Brussels – March 6, 2026
The European Union took a decisive step toward long-term climate neutrality on Thursday when member state representatives formally endorsed a binding target to reduce net greenhouse gas emissions by 90% by 2040 compared with 1990 levels. The decision, announced by the Council of the European Union, amends the European Climate Law and marks the final legislative milestone in enshrining the ambitious 2040 goal into EU primary legislation.
The endorsement follows more than two years of negotiations, scientific assessments by the European Commission, and intense debates among member states over the feasibility, economic implications and fairness of the target. The 90% reduction—measured in net terms (after accounting for carbon removals and limited international credits)—builds on the EU’s current legally binding commitment to cut emissions by at least 55% by 2030 compared with 1990 levels and its overarching objective of achieving full climate neutrality by 2050.
“The Council’s agreement today locks in a clear, ambitious and realistic trajectory toward climate neutrality by mid-century,” said EU Climate Action Commissioner Wopke Hoekstra in a joint statement with the rotating Council presidency (held by Poland in the first half of 2026). “This target sends a strong signal to investors, businesses and citizens that the EU is committed to leading the global transition to a sustainable, competitive and resilient economy.”
Key Elements of the 2040 Target
Under the amended Climate Law:
The EU must achieve a net reduction of greenhouse gas emissions of 90% by 2040 relative to 1990 levels across all sectors of the economy, including transport, buildings, agriculture, industry, land use, land-use change and forestry (LULUCF).
From 2036 onward, member states will be allowed to use high-quality international carbon credits to cover up to 5% of the 1990 baseline emissions (equivalent to roughly 200 million tonnes of CO₂-equivalent). This means at least 85% of the required reductions must be delivered domestically within the EU.
International credits must originate from verified emissions-reduction activities in partner countries and must fully align with the objectives of the Paris Agreement, including corresponding adjustments to avoid double-counting and robust environmental integrity safeguards.
The legislation includes several “flexibilities” designed to protect industrial competitiveness and ensure a just transition. These include targeted support for energy-intensive industries exposed to international competition, enhanced funding through the EU Innovation Fund and Just Transition Mechanism, and provisions allowing limited banking of over-achievements from the 2030s into the 2040 target period.
The European Commission originally proposed the 90% target in February 2024 following advice from the independent European Scientific Advisory Board on Climate Change, which concluded that a 90–95% net reduction by 2040 was necessary to remain on a credible pathway to net zero by 2050 while respecting the EU’s share of the global carbon budget.
Political and Economic Context
Thursday’s formal adoption by the Council comes after the European Parliament gave its approval in January 2026 and concludes a trilogue negotiation process between the Commission, Parliament and Council. While the 90% figure represents a compromise—some member states (notably Poland, Hungary and the Czech Republic) had pushed for greater flexibility and a lower headline target, while others (including Germany, France, the Netherlands and the Nordic countries) advocated for 95% or higher—the final text was adopted by qualified majority.
Industry groups, including BusinessEurope and Eurofer, welcomed the inclusion of competitiveness safeguards but reiterated concerns about the pace of decarbonisation and the risk of carbon leakage without stronger global alignment on carbon pricing. Environmental organisations, such as Greenpeace and the European Environmental Bureau, welcomed the target but criticised the 5% international credit allowance and certain flexibilities as potential loopholes that could undermine domestic ambition.
The decision strengthens the EU’s position in international climate negotiations ahead of COP31 in Brazil later this year. It also provides regulatory certainty for the next phase of key policies, including revisions to the Emissions Trading System (ETS), Effort Sharing Regulation, Renewable Energy Directive, Energy Efficiency Directive and Carbon Border Adjustment Mechanism (CBAM).
Next Steps
The amended European Climate Law will now be published in the Official Journal of the European Union and enter into force 20 days later. Member states will be required to submit updated National Energy and Climate Plans (NECPs) by 2029 that reflect the 2040 target, with interim milestones and sector-specific trajectories.
The European Commission is expected to table further legislative proposals in 2026–2027 to operationalise the 2040 goal, including possible reforms to the LULUCF sector, agriculture, and maritime transport emissions, as well as enhanced funding for carbon dioxide removal technologies and just transition measures.
With the 90% target now legally binding, the European Union has positioned itself as one of the most ambitious major economies in setting mid-century climate objectives. Whether the bloc can deliver on the target while preserving industrial competitiveness and social cohesion will be one of the defining political and economic questions of the coming decade.
