In July 2025, the European Commission proposed a new intermediary climate target for 2040. In 2040, the EU is must have reduced its net greenhouse gas emissions by 90% compared to 1990 levels.
This target is designed to guide the next phase of Europe’s green and clean energy transition, boost industrial competitiveness, and ensure that the EU stays on track to meet its 2050 climate neutrality goal.
This article explores the EU’s 2040 climate target in depth. What it is, why it’s needed, why it matters, what the options available to reduce greenhouse gas outputs are, how the EU plans to achieve it, and what is needed to stay on track toward this target.
What is the 2040 climate target?
The 2040 climate target sets a legally binding objective for the European Union to cut net greenhouse gas (GHG) emissions by 90% compared to 1990 levels.
The 2040 climate target was proposed by the European Commission in July 2025 as an amendment to the European Climate Law, which already sets targets for 2030 (-55%) and 2050 (net zero).
Rather than making a sudden leap at the last minute, by setting an intermediary 90% reduction target in 2040, the European Commission is mapping a clear, predictable trajectory. One that encourages long-term planning, green investment, and innovation across the clean economy.
Why does the EU need a 2040 climate target?
In the words of EU climate commissioner Wopke Hoekstra: “[The EU is] doing it because it makes sense – from an economic, security and geopolitical standpoint – to stay the course on climate”. Said differently this intermediary 2040 pitstop is needed to keep the pathway to climate neutrality by 2050 predictable, cost-effective, and realistic, thereby giving businesses, governments and investors, the certainty they need to plan ahead, invest in green solutions, and reduce reliance on fossil fuel imports.
1. Economic reasons
As said above, the first reason for the 2040 climate target is economic. By defining the 2040 goal in 2025, the EU provides a clear investment signal for the next fifteen years ahead. It helps identify gaps between the 2030 climate pathway and the 2050 climate net zero objective, guiding public and private money toward long-term decarbonised solutions. This early action helps avoid costly last-minute fixes and gives emerging clean industries the visibility they need to scale. The idea is simple: decarbonise early, save later. According to scientific advice and impact assessments, early action considerably reduces cumulative GHG outputs and avoids locking in expensive fossil spending. It also makes the best use of clean technologies like nuclear power, which could become costlier to deploy effectively as climate change worsens.
2. Strategic reasons
Reducing Europe’s reliance on imported fossil fuels and expanding clean energy capacity makes the EU more self-reliant and resilient. The European Commission sees the 2040 target as a way to invest in the EU’s long-term future – helping it withstand both geopolitical uncertainty and the growing impacts of climate change. It also strengthens the basis for a coordinated European policy response, ensuring Member States move forward on a shared path toward climate neutrality.
3. Legal reasons
Lastly, while the target makes strategic and economic sense, it’s also a legal requirement. Under Article 4(3) of the European Climate Law, the European Commission is legally required to propose this benchmark following a global progress check under the Paris Agreement (also referred to as the global stocktake). This rule is designed to keep the EU on a science-based trajectory, tightening ambition in regular steps and avoiding policy delays.
What does the 90% emissions reduction mean?
Concretely, a 90% reduction by 2040 means the EU must cut the amount of greenhouse gases it releases into the atmosphere by 90% compared to 1990 levels. Importantly, the target refers to net emissions – meaning it balances the outputs produced with those actively removed from the atmosphere through nature-based or technological solutions, like forest restoration or carbon capture (Green and Red areas on the graph underneath).
How can the EU reduce carbon emissions?
There are multiple ways, the EU can reduce its footprint. Notably, when planning for the 2040 climate target, the EU plans to cut fossil fuel use, scale up the production of renewable energy, and improve energy efficiency. The EU also plans to rely on carbon removals, emissions trading, and a limited use of international carbon credits to reach its 2040 climate milestone.
1. Cutting emissions at the source
The first and most important step is reducing outputs where they happen. Particularly in high emitting sectors like transport, buildings, energy, and industry. This involves phasing out fossil fuels, boosting the penetration of renewables in the energy mix, improving energy efficiency, and electrifying our society. This is in line with the position of Europe’s electricity industry.
A way the EU aims to reduce its greenhouse gas emissions is through the EU Emissions Trading System. Here, the EU puts a price on carbon for energy-intensive sectors like power generation, industry, and aviation – creating a financial incentive to cut discharge where possible. For example, a steel factory in Europe is given a limited number of “carbon allowances” – each one allowing it to emit one tonne of CO₂. If the factory emits less than its limit, it can sell its unused allowances to other companies. If it emits more, it must buy extra allowances from others. In doing so, the system rewards companies that reduce their outputs and makes pollution more expensive for those that don’t.
2. Scaling up carbon removals
However, even by phasing out fossil fuel use, not all emissions can be eliminated entirely. And some sectors are harder to abide than others. While industry can in big parts be electrified, land use and agriculture face more structural challenges in their net zero journey. To cancel out these sectors’ outputs, the EU relies on carbon removals. There are two main types:
- Nature-based removals, such as reforestation, improved land use, and better soil management. These are essential for restoring natural carbon sinks.
- Technological extractions, such as Direct Air Capture with Carbon Storage (DACCS) or Bioenergy with Carbon Capture and Storage (BioCCS). These capture CO₂ directly from the air or during bioenergy production and store it underground.
Under upcoming revisions, the EU ETS may also allow companies to offset residual emissions by using permanent, verified carbon extraction, such as direct air capture or bioenergy with carbon capture and storage.
In doing so, it would: encourage investment in clean and innovative technologies, support heavy industries like steel, cement, or aviation in managing their transition, and integrate carbon offsets into Europe’s main carbon pricing framework.
3. High-quality international carbon credits
Another way to reduce the EU’s carbon emissions, are the so called high-quality international carbon credits. These credits enable EU Member States to fund verified climate projects in other countries and count the resulting savings / absorptions toward their own target. For example, a European country could invest in a large-scale reforestation project in Southeast Asia and count the CO₂ absorbed by the trees in that region toward its own, European, clean, contributions.
As of 2036, the European Commission is likely to allow limited use of these international carbon credits, capped at 3% of 1990 levels.
Thereby it would offer flexibility where domestic reductions are especially challenging, support global climate action through investments, particularly in developing regions, and ensure environmental integrity through strict quality and transparency standards.
How will the EU deliver on the 2040 target?
To reach the 2040 climate target, the EU will rely on a mix of existing policies, and revised post-2030 policies. All this under the lens of coordinated action across Member States, guided by principles of fairness, rigor in cost-efficiency, and updated climate science.
Concretely, this means that the first step to delivering the 2040 target is to complete what is already underway. This means fully implementing the 2030 climate and energy legislation – including the measures introduced in the Fit for 55 package. According to the European Commission, strengthening the existing EU Emissions Trading System (EU ETS), boosting renewable energy uptake, and improving energy efficiency standards could collectively deliver a 54% reduction in emissions by 2030, laying a strong foundation for the decade ahead.
Then, beyond 2030, the European Commission will propose a new legislative package to close the remaining emissions gap. Shaped by impact assessments and grounded in principles like technological neutrality and solidarity, this framework will adapt sector-specific rules – from transport to agriculture – and introduce new tools where needed.
A key pillar of this strategy is the Clean Industrial Deal, which aims to decarbonise Europe’s industry while safeguarding its global competitiveness. It will combine targeted funding instruments – such as the Industrial Decarbonisation Bank – with regulatory reforms like a more flexible State Aid Framework and streamlined Carbon Border Adjustment Mechanism (CBAM) rules.
The EU will also increase flexibility in how climate targets are met. This includes allowing sectors that exceed their reduction goals to compensate for those lagging behind and exploring the controlled use of international carbon credits.
Together, these measures form the backbone of a climate strategy that aims to deliver a 90% reduction in greenhouse gas emissions by 2040 – in a way that is realistic, fair, and predictable.
What’s needed to make the 2040 target work?
At Eurelectric, we believe that ambition must be matched with the right enabling conditions. A 90% emissions reduction by 2040 can only be achieved through a strong and supportive framework – one that accelerates investment, supports innovation, and ensures no one is left behind in the transition. Without these foundations, even the most ambitious target risks falling short. To this end, Eurelectric has consistently called for action on seven critical enabling factors.
These enabling conditions – we already communicated on them in our Decarbonisation Speedways report.
The first enabling condition is market design. We need a fit-for-purpose electricity market that sends strong investment signals, ensures fair competition, and integrates renewables to build a net-zero power system. This includes designing mechanisms that reward flexibility, support infrastructure upgrades, and de-risk long-term clean energy projects.
Second, the transition demands skilled people. Developing and maintaining a qualified workforce is essential to plan, build, operate, and maintain clean energy infrastructure. Investing in training programmes and technical education will prevent bottlenecks in grid deployment, renewables, and energy services.
Permitting is another major bottleneck. Europe must simplify and accelerate procedures for new power generation, grid expansion, and storage solutions—while respecting environmental and social standards. Cutting red tape is essential to speed up deployment and meet rising electricity demand.
Fourth, we need to scale up innovation. This means promoting the research, development, and deployment of emerging technologies to improve system efficiency, reduce costs, and unlock novel solutions – from carbon extractions to advanced digital tools.
The backbone of the transition is the electricity grid. Europe must invest in modern, resilient, and digital networks – both at transmission and distribution level – to integrate variable renewables, support electrification, and maintain security of supply.
Sixth, flexibility must be at the core of the power system. We need to expand demand-side response, storage, and flexible generation to balance renewable supply and ensure that electricity remains reliable and affordable under all conditions.
Finally, the EU must adopt a forward-looking industrial policy. That includes coordinated support for clean energy supply chains, access to critical raw materials, and incentives for technology leadership. A competitive, decarbonised industry is key to delivering emissions reductions while strengthening Europe’s position in the global clean tech race.
“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.” Kristian Ruby, Secretary General, Eurelectric.
What are the next steps for the 2040 climate target?
The next steps for the EU’s 2040 climate target are threefold: it must be adopted by the European Parliament and Council, turned into concrete policies through new European legislation, and submitted internationally as part of the EU’s updated Nationally Determined Contribution (NDC) under the Paris Agreement.
First, the proposed goal will be debated and negotiated by the Parliament and Council. Once they reach agreement, the 90% reduction by 2040 will become legally binding through an amendment to the European Climate Law. As part of this process, the European Commission launched a public consultation on the Climate Law amendment. Eurelectric prepared a response to highlight the enabling conditions needed to deliver on this ambition. Our contribution is available here.
Second, the EU will begin preparing the laws needed to implement the target. This means updating key pieces of climate legislation – like the Emissions Trading System (EU ETS) and rules on carbon removals – to reflect the proposed level of ambition. These proposals will be based on detailed impact assessments and presented in the next Commission work programme.
Finally, the EU will communicate its updated Nationally Determined Contribution ahead of the COP30 climate summit in Brazil. This updated NDC will include a 2040 emissions pathway and an indicative milestone for 2035, sending a clear signal of Europe’s commitment to global climate action.
Disclaimer: This article is for informative purposes only and may not entirely reflect Eurelectric official positions. For formal positions, please consult our position papers here.