EU: Regulation on 2040 climate target published in the Official Journal of the EU

On 18 March 2026, Regulation on the EU climate target for 2040 was published in the Official Journal of the EU. 

This marks the conclusion of a legislative process that began with the Commission’s proposal in July 2025 (see our previous blog posts on the Commission proposal, the Council position and the Parliament position).

The new 2040 target

The Regulation amends the European Climate Law to set a 2040 EU climate target of 90% reduction in net greenhouse gas (GHG) emissions (emissions after deduction of removals) compared to 1990 levels. 

The existing targets under the European Climate Law (at least a 55 per cent reduction in net GHG emissions by 2030 and climate neutrality by 2050) remain in place. The Regulation adds the 2040 target as a further binding intermediate milestone on that path.

As with the 2030 and 2050 targets, the new 2040 target is a collective EU-wide target. One or more Member States could therefore underachieve, provided the Union as a whole meets the target.

Other key changes 

The Regulation makes a number of changes to the European Climate Law beyond inserting the headline 90 per cent figure.

Post-2030 policy framework

Final adoption of the Regulation is a starting point for further legislative work. The Commission will need to propose a programme of measures, including new legislation, to enable the EU to meet its new 2040 climate target, similar to what it did with the “Fit for 55” package when the EU agreed its 2030 climate target.

The Commission is required to ensure that the following flexibilities are reflected in future legislative proposals for the post-2030 framework:

• International carbon credits: From 2036, high-quality international credits under Article 6 of the Paris Agreement may make an “adequate contribution” towards the 2040 target of up to 5 per cent of 1990 Union net emissions. This would correspond to a domestic reduction of net GHG emissions of 85 per cent compared to 1990 levels by 2040. A pilot period from 2031 to 2035 may be considered to initiate a high-quality and high-integrity international credit market.

• Domestic permanent carbon removals: The role of domestic permanent removals under the EU Emissions Trading System (EU ETS) in compensating for residual hard-to-abate emissions is to be reflected in forthcoming legislative proposals. The Commission envisages providing for the inclusion of domestic permanent carbon removals in the EU ETS in the context of the review of the EU ETS Directive in 2026.

• Cross-sectoral flexibility: Achievements by Member States in one sector will be able to balance gaps in other sectors in a cost-efficient way, while ensuring that each sector contributes to the overall effort and that shortfalls in one sector are not made up at the expense of other economic sectors.

• Carbon removals more broadly: Future legislation is required to take into account the realistic contribution of carbon removals to the overall emission reduction effort, including the uncertainties of natural removals. It must also address the need to maintain, manage and enhance natural sinks in the long term and to protect and restore biodiversity, while promoting a sustainable and circular bioeconomy.

ETS2 postponement

The Regulation also postpones the operation of emissions trading for buildings, road transport and additional sectors under the new ETS2 until 2028. The ETS2 is a separate EU Emissions Trading System covering fuel used in buildings and road transport. This one-year delay, from the original 2027 start date, reflects political sensitivities around extending carbon pricing to sectors that directly affect households.

New review and reporting obligations

The Regulation strengthens the Commission’s review and reporting duties under the European Climate Law.

From 6 March 2027, and every two years thereafter, the Commission must assess and report on the implementation of the intermediate targets and decarbonisation trajectories set out in the European Climate Law. This assessment must take into account the latest scientific evidence; technological advances; and evolving challenges to, and opportunities for, EU global competitiveness. These biennial assessments may be accompanied by legislative proposals.

This review is in addition to the report already envisaged by the European Climate 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 Commission’s report must now also be accompanied, where appropriate, by proposals to revise the European Climate Law (including the 2040 target) and by measures to strengthen the enabling framework, with a view to safeguarding EU competitiveness, prosperity and social cohesion. In this report, the Commission must also consider a broader set of economic, social and technological factors, including:

• the global competitiveness of European industries;
• energy prices and their impact on industries and households;
• socioeconomic impacts, including on employment;
• technological advances across Member States and sectors;
• the estimated level of net removals at the EU level relative to the 2040 target, with a duty to propose corrective measures – and, if necessary, adjust the target – if natural removals diverge significantly;
• progress towards the intermediate targets; and
• Member States’ use of high-quality international credits to fulfil up to 5 per cent of their post-2030 targets and efforts.

In practice, these new review and reporting obligations mean that the 2040 target, and the wider framework around it, will be subject to regular political and legislative scrutiny well before 2040, with a clear focus on competitiveness, affordability and the role of removals and international credits.