Amendment EU Climate Law: 90 percent reduction by 2040
16/07/25
As intermediate goal between 55 percent emission reduction in 2030 and climate neutrality in 2050, the European Commission proposes a new climate goal for 2040. The proposed amendment of the EU Climate Law sets a reduction of net greenhouse gas emissions by 90 percent compared to the level in 1990. The proposal also introduces a bigger role for carbon credits within the EU Emission Trading System.
The EU Climate Law came into force in July 2021. In addition to the binding objective of climate neutrality by 2050, this Law (Regulation) also established the EU's binding climate target for 2030. This involves a reduction within the EU of net greenhouse gas emissions by at least 55 percent in 2030 compared to 1990 levels.
The proposal of 2 July 2025 for the new 2040-goal is closely linked to various new policies, such as the EU Competitiveness Compass, the Clean Industrial Deal, and the Affordable Energy Action Plan.
The Commission's proposal is submitted to the European Parliament and the Council for discussion and approval under the ordinary legislative procedure.
The Commission aims to present the new target at COP30 in November 2025 during the UN Climate Change Conference in Belém. It is still uncertain whether approval from both the European Parliament and the European Council can be finalized before that time.
How to achieve 90 percent reduction in 2040?
According to the proposal, Member States may achieve 3 percent of their savings 'flexibly' with so-called high-quality verifiable carbon credits. This means that they may obtain that part of their reduction outside the EU. This saving percentage is compared to 1990. These external emissions may only be used from 2036 onwards.
The allocation of the task between Member States and sectors, and in that way also the consequences for individual Member States, has not yet been determined and will depend on the policies to be proposed by the Commission to achieve the target. The policy package is expected in 2026. This is expected to include revisions of the Effort Sharing Regulation (ESR), the Emissions Trading System (ETS), and the Regulation on Land Use, Land Use Change and Forestry (LULUCF).
Why 90 percent in 2040?
The Commission substantiates the 2040 reduction target and the associated policies with three main arguments.
- First and foremost, the reduction target will make the medium-term investment horizon in the EU less uncertain, thereby contributing to a stronger business case for investments in the clean transition, clean technology, and innovation.
- Secondly, through this reduction target, the Commission aims to strengthen the global competitiveness of clean technologies developed - and yet to be developed - in the EU.
- Thirdly, with this reduction target, the Commission aims to strengthen the EU's resilience by being less dependent, both economically and geopolitically, on non-EU countries through homegrown green technology.
Next steps
The Commission has submitted the new climate target proposal to the European Parliament and the Council for discussion and adoption under the ordinary legislative procedure.
At an international level, the EU has to update its Nationally Determined Contribution (NDC) under the Paris Agreement. This needs to be done as preparation to the UN Climate Change Conference (COP 30), in November 2025. This is why the European Commission aims to have the new climate goal finalised by then.
Position of the Netherlands
The Dutch Climate Act also sets the target of a 55 percent reduction in greenhouse gas emissions by 2030, as well as the aim to reduce net greenhouse gas emissions to zero by 2050, combined with a commitment to negative greenhouse gas emissions after 2050.
Under the Dutch Climate Act, a Climate Plan must be established at least once every five years. This spring, the cabinet presented the draft Climate Plan 2025-2035. Among other things, it describes the pathway for the climate transition between 2030 and 2050, aiming for climate neutrality by 2050. In this draft the cabinet chooses not to set a national intermediate target for 2040 in the Climate Act. This is also not required under European policy.
In mid-June, the Parliamentary Committee on Climate and Green Growth declared the final draft Climate Plan 2025-2035 and the accompanying Roadmap for Carbon Removal controversial. This means that the Committee is postponing further discussion until a new cabinet is in place.
Contact us
Partner, Energy transition and sustainable energy, PwC Netherlands
Tel: +31 (0)65 160 08 61
Juliette Marsé
Director (Tax) - Energy, Utilities & Resources, PwC Netherlands
Tel: +31 (0)63 419 61 08
