EU member states in the European Council voted on Thursday to approve amendments to the EU Climate Law requiring the EU to reduce greenhouse gas (GHG) emissions by 90% by 2040, while introducing the ability to utilize carbon credits to achieve its climate goals.
The green light by EU states marks the last major step towards the final adoption of the amended Climate Law, following the approval of the changes last month by lawmakers in the European Parliament.
The EU Climate Law was initially adopted in 2021, setting into legislation the EU goal to reach climate neutrality by 2050, as well as the EU’s initial interim target to reduce net GHG emissions by at least 55% by 2030 compared to 1990.
In order to set its next interim target, the European Commission released a proposal to amend the law in July 2025, introducing a new target to reduce GHG emissions by 90% by 2040, and adding the ability for international carbon credits under Article 6 of the Paris Agreement to be used from 2036 to contribute up to 3% of the 90% reduction target.
In order to come to an agreement to allow for the adoption of the new target, however, the European Parliament and Council required the introduction of several flexibilities in the Climate Law, including allowing for the use of international carbon credits to account for up to 5% of the GHG reductions, and requiring the Commission to conduct a review every 2 years, which could result in changes to the target in the future, based on factors including energy prices and technological progress.
In addition to approving the new climate target, the amended Climate Law adopted by the Council also includes a one-year delay to the EU’s revision to the ETS, or ETS2 to 2028. Initially planned to be launched in 2027, ETS2 will extend the EU’s carbon pricing system to new sectors, including fuel used for road transport and for heating buildings. The agreement between Parliament and the Council also added flexibilities to ETS2, including providing member states with the ability to compensate for shortfalls within individual sectors to meet climate goals.
Maria Panayiotou, Minister for Agriculture, Rural Development and Environment for Cyprus, which currently holds the rotating Presidency of the Council, said:
“The European Union remains committed to leading the global fight against climate change while protecting our competitiveness and ensuring no one is left behind. Today’s adoption of the landmark 2040 climate target will give industry, citizens and investors the reassurance they need for the clean transition in the decade ahead.”
With the approval by both legislative bodies now in place, the amended Climate Law will be published in the EU’s official journal, will enter into force 20 days after publication.
