The formal target, scheduled for announcement on July 2, 2025, is that the EU proposes the use of international carbon credits to achieve a 90% reduction in net greenhouse gas emissions by 2040 compared to 1990 levels, as prepared by the European Commission. Meeting the critical need to address climate change, this bold target also addresses the political and economic requests from member states, such as Poland, the Czech Republic, and Italy.

The Commission provides flexibility to reduce the cost of adjustment, ensuring that the target year of 2040 is compatible with the EU’s climate commitment and the varying situations among member states.

EU Proposes Use of International Carbon Credits

Starting in 2036, the EU plans to apply top-quality international credits from a carbon market endorsed by the UN to cover up to 3% of the emissions cuts required. These credits could come from projects that are of global benefit to climate efforts, like Brazil’s reforestation.

As proposed in the Commission’s working document, subsequent EU law will outline the quality and origin standards that these credits must meet, as well as the means of obtaining them. By including international credits, the EU can meet the 90% target while making deeper cuts within its borders, lowering the investment burdens on European industry.

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Other Mechanisms and Challenges

The Commission is also working to include carbon removal credits in the EU Emissions Trading System. When this occurs, businesses will be able to buy carbon removal credits as offsets alongside the international credits they can buy through cap-and-trade regulations. The proposal suggests that governments select the most impacted sectors to minimize costs associated with achieving the targets, thereby enabling cost-effective target achievement (the Commission could further substantiate this).

For supporters of carbon credits, they are vital climate finance for developing countries, supporting seamless integration within global emissions reductions. Critics, on the other hand, have doubts about the effectiveness of this approach based on recent scandals involving carbon credit projects that did not yield realized climate benefits.

The draft plan may be revised before its release, and negotiations with the European Parliament and EU nations will shape the final legislation.

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