EU Sets New 2040 Climate Target: 90% Emissions Reduction

European Parliament adopts amended climate regulation establishing an intermediate 2040 target of 90% net greenhouse gas reduction.

Europe's Climate Ambition: The 2040 Target That Will Define a Generation

The European Parliament and Council formally adopted Regulation (EU) 2026/667 on March 11, 2026, amending the European Climate Law to establish an intermediate climate target of 90 percent net reduction in greenhouse gas emissions by 2040 compared to 1990 levels. The adoption represents a major milestone in EU climate policy and sets out the trajectory needed to achieve climate neutrality by 2050, as required by the original Climate Law adopted in 2021.

The decision was not without controversy. The 90 percent target, which falls short of the 95 percent that the European Scientific Advisory Board on Climate Change had recommended and that environmental organisations had campaigned for, reflects a political compromise between member states with different economic vulnerabilities and energy transition capabilities. Countries heavily reliant on coal, including Poland and Czechia, secured provisions for differentiated implementation pathways, while others including Germany, France, and the Nordic states pushed for higher ambition.

The Iran conflict and associated energy price spike has, paradoxically, both helped and hindered European climate action. On the positive side, soaring fossil fuel prices have strengthened the economic case for accelerating the transition to renewable energy and reducing import dependency. On the negative side, several member states have used the energy security argument to justify slowing or reversing near-term decarbonisation commitments, arguing that economic stability must take precedence over climate ambition during periods of geopolitical volatility.

The Green Deal architecture that underpins European climate policy is being retested against these political headwinds. European Commission climate chief Wopke Hoekstra has argued that climate and competitiveness are not in tension but complementary — that the countries and companies which lead the clean energy transition will be those best positioned to compete in the global economy of the 2030s and beyond. The 2040 target creates a clear framework within which businesses and investors can make long-term decisions, regardless of short-term geopolitical turbulence.