Finance
EU considers more flexible climate target in hunt for deal, draft shows
Published by Global Banking & Finance Review®
Posted on October 26, 2025
3 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on October 26, 2025
3 min readLast updated: January 21, 2026
EU negotiates a 90% emissions cut by 2040, with flexibility to review targets every two years, balancing industry needs and climate goals.
By Kate Abnett
BRUSSELS (Reuters) -European Union countries are negotiating proposals to give industries a more flexible path to meeting climate goals, a draft EU document showed, as the bloc attempts to win support from governments for a new 2040 emissions-cutting target.
The EU is negotiating a legally-binding target to cut net greenhouse gas emissions 90% by 2040, and is racing to approve the goal before world leaders gather for the U.N.'s COP30 climate summit on November 6.
However, months of negotiations have so far not yielded a deal, as some governments have pushed back on green measures, and raised concerns over how to finance the low-carbon transition alongside priorities like defence and revitalising industries.
A draft EU compromise proposal, seen by Reuters, showed countries have drafted plans that would allow the EU to review the 2040 target every two years - potentially allowing Brussels to weaken the goal in future.
The draft would also fix into law a commitment that if forests absorb less CO2 emissions than expected, or technologies to remove CO2 from the atmosphere develop slower than planned, other industries will not be forced to cut emissions faster to deliver the 2040 goal.
"Possible shortfalls in one sector should not be at the expense of other sectors," said the draft, dated October 25.
NO CHANGE ON CARBON CREDITS QUOTA
The new compromise reflects demands made by EU government leaders at a summit last week, where they debated the "enabling conditions" needed to meet green goals while avoiding higher energy bills for citizens and supporting businesses grappling with cheap Chinese imports and U.S. tariffs.
EU countries' ambassadors will negotiate the proposal next week, before their climate ministers attempt to approve the target on November 4.
The draft proposal did not change the 90% emissions-cutting target, nor the 3% of the goal that can be met by buying foreign carbon credits, rather than domestic efforts - although countries are still debating this. French President Emmanuel Macron said last week credits could potentially cover up to 5%.
In an attempt to win over sceptical governments, the European Commission has promised changes to other green measures, including price controls in an upcoming carbon market for transport fuels, as demanded by Poland and the Czech Republic. Brussels is also considering weakening its 2035 combustion engine car ban after pressure from Germany and Italy.
A spokesperson for Denmark, which holds the rotating EU presidency and drafted the document, declined to comment.
(Reporting by Kate Abnett;Editing by Helen Popper)
Emissions refer to the release of greenhouse gases, such as carbon dioxide and methane, into the atmosphere, contributing to climate change.
Sustainability is the practice of meeting current needs without compromising the ability of future generations to meet their own needs, often focusing on environmental, social, and economic factors.
Carbon credits are permits that allow the holder to emit a certain amount of carbon dioxide or other greenhouse gases, often used in cap-and-trade systems.
The EU's 2040 emissions goal aims to reduce net greenhouse gas emissions by 90% compared to 1990 levels by the year 2040.
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