EU Climate Target 2040: Assessment of the Commission Proposal

EU 2040 Climate Target: Expert Commentary

On 2 July 2025, the European Commission presented its proposal for the EU’s 2040 climate target as well as for the revision of the European Climate Law. The draft foresees a 90 percent reduction in net greenhouse gas emissions compared to 1990 levels. This is a key milestone on the EU’s path to achieving climate neutrality by 2050. At the same time, however, the proposal includes “flexibilities” that, according to analyses by Oeko-Institut, could weaken the impact of real emission reductions.

In two recent publications – a policy brief and a scientific assessment – Oeko-Institut examines key aspects of the Commission’s proposal:

  • International carbon credits: The proposal allows for the use of international carbon credits equivalent to three percentage points of 1990 emissions. According to the analysis, this flexibility could result in a 30 percent increase in net emissions in 2040. Gross emissions – those not accounting for CO₂ removals – would then be only 80 percent below 1990 levels.
  • Conditions for the use of international credits: Oeko-Institut recommends that Article 6 carbon credits from the Paris Agreement should only be used to go beyond the EU-internal targets, should meet the highest integrity standards, and must be fairly distributed between the EU, partner countries, the UN Adaptation Fund, and a contribution to the atmosphere. Temporary removals – such as those from forestry projects – should not be used to offset fossil fuel emissions.
  • Carbon dioxide removals (CDR) in emissions trading: The Commission proposes that only permanent and domestic CO₂ removals should be credited until 2035. Oeko-Institut welcomes this as an essential measure to ensure genuine emission reductions are not undermined.
  • Cross-sectoral flexibility: Additional flexibility between sectors, as envisaged by the Commission, could jeopardize the EU’s 2050 climate goal. Oeko-Institut therefore calls for strict limits on such flexibility.
“The Commission’s proposal for the 2040 climate target is an important step, but in some crucial areas it relies too heavily on flexibility. Measures such as international carbon credits or CO₂ removals must not result in real emission reductions being sidelined.”
Jakob Graichen
Senior Researcher in the Energy & Climate division
“International carbon credits must not be a substitute for effective climate action within the EU. They should only be used to go beyond ambitious targets, meet the highest quality standards, and be shared fairly with partner countries.”
Dr. Lambert Schneider
Research Coordinator for International Climate Policy

Webinar on the EU Commissions proposal

Oeko-Institut is hosting a webinar titled “The Commission proposal for an EU 2040 climate target – An initial assessment of key issues” to provide a first scientific assessment of the draft proposal.

The webinar provides a preliminary analysis of the key elements of the European Commission's proposal for the new EU climate target for 2040: How ambitious is the new target? What role do international carbon credits under Article 6 of the Paris Agreement play? And how are the land use sector and international aviation and shipping accounted for?

Date: Friday, 4 July 2025, 11:00–12:00 (CEST)

Registration: Register here

Policy Brief „Conditions for Using International Carbon Credits towards the EU’s 2040 Climate Target“

Expert assessment: „The EU's 2040 climate target – Assessment of the proposal by the EU Commission“