In a potential break from its long-standing domestic-only emissions policy, the European Union is considering the use of international carbon credits to help meet its 2040 climate goals. This move could mark a strategic pivot as the bloc seeks to balance climate ambition with economic pragmatism.

The European Commission is reportedly exploring a dual-track approach: allowing a slightly lower domestic emissions cut than the 90% reduction target currently under discussion, while making up the difference through verified international carbon offsets.

“We are sensitive to requests for a bit of pragmatism,” said EU Climate Commissioner Wopke Hoekstra. He reiterated that the 90% reduction remains the Commission’s "starting point" as final policy details are shaped for proposal ahead of summer.

Until now, EU climate targets have been exclusively met through internal measures. Reintroducing international credits — which were banned in 2013 due to quality concerns and market instability — would represent a significant shift.

READ MORE: New York Proposes Mandatory GHG Reporting Ahead of Cap-and-Invest Rollout

Risk and reward of returning to international offsets

Under the proposed framework, EU member states could use credits from projects abroad — such as reforestation or clean energy investments in developing countries — to complement their domestic reductions. This could offer flexibility for industry-heavy nations facing tougher decarbonization paths.

However, the idea is not without opposition. Critics highlight past abuses and the potential for environmental harm.

“The list of scandals linked to international credits is long — fraud, lack of environmental integrity, and the drastic collapse of the EU carbon price,” warned Linda Kalcher, Executive Director of Strategic Perspectives.

International offset credits previously triggered significant volatility in the EU Emissions Trading System (EU ETS), undermining carbon prices and public trust. Their ban more than a decade ago stemmed from the influx of low-quality and poorly verified credits.

This time, however, supporters point to improved global standards. New UN-led frameworks aim to enforce greater transparency and environmental rigor in credit certification, which could allay some of the past concerns.

Geopolitical leverage and climate finance

Advocates of reintroducing international credits argue the move could strengthen the EU’s global leadership in climate diplomacy. By investing in decarbonization efforts beyond its borders, the EU would not only support global climate action but also channel vital climate finance to regions that need it most.

“In my opinion, the countries at the other end of the negotiations would welcome this, because they are badly in need of climate finance,” said Andrei Marcu, Executive Director of the European Roundtable on Climate Change and Sustainable Transition (ERCST).

The EU’s formal 2040 climate target still requires approval from member states and the European Parliament. A detailed proposal from the European Commission is expected before the summer, setting the stage for what could be one of the most consequential climate policy debates in recent EU history.

Explore global carbon market strategies and policy shifts in our ESG Marketplace. Discover innovative climate finance solutions and tools to support decarbonization across borders.

Visit our ESG EVENTS to join the conversation on international offsets and net-zero targets.

Visit our ESG EDUCATE for resources on climate policy, compliance, and carbon accounting.