03. 11. 2025
AUTHOR: Linda Kalcher and Neil Makaroff
It has been over 2 years since Commissioner Hoekstra promised a net 90% emission reduction target by 2040 to gain approval for his first term from the European Parliament. Since then, numerous discussions have happened at the Environment Council, culminating in leaders paving the way for ministers to adopt the target tomorrow in the Environment Council. However, a few dynamics and details are still at play on the finish line to get the 2040 target agreed.
Securing broad support for the final deal
The European Climate Law introduced the novelty that the target can be adopted by a qualified majority of ministers rather than by unanimity in the European Council (EUCO). However, it is in nobody’s interest to only secure the minimal number of countries needed to pass the law, given that it will apply to all 27 countries. This would bear a significant risk that the transposition of the target into a post-2030 energy and climate policy framework next year and subsequently its implementation at the national level would face serious pushback.
The Danish presidency is thus negotiating to secure a broad group of countries, from Portugal to Romania and Finland to Malta, backing the final deal on the European Climate Law. It seeks to address the reasonable concerns about how to achieve the targets, boost industrial competitiveness and ensure affordability for households. At the same time, the Danes are trying to preserve the stringency of the target in order to provide predictability and policy certainty for businesses.
The negotiations in the Environment Council are becoming more complicated due to the fact that the EU’s emission reduction goal for 2035 (Nationally Determined Contribution or ‘NDC’) is also on the agenda. The 2035 is expected to be derived from the 2040 target, but its adoption requires unanimity. A few countries that are unlikely to support the 90% climate target for 2040 could thus block the NDC until the deal on the European Climate Law is sufficiently weak. Ultimately, both files are thus expected to be finalised as a package before the UN climate summit COP30.
Definition of the target and flexibilities to achieve it
The main crunch points for ministers to finalise tomorrow are the following:
1. Timing and quantity of international credits
The proposed 2040 target definition for the first time foresees the inclusion of international carbon credits, meaning that emissions reduced in non-EU countries will be bought and accounted for towards the target. The European Commission’s proposal was relatively prudent in suggesting a maximum use of 3% of international credits (as agreed upon in the German coalition treaty) as of 2036. However, a few countries that might be vital to reaching a qualified majority, such as France, back a 5% inclusion, and others would prefer a 2031 start of using these credits. Needless to say, the more and earlier these credits are used, the greater the risk that investments from European taxpayers would be spent on such credits instead of the European economy.
2. How to address uncertainties around natural carbon sinks and technologies
Carbon can be removed from the atmosphere through both natural sinks, such as forests, and technological solutions, including carbon capture and sequestration (CCS) or direct air capture. CCS is historically not meeting expectations, and the first direct air capture project is underperforming. The European forest carbon sink is already declining, largely due to forest fires, droughts or other climate-related impacts. Thus, there are significant uncertainties about their projected contributions to the climate goal by 2040, which caused leaders to agree to a revision clause at EUCO. In addition, the most recent text by the Danish presidency includes a biannual assessment of the feasibility of the target. Some countries, such as France, also request a specific ‘emergency brake’ that would trigger a debate on additional measures to enhance the sinks or the need to adjust the target downwards. In view of the uncertainties surrounding natural and technological sinks, it seems prudent to open the possibility to reassess the feasibility of the target based on facts, as long as it won’t incentivise regular populist attacks on climate policies. However, ministers will have the task of minimising review points of the target and ensuring it will only be a limited percentage. Otherwise, this risks damaging the certainty and predictability for business and investors, at a time when they are calling for a clear signal to invest in the net-zero transition.
The Danish presidency has a major task ahead: preserving the stringency of the 2040 target and NDC whilst getting both files across the finish line. It can rely on strong support from Germany, Spain, the Netherlands, Sweden, Slovenia, Finland and Portugal.
Photo Credit: EU Climate Commissioner Wopke Hoekstra and Denmark’s Environment Minister Lars Aagard. European Union.
