EU Sets Legally Binding 90% Emissions Reduction Target by 2040

The European Commission has proposed a significant EU Climate Law overhaul, setting legally binding objectives to cut net greenhouse gas emissions by 90% in 2040 compared to 1990 levels. The action is a significant landmark for the bloc's climate policy and reaffirms its commitment to becoming climate-neutral by 2050.

The new 2040 target stretches the EU's current 2030 target of reducing emissions by at least 55%. According to the Commission, the bloc is likely to achieve that target, and this new proposal would like to put on the table a precise roadmap for beyond 2030. The revised climate goal is outlined as a central pillar in Commission President Ursula von der Leyen's political guidelines for 2024–2029, to give long-term policy continuity and predictability to governments, companies, and investors throughout the European Union.

The updated law establishes provisions that aim to facilitate economic flexibility among members and promote least-cost approaches to emissions reduction. They are facilitated through the introduction of limited use of high-quality global carbon removals from 2036, more flexibility on domestic carbon removals in the EU Emissions Trading System, and cross-sectoral balancing measures under which overachievement in one sector balances underachievement in another.

This is part of an overall strategic focus on fairness, flexibility, and impartiality on technology. The Commission mentioned competitiveness and energy security as well as climate objectives in addition to highlighting increasing industry demands for predictability in planning regulations.

In addition to the emissions reduction objective, the Commission has published a communication setting out early measures under its Clean Industrial Deal. The policy is focused on coupling decarbonisation and economic development alongside industrial competitiveness. Measures under the Deal consist of a new state aid regime in an attempt to drive green investment, streamlining the Carbon Border Adjustment Mechanism (CBAM), and tax relief for driving clean manufacturing and clean energy technologies.

The EU has also indicated more substantial financial and structural support for grid infrastructure, Power Purchase Agreements (PPAs), and high priority sectors like chemicals, which will have stringent decarbonisation obligations. Pilot implementation of an Industrial Decarbonisation Bank and future budget outlays will be key to speeding up the clean energy transformation throughout the region.

In shifting the 90% target, the Commission aims to cement its leadership position in the global climate space, particularly in preparation for the COP30 United Nations climate conference to be hosted by Brazil in November 2025. The new target will also support the EU's new Nationally Determined Contribution (NDC) under the Paris Agreement that the bloc will unveil in collaboration with the Council Presidency.

The Commission has drawn on a mix of stakeholder consultations, IPCC scientific input, and the EU Scientific Advisory Board on Climate Change proposals to develop its policy. These contributions aim to put forward a target for emissions that is scientifically sound and economically feasible.

The legislative proposal is now at the formal negotiation phase with the European Parliament and the Council under the regular legislative process. Following adoption, the amendment will revise the 2021 European Climate Law, which actually does enshrine the 2050 net-zero goal and includes mid-century targets such as the suggested one for 2040.

In May 2025, the Commission issued a report on National Energy and Climate Plans (NECPs) and stated that the EU as a whole is getting close to the 2030 deadline. The progress underpins the deeper cuts needed in the next decade. The Commission is of the view that the 2040 deadline will be an important landmark for deciding the long-term climate and energy plan of the EU and allowing member states to prepare for the transition.

An ongoing decrease in greenhouse gas emissions remains an unavoidable prerequisite of climate stability, and the EU offer aims to show compliance with global scientific community as well as a strategy of earthy measures for the transformation of economic branches. Most emissions-generating branches, like steel, chemistry, and transportation, will have to be provided with special assistance in decarbonising depending on the target.

The updated climate plan comes at a time when energy security and geopolitical issues continue to be key drivers of the EU's general energy policy. Diversification of renewable clean energy sources, increasing energy efficiency, and reducing the importation dependence on fossil fuels are key pillars of the block's climate resilience and economic competitiveness strategy.
While ambitious in its vision, success will be dependent on implementation success, coordination among member states, and ongoing low-carbon technology innovation. The EU must balance possible trade-offs between energy affordability, growth, and the protection of the environment as it works to balance country interests with collective climate obligations.

The 2040 target, when adopted by a formal act, will spur forthcoming EU climate policy and finance initiatives. It will serve as a benchmark for public and private investment, urban planning, industrial policy, and research and innovation.

Globally, the EU's move will also influence other big economies that are getting ready to attend COP30 and reviewing their own Paris Agreement climate commitments. Under growing global pressure for effective action on climate, the EU's legislation can become a model for other governments to align national law with long-term climate goals.

Source: Article by Nirmal Menon | Published 4 July 2025

Credits: Photo credit – Picture Alliance / Panama Pictures