EU environment ministers have adopted a joint negotiating position on the 2040 emissions reduction target, providing more flexibility to member states compared to the European Commission’s earlier proposal.
Main Elements of the Agreement
- 90% emissions reduction by 2040 compared to 1990 levels. At least 85% to be achieved through domestic measures.Up to 5% through high-quality international carbon credits (pilot phase 2031–2035, full use from 2036). This represents greater flexibility than the European Commission’s initial proposal, which would have allowed only 3% credit use. The Council emphasizes that the target should remain legally binding, while acknowledging variations in competitiveness, social impacts, and national circumstances.
Why does this matter?
Expanding the credit allowance gives industries and member states more room to manage their decarbonization pathways. However, it raises questions about whether this could slow down domestic clean investment efforts.
EU ETS2 Launch Delay: 2027 ➜ 2028
- Ministers propose delaying the start of the new emissions trading system covering buildings and road transport by one year.
Rationale: Shielding households and small businesses amid ongoing energy price volatility.
Additional points discussed:
- A slower phase-out of free allowances for heavy industry under the existing ETS A review clause to address energy price impacts on competitiveness and consumers.
What’s Next?
- The European Parliament will vote on its negotiating mandate next week. A final compromise will be shaped in trilogue negotiations between the Parliament, Council, and Commission in the coming months.
Bottom line:
The ambition remains high, but the transition path is becoming more pragmatic, with stronger focus on social acceptance and economic resilience.