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EU strikes deal on climate target to cut emissions by 90% by 2040
Published by Global Banking and Finance Review
Posted on December 9, 2025
2 min readLast updated: January 20, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on December 9, 2025
2 min readLast updated: January 20, 2026
The EU has set a legally binding target to reduce emissions by 90% by 2040, using carbon credits for 5% of cuts, aiming for net-zero by 2050.
By Disha Mishra and Kate Abnett
Dec 10 (Reuters) - The European Union agreed on Wednesday to set a legally binding climate target to reduce greenhouse gas emissions by 90% from 1990 levels by 2040, and buy foreign carbon credits to cover 5% of the emissions cuts, goals that fell short of its original plan.
Negotiators from EU countries and the European Parliament reached the deal in the early hours of Wednesday, they confirmed in separate statements.
In practice, the target will require an 85% emissions reduction from European industries, and payment to developing countries via carbon credits to cut emissions on Europe's behalf to make up the rest.
The goal goes beyond most other major economies' emissions-cutting pledges, including China's. Still, it fell short of that recommended by the EU's climate science advisers and was weaker than Brussels' original plan for the goal, reflecting disagreement between EU governments over the speed and cost of their green agenda.
"The target delivers on the need for climate action while safeguarding our competitiveness and security," said Danish climate minister Lars Aagaard, who negotiated the deal on behalf of EU governments.
The EU also agreed to consider the option in future to use international carbon credits to meet a further 5% of its 2040 emissions reductions - potentially further softening the domestic efforts required.
The target, which is designed to keep Europe on track for its pledge to have net-zero emissions by 2050, represented a political compromise after months of negotiations.
Countries including Poland, Slovakia and Hungary had opposed deeper CO2 cuts as too strenuous for industries struggling with high energy costs, cheaper Chinese imports and U.S. tariffs.
Other EU members, including the Netherlands, Spain and Sweden, cited worsening extreme weather events and the need to catch up with China in manufacturing green technology as reasons to set a high target.
To win over opponents, the EU also agreed to delay the launch of a politically sensitive carbon price for fuel by one year, to 2028.
The Parliament and EU countries must each approve the target for it to become law - usually a formality that waves through pre-agreed deals.
(Reporting by Kate Abnett and Disha Mishra; Editing by Chris Reese, Christopher Cushing and Muralikumar Anantharaman)
Greenhouse gas emissions refer to gases that trap heat in the atmosphere, contributing to global warming and climate change. Common greenhouse gases include carbon dioxide, methane, and nitrous oxide.
Carbon credits are permits that allow the holder to emit a certain amount of carbon dioxide or other greenhouse gases. They can be bought and sold to help companies meet their emissions reduction targets.
The European Union's climate target aims to reduce greenhouse gas emissions by 90% from 1990 levels by 2040, with a goal of achieving net-zero emissions by 2050.
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