Friday, January 9, 2026
The European Union has made significant progress in its commitment to climate action with a provisional political agreement on a legally binding 2040 climate target. The European Parliament and EU Member States reached consensus on a target of 90% reduction in net greenhouse gas (GHG) emissions by 2040, compared to 1990 levels. This ambitious goal is a vital step towards achieving climate neutrality by 2050, and the deal has been hailed as a major milestone in the EU’s Clean Energy Transition.
The agreement includes key provisions that will help meet the 2040 emissions target while promoting industrial competitiveness, energy security, and clean energy solutions. One of the most notable aspects is the ability to use high-quality international credits to reach the 90% emissions cut, with a potential contribution of up to 5% of net GHG emissions from 1990 levels. This will allow EU nations to access global markets while ensuring ambitious domestic action.
The 2040 climate target sets a clear and flexible path towards a decarbonised European economy. The deal outlines several mechanisms that allow for both flexibility and cost-efficiency in achieving the reduction goals. Crucially, the agreement allows for domestic permanent removals within the EU Emissions Trading System (EU ETS) to compensate for hard-to-abate emissions in the later years of the target period.
The use of international credits will start in 2036, but only after a pilot period from 2031–2035. This ensures that the system operates in alignment with Paris Agreement safeguards. The implementation of this system will be closely monitored to avoid any risk of greenwashing and ensure that emissions reductions are genuine and impactful.
Another important feature of the agreement is the introduction of greater sectoral flexibility. This will allow EU Member States to meet their targets by compensating for shortfalls in one sector without compromising overall progress. The approach aims to provide a pragmatic and socially balanced transition to a green economy while considering the realities of today’s economic and geopolitical landscape.
The EU’s climate legislation will not stop at the 2040 target. The agreement provides guidance for the post-2030 framework, which will include a focus on the competitiveness of European industries. The framework will incentivise clean technologies, encourage renewable energy adoption, and promote technology neutrality, ensuring a balanced and inclusive transition for all EU Member States.
The biennial assessments introduced in the agreement will allow for continuous evaluation of the EU’s progress towards its climate goals. These assessments will be based on the latest scientific evidence, technological advancements, and evolving global market dynamics. The focus will also be on ensuring that the EU’s global competitiveness remains intact, especially in light of shifting energy prices and geopolitical pressures.
The review provision ensures that future evaluations will take into account the impacts on EU industries’ competitiveness, energy prices, and the progress of EU emissions removals. This ongoing process of review and adaptation ensures that the EU’s climate strategy remains both ambitious and realistic.
The agreement also involves a slight delay in the application of the EU Emissions Trading System (ETS) for buildings, road transport, and small industries. Initially planned for 2027, the system’s expansion will now begin in 2028. However, the monitoring, reporting, and verification requirements under ETS2 will proceed as scheduled from 2025. This delay aims to provide greater flexibility and ensure that the expansion of the ETS system is achieved in the most efficient and cost-effective manner possible.
With the provisional agreement reached, the next steps involve the formal adoption of the updated climate law by the European Parliament and the Council of the EU. Once adopted, the amended EU Climate Law will be published in the Official Journal and come into force. This will solidify the EU’s legally binding commitment to its 2040 emissions target, helping businesses, investors, and policymakers align their strategies with long-term climate goals.
The revised European Climate Law will provide the certainty needed for EU industries to continue their transition to cleaner technologies while ensuring the competitiveness of European businesses. The commitment to 90% emissions reduction by 2040 represents a clear signal to the global community that Europe is serious about driving climate action and environmental sustainability.
By securing this legally binding 2040 target, the EU has taken a crucial step towards a sustainable and low-carbon future. The agreement will accelerate the transition to clean energy, encourage innovation in green technologies, and foster job creation in emerging industries. With a clear and flexible pathway laid out, Europe is poised to lead the way in tackling climate change, improving energy independence, and driving economic growth while protecting the planet for future generations.
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Tags: decarbonisation, EU 2040 climate target, EU climate action, European Climate Law, renewable energy solutions, woodworking and processing, woodworking industry
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