SDG 13: Climate Action | SDG 9: Industry, Innovation & Infrastructure
Ministry of Environment, Forest and Climate Change | Ministry of Commerce & Industry
The EU has adopted a legally binding target to reduce greenhouse-gas emissions by 90% by 2040 relative to 1990 levels. Member states are required to deliver a domestic emissions reduction of 85%, while up to 5% of the reduction may come via high-quality international carbon credits, beginning 2036.
In tandem, the expansion of the EU’s emissions-trading system (ETS2) — covering fuel combustion in buildings and road transport — has been postponed to 2028, allowing more time for adaptation. The EU will also conduct biennial progress reviews, which may lead to adjustments of the 2040 target depending on scientific data, economic conditions and performance.
The 2040 target is framed as an interim milestone toward achieving climate neutrality by 2050, under the umbrella of the European Green Deal.
Policy Relevance
The move marks a substantial escalation in climate ambition for a major global economy. For policymakers worldwide, it sets a new benchmark for mid-century decarbonisation — signaling that deep-cut targets are politically feasible, even under economic constraints. The dual design, combining domestic reductions with a modest carbon-credit cushion, offers flexibility but preserves a strong emissions-reduction narrative.
For countries like India, the EU’s path raises two critical implications: (a) its tightening demand for low-carbon goods and energy services may accelerate global trade in clean technologies; (b) shared supply-chain pressure may increase on exporters to meet carbon-compliance standards.
What Is ETS2? The expanded EU carbon-pricing mechanism covering emissions from fuel combustion in buildings and road transport — a key tool for driving decarbonisation beyond industrial emissions.
Relevant Question for Policy Stakeholders:
How should India and other G20 economies recalibrate industrial, trade and energy-policy frameworks to respond to rising carbon-compliance demands from major trading partners like the EU — without compromising growth and development goals?
Follow the full news here: 2040 climate target: deal on a 90% emissions reduction in EU climate law