Under its newly revised Climate Law, the EU has cleared a path to meet up to 5% of its 2040 climate target using international carbon credits starting in 2036. But a new joint analysis from green think tank CONCITO and the Clean Air Task Force (CATF) warns that the bloc is making a massive, unhedged bet on a market that has a notorious track record of underdelivering.
The report, titled More Than a Buyer, points out that relying on these Article 6 credits carries immense risk.
Tight quality controls, rules preventing the banking of credits between compliance periods, sluggish project lead times, and the simple fact that host nations will increasingly want to keep emissions reductions to meet their own Paris Agreement targets could leave Europe facing a severe supply crunch.
Leveraging Brussels’ Collective Buying Power
To prevent a mad scramble for compliance, the report urges the European Commission to abandon the idea of letting individual member states shop for themselves. Instead, it advocates for a single, centralized purchasing body.
By acting as a unified buyer, the EU can use its financial muscle to negotiate high-integrity climate partnerships that drive real, structural decarbonization in selling countries, rather than triggering a race to the bottom for the cheapest available offsets.
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The co-authors also warn that the EU cannot afford to wait. The report recommends signaling demand by 2030, securing funding long before the 2036 start date, and building in regular calibration checkpoints to spot potential supply shortfalls early enough to pivot.
Critically, the analysis insists that these international credits must be kept entirely out of the EU Emissions Trading System (ETS). Allowing them in could compromise the integrity of Europe’s primary carbon market.
Instead, the authors argue, international credits should be funded nationally as a strictly limited flexibility tool under national targets, ensuring ETS revenues remain dedicated to cleaning up Europe’s own domestic industries.
Read more: EU Weighs Slower Emissions Cuts And More Free Permits As It Reworks Carbon Market Rules
