The European Union moved a step closer to reshaping its climate rulebook this week, adopting a legally binding commitment to slash greenhouse-gas emissions 90% by 2040. The agreement, reached late Tuesday between the European Parliament and EU member governments, amends the bloc’s cornerstone Climate Law and sets the stage for its long-term transition to net zero by mid-century.
European Commission President Ursula von der Leyen said the decision gives companies “predictability in an era of volatile energy markets,” adding that the package was intentionally designed to balance environmental ambition with economic pragmatism.
The new mandate, which follows last month’s COP30 summit in Brazil, signals the EU’s determination to remain a global climate standard-setter even as other major economies recalibrate policies.
Climate organizations welcomed the legally binding nature of the target, arguing that it anchors long-duration investments in renewables, low-carbon fuels, and cleantech manufacturing. In a statement from November the World Resource Institute said that “The EU’s 90% target reflects the level of ambition this moment demands and stands out as one of the most ambitious commitments in the world… signals that it recognises climate action as central to Europe’s economic future.”
Carbon Markets, Delays and the Push for Technological Scale
The deal also postpones by one year the launch of the EU’s new emissions trading program for buildings, road transport, and smaller industrial sectors, known as ETS2. Initially scheduled for 2027, the system is now expected to begin operating in 2028, though monitoring requirements already in force will continue as planned.
The agreement does provide room for a limited use of carbon removal credits, allowing high-quality international credits to account for up to 5% of the reduction target. While the credit market has faced criticism over inconsistent verification practices, European negotiators insist that only rigorously vetted offsets will qualify.
Carbon market experts have said this approach underscores the need to scale removal technologies while recognizing that international offsets, typically cheaper than domestic options, can help reduce compliance costs without diluting environmental integrity. “To achieve its climate targets, the EU must quickly scale up carbon dioxide removals while pursuing deep emissions cuts.” said Prof. Ottmar Edenhofer, Chair of the EU Advisory Board in an earlier back statement back in February 2025.
Business groups broadly framed the 2040 target as an economic opportunity rather than a regulatory burden, arguing that clear policy direction will accelerate innovation across energy storage, critical-minerals supply chains, and climate-friendly manufacturing.
Read more: COP30: EU Doubles Down On Carbon Import Tax, Rejects India Pushback
