EU May Use Global Carbon Credits For 2040 Climate Goal

The European Commission is considering permitting international carbon credits to be used to achieve the European Union's 2040 climate target, a decision that might relieve pressure on local businesses but also raise questions about the authenticity of the EU's climate direction. EU Climate Commissioner Wopke Hoekstra is currently debating this plan with legislators and member states in the face of internal opposition and increasing political pushback on the EU's aggressive green agenda. Sources close to the situation said so.

Originally, the Commission had intended to set a goal for reducing net greenhouse gas emissions by 90% by 2040 relative to 1990 levels. It did, however, miss last month's proposal deadline, referring to political opposition and continuous consultations. Especially given worldwide trade tensions, U.S. tariffs, and a surge of more affordable imports some say are damaging EU businesses, climate policy is more and more being judged against other urgent matters including national security and economic competitiveness.

Given these pressures, the Commission is currently considering different options to achieve the 2040 target, including a mix of reduced domestic emissions goal and use of international carbon credits to close the gap. Under this approach, nations would be permitted to fund global emissions-reducing schemes such tree rehabilitation in Brazil or renewable energy schemes in Africa and claim the carbon savings to their own environmental goals. This marks a major departure from present EU climate policy, which demands that goals be met only by domestic measures.

Though the Commission has not formally announced the consideration of international credits, Hoekstra recently admitted the Commission would accept "a bit of pragmatism" as talks progress, even if the 90% target remains the "starting point." A formal proposal is slated to be forthcoming prior to the summer, he has declared, and talks with member countries as well as the European Parliament would be crucial to achieving the goal.

Though hugely debated, the concept of using international carbon credits is not novel. Supporters contend that it could direct much required climate funding for developing nations and improve worldwide cooperation on climate change; opponents claim it might damage the EU's integrity. Past encounters with carbon markets have been fraught with issues. The European Union collapsed its carbon price in response to a flood of inexpensive, subprime loans early in the 2010s; thereafter, in 2013, the EU outlawed international credits from its Emissions Trading System (ETS). Many of those credits were later determined to offer little or no genuine environmental benefit, which resulted in general disapproval of the methods validate and track emissions reductions.

Warning against repeating past errors came from Strategic Perspectives think tank's executive director, Linda Kalcher. "Fraud risks, low environmental integrity, and market volatility were highlighted by her." The list of scandals connected to international credits is long, she said, advising that any move in this path must be supported by strong protections to guarantee that carbon credits reflect actual and checkable cuts in emissions.

Others contend that although there are worries, bringing back carbon credits—this time with more stringent monitoring and within the context of a U.N.-backed world market—could enhance openness and accountability and offer a fresh source of financing for climate initiatives in developing nations. Andrei Marcu, executive director of the European Roundtable on Climate Change and Sustainable Transition (ERCST), suggested that such a move might strengthen the EU's position in global climate negotiations. "In my opinion, the countries on the other side of the talks would welcome this since they really need climate cash," he added.

The 2040 climate target of the EU will ultimately look fuzzy. European Parliament, where views differ, will have to acknowledge any proposal by the Commission secured by both the member states of the EU. Though some legislators and governments advocate for flexibility to safeguard local businesses and economies, others insist that aggressive domestic decarbonization is absolutely necessary for the long-term viability of the EU and for its world climate leadership.

The balance between environmental integrity, economic pragmatism, and international solidarity will decide whether international carbon credits become a main element of the next major climate milestone of the European Union as talks go forward.