The Council of the EU and the European Parliament have reached a provisional agreement to amend the European Climate Law, setting a binding intermediate target of a 90% reduction in net greenhouse gas emissions by 2040 compared to 1990 levels. The target is intended to guide the EU’s climate framework after 2030 and contribute to the objective of climate neutrality by 2050.

The agreement introduces a number of flexibilities to support delivery of the target. From 2036, the EU may use high-quality international carbon credits for up to 5% of 1990 emissions, corresponding to domestic emission reductions of 85%. A voluntary pilot phase between 2031 and 2035 may be established to support the development of a high-integrity international credit market. Additional safeguards will apply to ensure the environmental integrity of such credits.

Co-legislators also agreed to postpone the start of the emissions trading system for buildings and road transport (ETS2) by one year, delaying its entry into application from 2027 to 2028.

The agreement further outlines guiding principles for the post-2030 climate framework, including competitiveness, simplification, social fairness, energy security and affordability, support for innovation and investment, and the role of carbon removals and natural sinks. These principles are expected to steer future proposals from the EU Commission.

A reinforced review mechanism will require the EU Commission to assess progress towards the 2040 target every two years, taking into account technological developments, energy prices, competitiveness and the level of removals. Where necessary, the Commission may propose amendments to the Climate Law or additional measures.

The agreement is provisional and subject to formal adoption by both institutions.