The European Parliament has voted 413–226 to amend the EU Climate Law, setting a new binding target to reduce greenhouse gas (GHG) emissions by 90% by 2040 compared to 1990 levels.

The vote follows negotiations between Parliament and the European Council, introducing new flexibilities designed to balance climate ambition with economic competitiveness.

From 55% by 2030 to 90% by 2040

The EU Climate Law, originally adopted in 2021, enshrined the bloc’s commitment to climate neutrality by 2050 and an interim target of at least 55% emissions reductions by 2030.

According to the European Commission, the EU had already reduced emissions by 37% by the end of 2023 compared to 1990 levels and remains broadly on track to meet its 2030 goal.

In July 2025, the Commission proposed raising ambition to a 90% reduction by 2040, including limited use of international carbon credits under Article 6 of the Paris Agreement.

Read more: Carbon Capture Policy Stress-Test: What Denmark’s CCS Tender Revealed

Expanded Role for International Carbon Credits

Under the final agreement, international carbon credits may contribute up to 5% of the 2040 target from 2036 onward. This effectively requires at least 85% domestic emissions reductions within the EU.

However, safeguards apply:

Credits cannot be used for emissions covered by the EU’s Emissions Trading System (ETS).

Credits must originate from countries with Paris Agreement-aligned climate targets and policies.

This represents an expansion from the Commission’s initial proposal, which capped the contribution at 3%.

Biennial Review Mechanism Introduced

To address concerns from member states regarding competitiveness and economic impact, lawmakers included a review clause requiring the Commission to assess progress toward the 2040 target every two years.

The assessment will consider:

Scientific developments

Technological progress

Energy prices

Net removals capacity

EU global competitiveness

If necessary, the Commission may propose revisions to the target, including potential adjustments to the 2040 goal.

Explore OneStop ESG Marketplace: Regulation and Compliance

ETS2 Delayed by One Year

The agreement also introduces a one-year delay to the launch of ETS2, the expansion of the EU’s carbon pricing system to additional sectors such as road transport fuels and building heating.

Originally scheduled for 2027, ETS2 will now be postponed, alongside new flexibilities allowing member states to compensate for shortfalls across sectors to meet climate objectives.

Next Step: Council Approval

Before entering into force, the amended Climate Law must receive formal approval from member states in the EU Council.

If adopted, the 90% target will mark one of the most ambitious legally binding mid-century climate commitments globally, reinforcing the EU’s position ahead of the 2050 net-zero deadline.

Explore ESG Solutions on our marketplace - OneStop ESG Marketplace.

Keep abreast of the top ESG Events on OneStop ESG Events.

OneStop ESG Educate: Your go-to source for top ESG courses and training programs tailored to your needs.

Stay informed with the latest insights on OneStop ESG News.

Discover meaningful career opportunities on OneStop ESG Jobs.