EU Nations reach deal on 2040 climate goal after key concessions

European Union member states sealed a deal to reduce emissions by 90 per cent through 2040 compared with 1990 levels, a climate win that required some proposals to be watered down. 

The agreement — announced after marathon talks among environment ministers in Brussels — was only reached after a number of concessions were made. That included allowing countries to claim a greater share of their emissions reductions by buying international carbon credits.  

The deal paves the way for the EU to submit an updated climate pledge to the United Nations at the COP30 summit. That draws a sharp contrast with the administration of President Donald Trump, who is once again pulling the US out of the landmark Paris agreement and last month throttled a plan to adopt a global carbon tax for the shipping industry. 

 

Even within the EU, the broad consensus on climate action that prevailed five years ago has fractured, giving way to trade protectionism and policies that prioritize economic growth. 

“I think it is a sensible compromise in a difficult political landscape,” said Jahn Olsen, head of environmental products at Energy Aspects. “Lets be clear, we have a European Parliament more focused on competitiveness than climate at the moment, and member states are concerned about deindustrialisation. Something had to give.” 

Despite concessions to make the green transition more affordable for consumers and industries, Hungary, Slovakia and Poland opposed the deal. There was no formal vote, but Bulgaria and Belgium also abstained, while Austria’s support came with certain caveats.  

Still, Denmark, which holds the EU’s rotating presidency, was upbeat on the agreement. 

“The target is in line with science. It’s also there to give guidance to the industry,” said Lars Aagaard, the Danish climate minister. “We have now the foundations for shaping the future of our continent, a continent that takes responsibility for climate seriously.” 

Dozens of world leaders, including from Europe, are meeting in Belem, Brazil, on Thursday for two days of climate talks. Formal negotiations begin at the UN’s annual COP30 summit in the city on Nov. 10. 

A key element of the EU’s climate talks on Tuesday was a push to increase the use of international credits generated under Article 6 of the Paris accord, according to people with knowledge of the talks. The limit will be increased to 5 per cent of the bloc’s baseline net emissions in 1990, compared with 3 per cent originally proposed by the European Commission.  

Use of the credits would start with a five-year pilot phase in 2031, five years earlier than sought by the commission, and won’t be limited to sectors outside the EU carbon market. 

That means that the EU will be obliged to reduce emissions domestically by 85 per cent and rely for the remaining 5 per cent on cheaper imported credits, which companies may also be able to use to comply under the Emissions Trading System. 

“This is a vote of confidence in international credits, highlighting the key role the EU plays in climate finance,” said Enric Arderiu, head of environmental products at trader Mercuria Energy Group Ltd. “Given timeframes for investments, clarity is needed on eligibility requirements to ensure credit supply develops and provides the cost effective flexibility that the EU requires to achieve the 2040 target.” 

The EU already has two binding targets: net zero emissions in 2050 and a 55 per cent cut by 2030 compared with 1990 levels.  

Tuesday’s agreement will be the negotiating position of member states for the next stage of the legislative process: talks with the European Parliament and the European Commission about the final shape of the target.  

To make the green transition more affordable for consumers and industries, member states won some assurances and flexibilities from the commission even before the ministerial meeting. Those included trade protections for steel and language on technical neutrality, a term often used to open the door to more nuclear power as demanded by France. 

Additional concessions were offered during the negotiations on Tuesday, the people said. They include a one-year delay to a new carbon market for transport and heating fuels to 2028.  

A key concern for German industries was also addressed, as member states called for a slower phase out for free allocations of carbon allowances from 2028 onward. 

A group of countries, including Poland, had demanded the postponement of the cap-and-trade program on concerns it will boost energy prices and trigger a backlash from voters. 

A deal on the 2040 climate target was the basis for the EU to agree on a new pledge, known as a Nationally Determined Contribution, to the UN. The bloc has already missed key deadlines to update its NDC because of divisions among member states.  

On Wednesday, it settled for a range of emissions cuts between 66.3 per cent and 72.5 per cent to be presented as its updated green commitment.