This week, the European Commission announced the 2040 climate target, along with enabling factors to deliver the Clean Industrial Deal in the form of recommendations on taxation, grids and renewables. Released on 2 July, the amendment to the European Climate Law sets out a 90% reduction in net greenhouse gas emissions by 2040 compared to 1990 levels. Framed as an important milestone on the path to net-zero by 2050, the 2040 target is intended to provide predictability for investors, guide national planning and ensure Europe’s competitiveness through its decarbonisation trajectory. The proposal also outlines certain flexibilities and mechanisms designed to help member states meet the target in practice.
This week’s Friday Feature looks at why the EU is setting a 2040 target, what the Commission’s proposal includes and the enabling factors Eurelectric believes will be essential to deliver it.
Why a 2040 target?
The setting of an intermediary 2040 target serves multiple purposes:
- First, the 2040 target meets a legal requirement in the European Climate Law. Article 4(3) requires the Commission to put forward this intermediate target after assessing collective progress (also called the global stocktake) under the Paris Agreement. This legal anchor is meant to keep the EU on a predictable, science-based pathway to the 2050 climate neutrality, tightening ambition in regular steps and both giving industry and policymakers the clarity they need.
- Second, introducing a 2040 climate target serves a practical, political purpose. It makes sure that Europe’s journey to climate neutrality stays on track without sudden, disruptive changes. This helps avoid last-minute, costlier interventions and helps identifying the policy and investment gap between the 2030 climate package and the long-term net-zero goal, providing businesses with the visibility to commit capital and innovate at scale.
- Third, there is an economic objective. The idea is simple: decarbonise early, save later. Last term, the Commission pushed for maximising early decarbonisation, echoing scientific advice and impact assessments. Early action reduces cumulative emissions and avoids locking in expensive fossil spending. It also makes the best use of clean technologies like nuclear power, which could become harder to deploy effectively as warming worsens.
- Last but not least, the 2040 target also aims at strengthening Europe’s energy independence, resilience, and industrial competitiveness. By reducing reliance on imported fossil fuels and supporting the development of clean technology value chains within Europe, it can help ensure the EU remains secure, self-reliant, and competitive in a changing global economy. As EU climate Commissioner noted, “We’re doing it because it makes sense – from an economic, security and geopolitical standpoint – to stay the course on climate […]. It’s about becoming more independent and resilient.”
Crucially, the 2030 framework already agreed by EU institutions remains untouched by the proposed 2040 target. The new target is intended to guide the post-2030 pathway, with the Commission highlighting the need for detailed impact assessments to identify the measures required for the 2030–2040 period. This is meant to avoid retroactive changes to existing plans while signalling the scale of effort needed in the next phase of the transition.
Cut emission by 90%…and what else?
The headline figure in the Commission’s proposal is a 90% reduction in net greenhouse gas emissions by 2040 compared to 1990 levels. Importantly, we are speaking about net emissions, which means that the target covers not only cuts in direct greenhouse gas (GHG) emissions but also removals – activities that take carbon out of the atmosphere. The overall presence of GHG must fall by 90%, but the draft does not specify how much of this should come from technological versus nature-based removals, nor does it set strict criteria on their durability. Those details will be worked out in future legislation.
The other headline in the Commission’s announcement is the proposed use of high-quality international carbon credits starting from 2036, capped at 3% of total EU emissions. In practice, this would allow member states to fund verified climate projects outside the EU and count the resulting reductions toward their own target. While intended as a tool to address harder-to-abate sectors (like land-use), this measure is contentious. Green groups argue the EU should focus on cutting emissions domestically, while the Commission points out that many developing countries are interested in EU financing for projects like reforestation and sees potential to ensure such offsets deliver real reductions.
“The planet doesn’t care about where we take emissions out of the air,”
The proposal also mentions integrating permanent carbon removals into the EU Emissions Trading System (EU ETS) to offset residual emissions from sectors where decarbonisation is especially challenging. This reflects the recognition that even with strong emissions cuts, some level of removal will be needed to balance out what cannot be fully eliminated.
Beyond these specifics, the Commission’s draft sets out a list of broader principles expected to guide the next legislative steps around the 2040 target (meaning the amendments that will need to be brought to existing legislation as a result of it): solidarity between member states and sectors, cost-efficiency, a science-based approach, social fairness, and competitiveness, among others. The text also emphasises the need to rely on the “best available cost-effective, safe and scalable technologies”- a framing that supports the role of electrification as essential pillars of Europe’s path to climate neutrality.
How do we deliver?
Ambition calls for the right enabling conditions. We have always been clear that this level of commitment can only be delivered with the right enabling framework – one that accelerates and strengthens the conditions needed to unlock investment, support innovation and ensure no one is left behind in the transition.
“A 90% emissions reduction target by 2040 is ambitious, and delivering on it will require a relentless focus on the enablers: faster permitting, stronger grids, and an industrial policy that puts electrification at the core.”
That’s why Eurelectric has consistently called for action on seven critical enabling factors:
- Market design: A fit-for-purpose electricity market that provides clear investment signals, ensures fair competition and integrates renewables to support the transition to a net-zero power system.
- Skills: Developing and maintaining a workforce with the technical expertise needed to plan, build, operate and maintain clean energy infrastructure and technologies.
- Permitting: Accelerating and simplifying planning and approval processes for new power generation, grids and storage while balancing environmental and social considerations.
- Innovation: Promoting research, development, and deployment of emerging technologies to improve system efficiency, reduce costs and unlock new solutions for decarbonisation.
- Grids: Investing in modern, resilient, and digital electricity grids at transmission and distribution levels to integrate renewables, enable electrification and maintain security of supply.
- Flexibility: Expanding flexible resources across demand, storage, and generation to balance variable renewable supply and ensure reliable, affordable electricity at all times.
- Industrial policy: Supporting the competitiveness and sustainability of European industry through coordinated policies on clean energy supply chains, critical raw materials and technology leadership.
For more on the enabling factors, check our flagship on Decarbonisation Speedways here.
What’s next?
Delivering on the 2040 target will depend on putting the right enabling conditions in place – from market design and permitting to grids, flexibility, skills, innovation, and industrial policy. Without these, even the most ambitious goal risks would remain out of reach.
It also means maintaining an open and continuous dialogue with industry partners to find the best solutions across all sectors. As our industrial competitiveness report shows, decarbonisation is already cost-effective in some industries today, while others will need further effort, support, and tailored approaches to make the transition work in practice.
This blog post was originally published as part of Eurelectric’s LinkedIn Friday Features. Subscribe here to stay updated.
Disclaimer: This article is for communication purposes only and may not reflect Eurelectric positions. Any positions taken in this article shall not be attributable to Eurelectric’s official positioning. Official Eurelectric positions are reflected only in position papers published here.