EU 2040 Climate Target

The Council of the European Union (the “Council”) has approved the amended European Climate Law (the “European Climate Law”) and published Regulation (EU) 2026/667 (the “Regulation”) in respect of the 2040 intermediate climate target.  The European Climate Law, with direct effect in Ireland, was first adopted in 2021 and established the EU’s long-term climate policy framework in line with the Paris Agreement.

Background

The European Climate Law sets objectives for achieving climate neutrality by 2050 and reducing net emissions by at least 55% by 2030.  The Regulation introduces a 2040 intermediate climate target.

Following the ‘Europe’s 2040 climate target’ communication in February 2024, the European Commission (the “Commission”) proposed the new climate target on 2 July 2025.  EU leaders stressed the need for a balanced approach – one that protects and boosts the EU’s competitiveness while also ensuring a socially fair transition.  They also called for a framework to support the target.

Key Measures under the 2040 Intermediate Target

• Binding 2040 Target: a 90% reduction in net greenhouse gas emissions compared to 1990 levels.
• Climate Neutrality: a strengthened pathway to achieving climate neutrality by 2050 across all sectors of the economy.
• Use of International Credits: From 2036, high-quality international credits under Article 6 of the Paris Agreement may be used up to a limit of 5% of 1990 EU net emissions, ensuring that at least 85% of emissions reductions are achieved within the EU, consistent with the Paris Agreement.
• Policy Focus: The Commission must consider competitiveness, simplification, social fairness, energy security and affordability in its post-2030 legislative proposals. The amended European Climate Law also calls for:
  • EU-based permanent carbon removals to compensate for residual hard-to-abate emissions under the EU emissions trading system; and
  • enhanced flexibility within and across sectors and instruments, to support cost-effective and simplified achievement of targets.
• ETS2 Timeline Change: The start date for EU emissions trading system for road transport, buildings and other sectors to be fully operational (set out in Chapter IVa of Directive 2003/87/EC) has been postponed until 2028 (from the previously anticipated start date of 2027).

Next Steps

The amended regulation was published in the Official Journal of the EU on 18 March 2026 and comes into force 20 days later on 7 April 2026.

From 6 March 2027 and every two years thereafter, the European Climate Law will undergo review.  Based on scientific evidence and technological developments, the Commission will assess the climate law taking into account the above policy considerations.  Where necessary, the Commission will propose revisions to the law or additional measures to support competitiveness and long-term prosperity.

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