EU weakens its 2040 climate goal with an international carbon credits loophole
“EU’s new Climate Law has opened the door to a dangerous expansion of the offsets industry.”
After months of delays and political wrangling, the EU last week announced its new climate target. The 2040 target aims to reduce emissions in the EU by 90% compared to 1990. This is the low end of the recommendation by the EU’s scientific advisory board on climate change. And the 90% target has now been weakened by allowing 5% of emissions to be “offset” by international carbon credits.
The EU’s scientists advised against allowing carbon credits partly because buying carbon credits would divert money away from much-needed investment to decarbonise European industries.
This climate deal will allow Big Polluters in the EU to buy hundreds of millions of international carbon credits under Article 6 of the Paris Agreement. Instead of implementing the urgently needed structural changes to decarbonise their operations in the EU, corporations will be allowed to outsource their responsibility for the climate crisis to other countries.
In July 2025, the European Commission proposed allowing 3% of the reduction target to be met by carbon credits. The decision to increase this to 5% makes an already dangerous loophole even worse.
France and Portugal pushed for the 5% carbon credits figure. Poland and Italy argued for 10%.
And the EU climate deal includes a the option of making things even worse. Reuters reports that,
The EU also agreed to consider the option, in future, to use international carbon credits to meet a further 5% of the 2040 emissions reductions — potentially shaving another 5% off the domestic target.
The target will be reassessed every two years. The EU will consider whether the target is impacting the economy and causing high energy prices, with the option of allowing countries to buy even more carbon credits.
The European Commission adopted the EU Climate Law in 2021, which has a target of “net zero” by 2050. The new climate deal is a revision to the Climate Law.
Ottmar Edenhofer chairs the EU’s scientific advisory board on climate change. “If the targets are constantly being watered down via the revision clause, that’s not a good idea, because then the 2050 target will also not be achievable,” Edenhofer told Politico.
Billions for carbon credits
Trishant Dev, of the Indian think-tank Centre for Science and Development told Climate Home News that 5% “may seem small compared to the EU’s overall emissions cuts, but in absolute terms it represents a vast volume of offsets, and therefore, massive investments in offset projects.”
It could result in the EU spending as much as US$57 billion a year on carbon credits, and result in emissions being 50% higher according to an estimate by Carbon Market Watch.
In a statement, Carbon Market Watch points out that,
After months of delay, dithering and dispute, European Union member states have finally reached a deal on the bloc’s crucial 2040 climate target, albeit one that dangerously delays decarbonisation, which could trigger dangerous climate tipping points, and unfairly burdens those least responsible for the climate crisis.
A pilot phase for using carbon credits will start in 2031. Full implementation will start in 2036.
Allister Furey, CEO of carbon credit ratings agency Sylvera, is clearly pleased with the new loopholes. He said the EU climate deal would create, “the single largest source of known demand for carbon credits. The bad news is that that won’t kick in for around a decade.”
EU climate commissioner, Wopke Hoekstra, describes the deal as “a very good compromise”. That’s true, but while it’s good for Big Polluters and the offset industry, it’s very bad for the climate.
“A dangerous expansion of the offsets industry”
In a statement published by Real Zero Europe, Joanna Cabello, senior climate justice researcher at the Centre for Research on Multinational Corporations (SOMO) said,
“EU’s new Climate Law has opened the door to a dangerous expansion of the offsets industry. This industry has consistently failed to cut emissions. After more than 25 years of false solutions, global emissions and fossil fuel production and consumption keep climbing, while communities in the Global South bear the social and environmental costs.
“The EU must ensure emissions are reduced at home, instead of buying their way out of responsibility. Too many years have passed with offsets delaying real emission reductions and climate justice.”
The announcement of the new climate target came just before the start of COP30 in Belém. The climate deal was approved after 18 hours of negotiations that ran overnight from 4 November to the morning of 5 November 2025. Clearly the EU was desperate not to turn up to COP30 empty handed. The EU also updated its Nationally Determined Contribution with a target of 66 to 72% reduction in emissions by 2035 compared to 1990.
Hungary, Slovakia, Czechia, and Poland did not support the revision to the EU’s Climate Law. Bulgaria and Belgium abstained. The rest of the EU countries backed it. The climate deal needed support from at least 15 of the EU’s 27 member states.
Politico reports that,
Lawmakers in the European Parliament now have to agree on their own position on the 2040 climate target and negotiate with the Council of the EU before the target becomes law.
Yet another loophole
The 2040 target was weakened even further. Europe’s forests are increasingly degraded by wildfires and droughts, as well as under ever more pressure to supply raw materials, especially for bioenergy.
In 2025, wildfires in the EU burned a record area of more than 1 million hectares of land.
The capacity of Europe’s forests to absorb carbon dioxide has declined by more than one-third in the last decade.
According to Reuters,
Industries from car manufacturing to the defence sector have been concerned that they may be on the hook to make up any shortfall if forests and wetlands play a weakened role in mitigating emissions.
France proposed an “emergency brake” that would allow countries to reduce the emissions target even further if forests absorb less CO₂ than expected.
The final deal agreed by the EU states that if forest absorb less CO₂, Big Polluters will not be forced to cut emissions faster to meet the 2040 target.
This is insane. Burning fossil fuels is driving the climate crisis. As the climate crisis gets worse, wildfires and droughts are getting worse. Forests are absorbing less and less CO₂. And to make matters worse, the EU’s promotion of using forest biomass for bioenergy is increasing the pressure on forests and incentivising forest destruction.
Instead of focusing on getting Big Polluters to stop burning fossil fuels and working on the structural changes required to decarbonise the economy, the EU has created a series of loopholes that will allow emissions to continue.