The European Commission is set to propose on Wednesday a 2040 EU climate target that, for the first time, would permit countries to use carbon credits from developing nations to cover a limited portion of their emissions reduction goals, according to a draft of the proposal.
The draft stated that the European Union executive would propose a legally binding target to cut net greenhouse gas emissions by 90% by 2040 from 1990 levels, aiming to keep the EU on course to achieve its core climate goal of reaching net zero emissions by 2050.
But following pressure from governments including France, Germany, Italy, Poland and the Czech Republic, the draft EU proposal includes flexibilities that would soften the 90% emissions target for European industries.
Unlike previous EU emissions targets, which relied solely on domestic cuts, the draft allows up to 3 percentage points of the 2040 goal to be met using carbon credits purchased from other countries through a U.N. “backed market” reflecting Germany’s position and easing the burden on domestic industries.
The carbon credits would be phased in from 2036, and the EU will propose legislation “setting robust and high integrity criteria and standards, and conditions on origin, timing and use of such credits,” the draft said.
Countries would also get more flexibility on choosing which sectors in their economy contribute most towards the 2040 goal, it said.
Climate change has turned Europe into the world’s fastest-warming continent, with this week’s heatwave sparking wildfires and widespread disruption. However, the EU’s ambitious climate policies have also fueled tensions among its 27 member states.
While the European Commission has pitched its climate agenda as a way to improve Europe’s competitiveness and security, some governments and lawmakers say industries reeling from U.S. tariffs and high energy costs cannot afford tougher emissions rules.
“Decarbonisation is not only crucial for the planet, but also a key driver of economic growth when integrated with industrial, competition, and trade policies,” the draft said.
A Commission spokesperson declined to comment on the draft, which could change before it is published.
Carbon credits are generated by projects that reduce CO2 emissions abroad – for example, forest restoration in Brazil, and raise funds for such projects. However, investigations have shown some credits failed to deliver the environmental benefits they claimed.
The EU’s climate change advisers have opposed counting them towards the 2040 target, and said spending money on foreign carbon credits would divert investments from local industries.
EU countries and lawmakers must negotiate and approve the 2040 goal. That lawmaking process can take years, but the EU faces a deadline of mid-September to submit a new 2035 climate target to the U.N. – which the Commission has said should be derived from the 2040 goal.