By 2040: EU Commission proposes 90 percent target for greenhouse gas reduction

On July 2, 2025, the European Commission presented a proposal to amend the EU Climate Law. The goal is to reduce net greenhouse gas (GHG) emissions by 90 percent by 2040 compared to 1990 levels. The new interim target is intended to secure the path to legally enshrined climate neutrality by 2050. The proposal is based on a comprehensive impact assessment and recommendations from the European Scientific Advisory Board on Climate Change and the Intergovernmental Panel on Climate Change (IPCC). It was developed following consultations with Member States, the European Parliament, stakeholders, and civil society.

Flexibility instead of sector targets

The new proposal is a departure from the previous sectoral targets. Member States will be able to offset emission reductions across sectors in the future. For example, Germany could offset the largely stagnant transport sector with rapid progress in the electricity sector. The sectoral targets were introduced to ensure that all sectors contribute.

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Starting in 2036, high-quality international emission credits will also be eligible to be credited to a limited extent. Permanent CO2 removal under the EU Emissions Trading System (EU ETS) will also be given greater consideration. The Commission emphasizes that the measures should be cost-effective, technology-neutral, and socially balanced.

New climate law aims to provide investment security for companies

The new climate target is closely linked to the EU's Clean Industrial Deal, which aims to secure the competitiveness of European industry while driving decarbonization. Recent measures include a new state aid framework, tax incentives for investments in clean technologies, and guidelines for better use of EU renewable energy regulations.

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A simplified Carbon Border Adjustment Mechanism (CBAM) is also intended to reduce administrative burdens for importers. 90 percent of importers have been exempted from the reporting requirement. A comprehensive review of the CBAM is scheduled for the end of 2025. Commission President Ursula von der Leyen stated: "As European citizens increasingly feel the impacts of climate change, they expect Europe to act. Industry and investors expect us to set a predictable course of action. Today, we demonstrate our firm commitment to decarbonizing the European economy by 2050. The goal is clear, the journey pragmatic and realistic."

Next steps by the EU institutions

The proposal will now be submitted to the European Parliament and the Council for consideration and adoption through the ordinary legislative procedure. An agreed 2040 target will serve as a guideline for the EU's policy framework after 2030. In the run-up to the UN Climate Change Conference COP30 in November 2025 in Belém, Brazil, the Commission, together with the Council Presidency, intends to update the EU's Nationally Determined Contribution (NDC). This is intended to underline the EU's commitment to the Paris Climate Agreement.

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BDEW: Regulatory environment must enable investments

From the perspective of the German Association of the Energy and Water Industries (BDEW), the 90 percent target for 2040 proposed by the EU Commission is an important signal for planning security – also for investments in hydrogen. Kerstin Andreae, Chair of the BDEW Executive Board, emphasizes that targets alone are not enough. What is crucial is a regulatory environment that enables investments in renewable energies, grid infrastructure, and especially hydrogen. The planned option of using international certificates to achieve the target from 2036 onwards must be accompanied by strict standards to prevent greenwashing. Only with verifiable rules can the contribution of technical CO2 sinks be meaningfully integrated into climate policy.