What the new EU climate agreement envisages: 90% emissions reduction by 2040, why flexible targets are being discussed

Negotiators from the EU Council and the European Parliament have agreed to amend the European Climate Law, which calls for a 90% reduction in emissions by 2040. The agreement—which its proponents described as "flexible"—also includes the approval of international credits and the Commission's ability to revise targets following periodic assessments. Here's what's changed.

3 min read · 29 Jan 2026

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Edited by Giulia Casula

Overnight, the Presidency of the EU Council and representatives of the European Parliament agreed to amend the European climate law, which sets out in black and white the objective to be achieved by 2040: a 90% reduction in net greenhouse gas emissions compared to 1990 levels.

This is an intermediate target but a “fundamental” step, according to European institutions, towards climate neutrality by 2050. The agreement has been defined as “flexible” by its promoters due to some elements introduced by legislators that should facilitate the achievement of the target without undermining European competitiveness.

Specifically, starting in 2036, up to 5% of emissions reductions (two percentage points more than the Commission’s proposal) can come from “high-quality international carbon credits,” meaning environmental projects carried out in other countries outside the EU. However, at the request of Parliament, funding for projects in countries that run counter to the Union’s strategic interests will be excluded. The use of credits will begin in 2036, but a pilot phase will be established for the period from 2031 to 2035 to support market development.

The agreement also confirms the one-year postponement, from 2027 to 2028, of the entry into force of the ETS2 system for transport and buildings, the mechanism that forces companies that exceed a certain level of emissions to pay to incentivize their reduction.

A review clause for the entire 2040 climate target is also introduced, allowing the European Commission to revise the targets following periodic assessments conducted every two years. In its analyses, the executive will take into account any implementation issues, energy price trends, and their impact on both businesses and households. Following these assessments, it will be able to decide whether it is appropriate to amend the climate law and therefore the 2040 target.

As requested by Italy during negotiations at the EU Council, the clause will also establish whether countries can purchase an additional 5% of foreign credits to cover national efforts after 2030.

The agreement must now be formally approved by both institutions before it enters into force. The next steps will involve a vote by Parliament and then approval by the Council. Once these steps are completed, if approved, the agreement will enter into force twenty days after its publication in the official EU journal.

“Today, the EU demonstrates its strong commitment to climate action and the Paris Agreement. One month after COP30, we have turned our words into action, with a legally binding target of a 90% emissions reduction by 2040. We have a clear direction towards climate neutrality and a pragmatic and flexible plan to make the clean transition more competitive,” said European Commission President Ursula von der Leyen. “The agreed climate target ensures a clear and stable trajectory towards a decarbonized European economy by 2050. It provides certainty for investors and businesses to promote the clean transition, industrial competitiveness, energy security, and the EU’s independence,” she concluded.

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