International Carbon Credits Back on the Table? EU’s Climate Goal Gets a Twist
The European Union (EU) is considering a new plan to help meet its 2040 climate goal. According to sources, the European Commission may allow countries to use international carbon credits under Article 6 of the Paris Agreement. This would be a big change from the EU’s current rule, which says climate targets must be met using domestic actions only.
Countdown to 2040: Can the EU Hit Its Green Target in Time?
The European Commission has proposed a target to cut EU greenhouse gas emissions by 90% by 2040 compared to 1990 levels. This goal is part of the EU’s plan to become “climate neutral” or net-zero zero by 2050.
Achieving the 2040 climate targets entails substantial financial commitments. The EU estimates a need for around €660 billion annually in energy investments during the 2031-2050 period. This represents about 3.2% of the EU’s GDP.
However, the official proposal for the 2040 goal has been delayed.
One reason for the delay is the growing political debate. Some governments and lawmakers worry that the green policies may hurt industries, especially with rising global competition and trade issues like U.S. tariffs. Because of this, the Commission is now exploring more flexible options to reach the 2040 goal.
One option is the use of international carbon credits.
Reuters reports that sources say the Commission is thinking about a new idea. They might let EU countries use international carbon credits to help meet part of the 2040 target. This would mean that countries could support CO2-reduction projects in other parts of the world—such as forest restoration in Brazil—and count those emissions savings toward their EU goals.
This would be a major shift for the EU. Until now, the EU’s climate targets have focused only on domestic efforts. International credits were banned from the EU Emissions Trading System (ETS) after 2020 due to problems in the past.
What Are International Carbon Credits?
A carbon credit is a certificate that shows one tonne of carbon dioxide (CO2) has been reduced or removed from the atmosphere. These credits can be created by projects such as planting trees, using cleaner energy, or capturing emissions. Countries or companies can buy these credits to offset their own emissions.
Under Article 6 of the Paris Agreement, countries can trade these credits internationally. This helps fund climate projects in developing countries and allows other countries to meet their climate goals in a more flexible way. These projects include initiatives like reforestation, renewable energy installations, and methane capture.
EU’s Past Experience with Carbon Credits
Between 2008 and 2020, the EU allowed companies to use international credits under the ETS. Over 1.6 billion credits were used. Many of these credits came from the Clean Development Mechanism (CDM) and Joint Implementation (JI) systems under the Kyoto Protocol.
However, this system had problems. Many projects failed to deliver the promised emissions cuts. Some even led to fraud. Moreover, the many cheap credits lowered the carbon price in the EU. This made it easier for companies to pollute. This slowed down progress on cutting emissions inside the EU.
Because of these issues, the EU stopped accepting international credits after 2020. The current rules for the EU ETS focus only on domestic actions.
According to the European Environment Agency (EEA), the following would be the forecasted trend of the supply and demand of EU carbon credits until 2030.
Given the 2040 climate goals, the EC is thinking about bringing back international carbon credits. This would offer more flexibility in meeting emission reduction targets.
Article 6 Explained: A Second Chance for Global Offsets
The Paris Agreement introduced a new system under Article 6 to improve the way international carbon credits (ITMOs) work. This system includes rules to avoid double counting, ensure credits are real, and improve transparency.
Supporters of Article 6 say it can help developing countries get more climate funding. If the EU uses these credits again, it could also help poorer countries develop greener economies.
Critics, however, warn that the Article 6 system is still not strong enough. Some carbon credit projects may still overestimate emissions savings or fail to remove carbon in a permanent way. There are also concerns that switching back to international offsets may reduce the pressure on the EU to cut emissions at home.
The Contradicting Views from Experts
Some experts and groups are urging caution. Linda Kalcher from Strategic Perspectives said international credits have faced many issues. These include fraud and poor environmental benefits.
Others, like Andrei Marcu of the ERCST think-tank, believe that developing countries would welcome the move. These countries often need more climate finance and would benefit from EU support for local carbon projects.
Carbon Market Watch, an environmental group, warned that using carbon credits and removals instead of real domestic reductions could weaken the EU’s climate ambition. They particularly noted that:
“Carbon Market Watch warns that reckless reliance on Article 6 credits and carbon removals is not a replacement for domestic emissions reductions commitments.”
The EU’s climate laws and scientific advisors have strongly supported domestic emissions cuts. The European Scientific Advisory Board on Climate Change has said the EU should cut 90–95% of emissions by 2040 through domestic action only.
Buying credits from other countries may help meet targets on paper. However, experts say it does not reduce pollution inside the EU. They warn that it could slow the shift away from fossil fuels and delay investments in clean energy and green jobs within Europe.
What’s Next: Will the EU Go Global on Carbon Trading?
The European Commission says it is still aiming for a 90% cut by 2040, but it is also listening to calls for more flexibility. EU climate commissioner Wopke Hoekstra said the 90% cut is the “starting point” and plans to propose the final target before summer.
Any target must be approved by EU countries and the European Parliament. This means more talks and possibly changes before anything is final.
If the EU decides to include international carbon credits in its 2040 plan, it would mark a big policy shift. The decision could impact how the world sees the EU’s climate leadership and how the global carbon credit market develops in the future.
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