On 5 March 2025, the Council formally adopted the amended European climate law, introducing a binding intermediate climate target, for 2040, of a 90% reduction in net greenhouse gas (GHG) emissions compared to 1990 levels. This new target strengthens the EU’s path towards achieving climate neutrality by 2050 across all sectors of the economy. The amended climate law also shifts the date for the EU emissions trading system for road transport, buildings and other sectors (ETS2) to become fully operational by one year, moving it from 2027 to 2028.

From 2036 onwards, high-quality international credits may be used up to a limit of 5% of 1990 EU net emissions to make an adequate contribution towards the 2040 target in a way that is both ambitious and cost-efficient. This means that at least 85 % of GHG emissions reductions must be achieved within the EU. Credits must be based on credible activities of GHG reduction in partner countries, in line with the Paris agreement.

The amended European Climate Law sets out further key elements the Commission must consider when preparing its legislative proposals for the post‑2030 period, with a focus on competitiveness, simplification, social fairness, energy security and affordability, alongside other priorities. Among these elements are:

• EU-based permanent carbon removals(processes that involve capturing carbon dioxide from the atmosphere and storing it durably) to compensate for residual hard-to-abate emissions under the EU emissions trading systém; and

Enhanced flexibility within and across sectors and instruments, to support the achievement of targets in a simple and cost-effective way

This adoption marks the final step in the legislative process. The amended regulation will enter into force 20 days after its publication in the Official Journal of the European Union and will apply directly in all EU countries. The Commission will make relevant proposals to implement the binding EU 2040 climate target.