EU Council approves 2040 climate target with 90% GHG reduction
The European Council has approved a binding interim climate target for 2040 under the European Union’s Climate Law. This target requires the bloc to reduce its greenhouse gas emissions by 90% by 2040 compared to 1990 levels. However, from 2036 onwards, up to five percentage points of this reduction may be achieved through the purchase of international climate certificates. In effect, member states will only need to reduce their domestic emissions by 85%.“Credits must be based on credible activities of GHG reduction in partner countries, in line with the Paris agreement,” the European Council stated. Notably, the European Commission’s initial proposal had suggested a 90% emissions reduction with a maximum of 3% of certificates from third countries. The European Parliament and member states later increased this share to 5%.For context: until now, the EU had only set binding targets for 2030 and 2050. Under the ‘Green Deal,’ net greenhouse gas emissions must be reduced by at least 55% by 2030 compared to 1990 levels. The EU aims for climate neutrality by 2050. While the EU Climate Law had always included an interim target for 2040, no specific figure had been set until now. This target has now been confirmed by all EU institutions and stands at a 90% reduction in greenhouse gas emissions. The amended regulation will enter into force 20 days after its publication in the Official Journal of the European Union and will apply directly in all EU countries.The European Commission is now responsible for proposing measures to implement the 2040 climate target. These measures should also consider processes for removing CO2 from the atmosphere and storing it permanently. Additionally, the Council notes that greater flexibility within and between sectors could be introduced to achieve the target.It has also been officially decided that the introduction of the EU Emissions Trading System for road transport, buildings, and other sectors (ETS2) will be postponed by one year, from 2027 to 2028. Fuels such as petrol and natural gas will thus only be included in the system from 2028 onwards, to temporarily mitigate sharp price increases for refuelling and heating.Background: The planned emissions trading system will make fossil fuels more expensive each year. In Germany, fuel pricing has been regulated since 2021 under the Fuel Emissions Trading Act (BEHG). In practice, this acts as a CO2 tax, starting at 25 euros per tonne and projected to reach around 60 euros by 2026. This fixed-price mechanism will transition into a free European trading system from 2028, formally known as EU ETS2 (Emissions Trading System).EU ETS2 covers CO2 emissions from both transport and buildings. What is burned must first be purchased. Suppliers, such as mineral oil companies, are required to auction certificates for the CO2 emissions from their products; the end customer is not directly involved in the trading. However, the number of these certificates is limited and will be reduced by 5.1% annually. This scarcity will lead to continuously rising CO2 prices unless countermeasures are taken.consilium.europa.eu
