The EU has set a 2040 EU climate target of a 90% reduction in greenhouse gas emissions compared to 1990 levels. This new target requires the Commission to review other relevant EU legislation to achieve the target. Our Planning & Environment team discuss how, for example, RED II and the Energy Efficiency Directive will need to be amended.
What you need to know
- The EU Climate Law sets a binding objective to achieve climate neutrality by 2050.
- To achieve this, it set an interim binding objective to achieve a 55% reduction in net greenhouse gas (GHG) emissions compared to 1990 levels by 2030.
- The EU Climate Law has been amended in March 2026 by Regulation (EU) 2026/667.
- The amended law sets a new binding climate target of 90% reduction in GHG emissions compared to 1990 levels by 2040.
- This requires amendment to also be made to other EU legislation, including RED II and the Energy Efficiency Directive.
The existential threat posed by climate change requires increased climate action. Current geopolitical affairs further highlight the importance of reducing dependency on fossil fuels. The EU Climate Law[1] established the EU’s framework for achieving climate neutrality by 2050. This is a legally binding target. The EU institutions and Member States are bound to take the necessary measures at EU and national level to meet the target.
The EU Climate Law also set an interim target of reducing net GHG emissions by 55% compared to 1990 levels by 2030. This is also binding. While much has been achieved, it is estimated that as of early 2026, the EU has reduced its net GHGs by approximately 39-40% below 1990 levels. This leaves a gap of 15 to 16 percentage points to reach the 55% target by 2030.
Amendment to Climate Law
As more ambition is needed to reach climate neutrality by 2050, the EU has amended the Climate Law by introducing a 2040 target. This was done by the adoption of Regulation (EU) 2026/667 in March 2026. It entered into force on 7 April 2026. It sets a 2040 EU climate target of a 90% reduction in GHG emissions compared to 1990 levels. The Commission will assess progress towards the target every second year and could amend the new 2040 target.
To assist achieving this target, the Commission is required to take certain steps to achieve key goals through implementing legislation. One of the most notable of these is the introduction of an international credit system.
High-quality international credits will be enabled to contribute to up to 5% of the 2040 target from 2036 onwards. This means that at least 85% of emissions reductions are expected to be achieved domestically. The introduction of this system must be done in a way that is both ambitious and cost-efficient. It must support the EU and third countries in achieving net GHG reduction trajectories compatible with the Paris Agreement. The credit system will be regulated by EU law to ensure credits are based on credible and transformative activities in partner countries that are subject to robust safeguards. A pilot period from 2031 to 2035 to initiate a high-quality and high-integrity international credit market may be considered.
A summary of some other of these key goals includes:
- Establishing a role of domestic permanent removals under the EU’s emissions trading system (ETS) to compensate for residual hard-to-abate emissions.
- Postponing the start date for EU emissions trading system for road transport, buildings and other sectors (ETS2) from 2027 to until 2028.
- Enhancing flexibility within and across sectors and instruments, to support the achievement of targets in a simple and cost-effective way.
- Maintaining, managing and enhancing natural sinks in the long term and protecting and restoring biodiversity.
- Achieving energy availability, affordability and security of supply. Strengthening electricity grids and interconnections with a view to building a genuine Energy Union and promoting domestically produced energy.
- Increasing access to public and private finance as well as support for innovation and access to innovative technologies across all Member States.
Amendments to other legislation
The new 2040 target requires the Commission to review and update other relevant EU legislation including the RED II Directive[2] and the Energy Efficiency Directive[3]. For example, the RED II Directive sets 2030 targets for different types of renewable energy, such as fuel for transport, heating and cooling, etc. The Energy Efficiency Directive establishes indicative national energy efficiency contributions for 2030. These will have to be reviewed in the context of the new 2040 target. The Commission launched public consultations for amending these pieces of legislation on 19 and 20 March 2026 respectively.
Conclusion
The amendments to the EU Climate Law set an ambitious interim target to 2040. It places a binding obligation on Member States to reduce net GHG emissions by 90% compared to 1990 levels. To achieve this, the EU will implement measures that stakeholders can avail of. It will also require further legislative amendments to re-adjust other existing targets in line with the new target.
For guidance on the implications of these amendments, please reach out to a member of our Planning & Environment team.
[1] Regulation (EU) 2021/1119 of 30 June 2021 establishing the framework for achieving climate neutrality
[2] Directive (EU) 2018/2001 of 11 December 2018 on the promotion of the use of energy from renewable sources
[3] Directive (EU) 2023/1791 of 13 September 2023 on energy efficiency
The content of this article is provided for information purposes only and does not constitute legal or other advice.
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