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The EU Commission has proposed to set a 2040 EU climate target of 90% reduction in net greenhouse gas (GHG) emissions, compared with a 1990 baseline. As part of the draft, “high quality international carbon credits” will be able to be used from 2036 as part of an effort to enhance the policy’s flexibility.
The proposal also includes the use of domestic permanent removals in the EU Emissions Trading System (ETS) and the addition of greater flexibilities across sectors “to help achieve targets in a cost-effective and socially fair way.” Projects such as direct air carbon capture and storage (DACCS) and bioenergy with carbon capture and storage (BioCCS) were explicitly called out in the draft legislation.
While “real and timely domestic GHG emission reductions” remain central to the EU’s climate action, the proposal said it can be “complemented by the enhancement of carbon removals.”
The Commission proposes that starting from 2036 a limited contribution of 3% of 1990 EU net emissions can be used towards the EU 2040 target in line with the Paris Agreement’s accounting rules. Net EU emissions were around 5 billion tCO2e in 1990, so the 3% allowance could mean Article 6 demand from the EU reaching around 150 million tCO2e.
Any use of carbon credits within this framework will be subject to an impact assessment, as well as future EU rules as to how and when they can be used. This will include high integrity criteria, conditions on origin, timing and use, among other things.
Alongside approving the use of credits, the proposal noted the “importance of accelerating and strengthening the right enabling conditions” to support the 90% target, which includes a competitive European industry, a fair transition and a level playing field with international partners.
Wednesday’s draft builds on the EU’s legally binding goal of reducing GHG emissions by at least 55% by 2030, which aims to work towards a fully decarbonized European economy by 2050.
The EU Commission also published communications on the progress of its Clean Industrial Deal on Wednesday. Key deliveries included the Clean Industrial Deal State Aid Framework adopted last week and the simplification of the Carbon Border Adjustment Mechanism in mid-June.
Recommendations on tax incentives to encourage investments in clean technology and industrial decarbonization were also recently published.
Going forward, the EU Commission’s 2040 climate target proposal will now be submitted to the European Parliament and Council for legal adoption.
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