Weakening the EU 2040 target would fail to deliver clear signal to businesses and consumers

EU ministers have agreed on a weakened 2040 climate goal. The reduced target of 85%, along with the provision that up to 5% of that reduction can be achieved by international carbon credits, puts Europe’s climate leadership into question, says T&E. If long-term ambition is to be reduced, near-term measures like ETS2 and ambitious car CO₂ standards become even more crucial to providing a clear direction to Europe’s businesses and consumers.

Governments agreed to delay the EU’s carbon price on road and heating fossil fuels (ETS2) by a year. According to T&E, this denies governments the revenues needed to reinvest in green technologies and to set up redistribution measures that can support low and middle-income households with the transition.

Federico Terreni, climate policy manager at T&E, said: “A weakening of the EU’s 2040 target and particularly a delay to ETS2 not only puts Europe’s climate leadership at risk, but undermines the clear pathway towards increased energy security. If we don't uphold the near-term implementation of ETS2 and car CO₂ standards, the signal to consumers and businesses is of continued reliance on volatile fossil fuel markets. The Parliament needs to push back against the delay to ETS2 and maintain car CO₂ standards.”

Governments have agreed that up to 5% of the target can be met with international carbon credits. This is far too high, says T&E, and will slow down and create uncertainties for investments in green technologies which will be the backbone of Europe’s future economy. The acquisition of a limited amount of high-quality, high-permanence international carbon credits characterised by stringent eligibility criteria, could be considered, says T&E. But it warns that if these stringent criteria cannot be guaranteed, international carbon credits should not form part of the EU’s target.

Lawmakers in the European Parliament will need to agree their own position, and negotiate with the Council before the target becomes law.