Published by Global Banking & Finance Review®
Posted on June 28, 2025
3 min readLast updated: January 23, 2026
Add as preferred source on GoogleThe EU plans to incorporate carbon credits into its 2040 climate target, easing the emissions cuts required from European industries.
By Kate Abnett
BRUSSELS (Reuters) -The European Commission is set to propose counting carbon credits bought from other countries towards the European Union's 2040 climate target, a Commission document seen by Reuters showed.
The Commission is due to propose a legally binding EU climate target for 2040 on July 2.
The EU executive had initially planned a 90% net emissions cut, against 1990 levels, but in recent months has sought to make this goal more flexible, in response to pushback from governments including Italy, Poland and the Czech Republic, concerned about the cost.
An internal Commission summary of the upcoming proposal, seen by Reuters, said the EU would be able to use "high-quality international credits" from a U.N.-backed carbon credits market to meet 3% of the emissions cuts towards the 2040 goal.
The document said the credits would be phased in from 2036, and that additional EU legislation would later set out the origin and quality criteria that the credits must meet, and details of how they would be purchased.
The move would in effect ease the emissions cuts - and the investments required - from European industries needed to hit the 90% emissions-cutting target. For the share of the target met by credits, the EU would buy "credits" from projects that reduce CO2 emissions abroad - for example, forest restoration in Brazil - rather than reducing emissions in Europe.
Proponents say these credits are a crucial way to raise funds for CO2-cutting projects in developing nations. But recent scandals have shown some credit-generating projects did not deliver the climate benefits they claimed.
The document said the Commission will add other flexibilities to the 90% target, as Brussels attempts to contain resistance from governments struggling to fund the green transition alongside priorities including defence, and industries who say ambitious environmental regulations hurt their competitiveness.
These include integrating credits from projects that remove CO2 from the atmosphere into the EU’s carbon market so that European industries can buy these credits to offset some of their own emissions, the document said.
The draft would also give countries more flexibility on which sectors in their economy do the heavy lifting to meet the 2040 goal, "to support the achievement of targets in a cost-effective way".
A Commission spokesperson declined to comment on the upcoming proposal, which could still change before it is published next week.
EU countries and the European Parliament must negotiate the final target and could amend what the Commission proposes.
(Reporting by Kate Abnett, Editing by Timothy Heritage)
The European Commission is set to propose a legally binding EU climate target for 2040, aiming for a 90% net emissions cut from 1990 levels.
The EU plans to allow the use of 'high-quality international credits' from a U.N.-backed carbon credits market to meet 3% of its climate target.
Proponents argue that carbon credits are essential for funding CO2-cutting projects in developing nations, but recent scandals have raised doubts about the effectiveness of some credit-generating projects.
The document indicates that the use of carbon credits will be phased in starting from 2036.
The Commission will add other flexibilities to the 90% target, allowing countries more leeway on which sectors will contribute to meeting the 2040 goal.
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