and financing.

The Commission estimates that the EU will need to mobilise €695 billion annually from 2031 to 2040 for energy-related investments. To reach the EU's decarbonisation goals, electricity's share in final energy demand must rise from around 23 per cent today to approximately 32 per cent by 2030 and nearly double to reach 50 per cent by 2040. The reports make clear that achieving the 2040 target will require not only sustaining current momentum, but also significantly accelerating action across all sectors.