EU Weighs International Carbon Credits to Ease 2040 Emissions Target for Domestic Industries

The European Commission is considering a controversial shift in climate policy that would allow the use of international carbon credits to meet its 2040 emissions reduction target. This move could reduce the burden on domestic industries, which have faced mounting pressure under the EU’s increasingly ambitious environmental rules. Currently, all EU climate targets rely solely on domestic efforts. If approved, the policy would mark a significant departure, letting countries offset emissions by supporting CO2-cutting projects abroad, such as reforestation in developing nations.

The Commission’s initial goal was to propose a 90% emissions cut by 2040, but internal resistance and missed deadlines have slowed progress. Political concerns over industrial competitiveness, rising geopolitical tensions, and complaints about the economic impact of green regulations have sparked a reevaluation of the approach. Climate commissioner Wopke Hoekstra noted that 90% remains the ‘starting point’ but acknowledged growing calls for flexibility.

Critics warn that international credits come with credibility risks. Past scandals revealed fraud and questionable climate benefits from some credit-generating projects. The EU previously banned such credits in 2013 after they caused a collapse in carbon prices. Still, some experts argue that strict safeguards in the U.N.-backed carbon market under development could address these concerns and improve trust in credit quality.

Supporters believe the move could also enhance EU leverage in international climate negotiations. Developing countries, which host many credit-generating projects, may welcome new financial flows through EU support. The final decision requires approval from both EU member states and the European Parliament and is expected before the summer.