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ARTICLE · 09 JULY 2025

EU 2040 Climate Target And Carbon Credits—what's Changing?

A&O Shearman
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Today, the European Commission proposed an amendment to the EU Climate Law reviewing the 2040 climate targets that first enshrined climate neutrality by 2050...

European UnionEnergy and Natural Resources
Gauthier van Thuyne
Gauthier van Thuyne
Jochem Spaans
Jochem Spaans
Udo Herbert Olgemöller
Udo Herbert Olgemöller
Arthur Sauzay
Arthur Sauzay
Romaric Lazerges
Romaric Lazerges
Mario Garcia
Mario Garcia
Marinus Winters
Marinus Winters
Stéphanie Dalleur
Stéphanie Dalleur
Carole Schmidt
Carole Schmidt
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Today, the European Commission proposed an amendment to the EU Climate Law reviewing the 2040 climate targets that first enshrined climate neutrality by 2050—and with it, a structural shift in how climate action will be measured and financed in the EU. At the heart of the draft proposal:

  • A 90% net emissions reduction target (vs. 1990 levels) by 2040 would be implemented.
  • International carbon credits would be introduced, which could be used by member states and companies to cover up to 3% of that target.
  • Use of credits would be allowed from 2036 onwards, aligning with the Article 6 mechanism of the Paris Agreement. The origin, quality criteria and other conditions concerning the acquisition and use of any such credits shall be regulated in union law.

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