On 2 July 2025, the European Commission proposed a 90% emissions reduction target by 2040. This target represents an intermediate step towards achieving climate neutrality by 2050, as recommended by the European Scientific Advisory Board on Climate Change (ESABCC).
As discussions begin on the adoption of this target by EU institutions, calls have emerged for greater flexibility in how the goal is met. The European Commission’s proposal allows for such flexibility through the careful use of carbon credits, as provided for in Article 6 of the Paris Agreement.
A reminder of what Article 6 of the Paris Agreement entails is available here.
The Commission’s recent proposal would allow ‘high quality’ international carbon credits to account for up to 3% of the EU’s 1990 net emissions, equivalent to around 140 MtCO₂.
While this flexibility could facilitate the approval procedure of the new target, in practice it would allow an increase of around 30% in net domestic emissions by 2040, as the reductions would take place in other parts of the world, rather than in Europe.
High quality carbon credits
In integrating flexibility mechanisms into the EU’s emissions reduction strategy, it is essential to define and enforce criteria for ‘high-quality’ carbon credits. This is crucial to safeguard environmental integrity and maintain the EU’s leadership on climate action.
The inclusion of carbon credits presents both advantages and risks:
- Advantages include: a political signal of the EU’s commitment to supporting multilateral processes; strengthening the EU’s influence in defining global credit standards; scaling up global climate action and directing finance towards vulnerable countries.
- Risks include: potential overcrediting; market fragmentation; diversion of climate finance; weakening of national climate ambition; reputational damage due to low-quality credits; disputes arising from misuse or mismanagement of credits.
This policy briefing reviews proposals aimed at ensuring high quality carbon credits. Article 6.4 provides a good starting point for credits to be considered ‘high quality’. However, clear requirements are needed to ensure the application of these criteria, which should guarantee:
- Environmental integrity: alignment with net-zero goals; additionality; permanence; leakage prevention (emissions displacement); human rights; safeguards and robust accounting with corresponding adjustments.
- Robust governance: centralised recognition/purchasing mechanisms; rigorous MRV systems; conservative methodologies and full transparency with stakeholder oversight.
If designed with strong safeguards, Article 6 credits could complement the EU’s climate policy by promoting international solidarity and driving higher global standards for emission reductions.
However, weak implementation risks undermining the EU’s climate goals and credibility.
Read the policy briefing “The role of Article 6 in reaching the EU climate targets”
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