Brussels: Europe and the Arabs

The Presidency of the Council of Member States and representatives of the European Parliament have reached an agreement in principle on amending the European Climate Act, which includes a binding intermediate climate target for 2040 of reducing net greenhouse gas emissions by 90% compared to 1990 levels. This new target is a crucial step towards achieving the EU's long-term goal of climate neutrality by 2050.

According to a statement released in Brussels by the EU institutions, the agreement outlines areas of flexibility to support the achievement of the 2040 target, as well as several key elements to be considered in the post-2030 climate action framework. These elements will guide future legislative proposals from the Commission to enable the EU to achieve the 2040 target, while providing support to European industry and citizens during the transition period.

The agreement also confirms the support of lawmakers for postponing the implementation of the EU Emissions Trading Scheme for Buildings and Road Transport (ETS2) for one year. The statement quoted Lars Ågaard, Denmark’s Minister for Climate, Energy and Utilities, as saying, “Today, Europe has united around our clear climate policy direction, grounded in science and safeguarding our security and competitiveness. The agreement between the Council and the European Parliament on the 2040 target is crucial, and I am truly proud of what we have achieved together. This target meets the need for climate action while maintaining our competitiveness and security. With the 2040 target achieved, we can now focus on developing the policies and cooperation necessary to drive Europe towards a more sustainable, secure, and prosperous future.”

Key elements of the agreement:

The agreement among legislators includes:

A binding target of reducing net greenhouse gas emissions by 90% by 2040, as proposed by the European Commission.

Further clarifications and additions to the flexibility proposed by the Commission, including the contribution of high-quality international carbon credits to achieving the target, the role of permanent domestic carbon removals under the EU Emissions Trading System, and enhanced flexibility within and between sectors and instruments. Continue developing the enabling framework principles for the post-2030 climate architecture, focusing on competitiveness, simplification, social equity, consideration of national circumstances, energy security and affordability, support for innovation and investment, the realistic contribution of decarbonization to achieving the overall goal, and the long-term conservation, management, and enhancement of natural sinks.

Strengthen the review mechanism, including regular assessments of progress towards achieving the targets related to competitiveness, energy prices, and net removal levels, as well as requiring the Commission to propose amendments to the climate law or take additional measures as needed to strengthen the enabling framework.

The start date for the second EU Emissions Trading System (ETS) has been postponed by one year, from 2027 to 2028.

The Role of International Carbon Credits
The interim agreement includes a balanced approach to the role of international carbon credits in the post-2030 climate framework. Lawmakers agreed to allow, starting in 2036, the use of high-quality international credits to contribute appropriately to achieving the 2040 target, up to 5% of the EU’s 1990 net emissions. This is equivalent to achieving an 85% domestic emissions reduction by 2040. A pilot phase for 2031–2035 could also be established to support the development of a fair international credits market.

Furthermore, lawmakers are introducing additional safeguards to guide the Commission in preparing future rules for the use of international credits within the post-2030 climate architecture, to ensure the fairness of these credits. The Commission must, where appropriate, consider supplementing the criteria set out in the Paris Agreement when establishing the rules for international credits.

Legislators also reached a compromise on the scope of potential flexibility to be examined in the next review of the system. Among other things, the review will address the possibility for Member States to use additional high-quality international credits to achieve up to 5% of their post-2030 targets and efforts. The European statement added that the agreement reached by the Council and Parliament is provisional, pending formal ratification and adoption by both institutions. The European Climate Act, first adopted in 2021, provides the legal basis for the EU’s long-term climate policies, in line with the Paris Agreement. The Act sets a binding target of achieving climate neutrality at the economic level by 2050, and a further target for 2030 of reducing net emissions by at least 55%. It also stipulates the establishment of a transitional climate target for 2040.

Following the publication of the "European Climate Target 2040" statement in February 2024, the European Commission submitted a proposal on July 2, 2025, to amend the European Climate Act with the aim of setting a target for 2040.

In October 2025, the European Council issued strategic guidance on the way forward towards setting a 2040 target. Leaders stressed, in particular, the need for a balanced approach that maintains and enhances the EU's competitiveness while ensuring a socially just transition. They also emphasized the need to consider the uncertainties surrounding natural decarbonization processes. The European Council called on the European Commission to continue developing the enabling conditions necessary to support European industry and citizens in achieving the 2040 target. On November 5, 2025, EU environment ministers endorsed the Council's position on amending the European Climate Act, while the European Parliament adopted its negotiating position on November 13.