The Council of the European Union has formally adopted an amendment to the European Climate Law, setting a legally binding target to reduce net greenhouse gas (GHG) emissions by 90% by 2040 compared with 1990 levels. The new intermediate target is intended to strengthen the bloc’s pathway towards achieving climate neutrality across the economy by 2050.
Under the revised framework, from 2036 onwards the EU will allow the use of high-quality international carbon credits for up to 5% of 1990 net emissions to help meet the 2040 target. This means that at least 85% of emission reductions must be achieved within the European Union. The credits must originate from credible emission reduction activities in partner countries and must comply with the principles of the Paris Agreement.
The amended law also outlines key considerations for the European Commission when preparing legislative proposals for the post-2030 period. These include ensuring competitiveness, simplifying regulatory frameworks, maintaining social fairness, strengthening energy security and ensuring affordability during the transition.
Among the measures included in the updated framework is the potential use of EU-based permanent carbon removals to compensate for residual emissions in hard-to-abate sectors under the EU Emissions Trading System (ETS). Permanent removals refer to processes that capture carbon dioxide from the atmosphere and store it in a durable manner.
The legislation also introduces greater flexibility across sectors and policy instruments to support cost-effective implementation of the climate targets. In addition, the start of the second EU emissions trading system (ETS2) covering road transport, buildings and other sectors has been delayed by one year, shifting full operationalisation from 2027 to 2028.
With the Council’s formal adoption, the amended regulation now represents the final step in the legislative process. The law will enter into force 20 days after publication in the Official Journal of the European Union and will apply directly across all EU member states. The European Commission is expected to bring forward additional proposals to implement the binding 2040 target.
The revised legislation also mandates a review of the European Climate Law every two years. These assessments will consider scientific and technological developments, EU competitiveness, energy prices, the availability of carbon removals and the role of international carbon credits in meeting post-2030 climate goals.
The European Commission may propose further amendments or additional policy measures where necessary to support competitiveness and long-term economic prosperity while maintaining the EU’s climate ambition.
First adopted in 2021, the European Climate Law provides the legal foundation for the EU’s long-term climate policy in line with the Paris Agreement. It established a binding objective of achieving climate neutrality by 2050 and a 2030 target of reducing net emissions by at least 55%.
Following the publication of the European Commission’s communication on “Europe’s 2040 climate target” in February 2024, the Commission formally proposed the new target in July 2025 through an amendment to the climate law. In October 2025, EU leaders provided strategic guidance on the framework for the 2040 target, emphasising the need to balance climate ambition with economic competitiveness and a socially fair transition for industry and citizens.
