European Union flags wave outside the European Commission headquarters in Brussels. Photo/Bruegel
By Daisy Okiring
Nairobi, Kenya, 14th August 2025
If Europe is to reach climate neutrality by 2050, it must slash greenhouse gas emissions by nearly 90% within just two decades. But with industries warning of economic pain and developing nations questioning the fairness of its rules, can the EU’s 2040 target truly drive global change — or will it remain a political compromise dressed as climate leadership?
The European Union has put forward one of its most ambitious environmental milestones yet: cutting greenhouse gas emissions by 90% by 2040 compared to 1990 levels. The plan, embedded in the European Commission’s latest climate communication, is a direct response to the legally binding European Climate Law, which demands climate neutrality by mid-century.
But the announcement has already sparked debates in Brussels, Berlin, and beyond. From heavy industries fearing competitiveness losses to carbon market advocates pushing for broader integration with global systems, the 2040 target is as much a political balancing act as it is a climate imperative.
A target born from urgency and political calculation
The Commission’s proposed 90% reduction target stems from months of consultation with scientists, economists, industry leaders, and civil society groups. According to the European Scientific Advisory Board on Climate Change, a 90–95% cut is necessary if the bloc is to meet its 2050 neutrality goal without relying excessively on unproven carbon removal technologies.
“We are not just setting a number; we are setting the tone for the next two decades of climate policy,” said European Commissioner for Climate Action Wopke Hoekstra during the announcement.
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While the figure aligns with scientific recommendations, its political framing was carefully crafted. The Commission stopped short of presenting new legislative proposals alongside the target, signaling that the next European Parliament and Commission — set to take office after the 2024 elections — will carry the burden of turning ambition into binding policy.
Industry fears and the competitiveness question
Europe’s industrial giants have wasted no time in voicing concerns. Energy-intensive sectors such as steel, cement, and chemicals warn that without robust carbon leakage protections — mechanisms to prevent production shifting to less regulated regions — the target could trigger job losses and economic decline.
The EU already has the world’s largest carbon market, the Emissions Trading System (ETS), which will be expanded to cover more sectors by 2030. But the idea of tightening it further to meet the 2040 goal has sparked industry pushback.
“Europe must avoid policies that punish our industries while competitors operate without equivalent constraints,” said Axel Eggert, director general of the European Steel Association. “If the EU wants green leadership, it must pair ambition with industrial strategy.”
The Commission insists that mechanisms such as the Carbon Border Adjustment Mechanism (CBAM) — which will impose tariffs on imports based on their carbon content — will shield EU businesses from unfair competition. Still, its implementation will be closely watched by trading partners wary of disguised protectionism.
The role of global carbon markets
One of the most significant undercurrents in the 2040 debate is how Europe will position itself in the evolving global carbon market landscape. The EU’s ETS has already linked with Norway, Iceland, and Liechtenstein, and discussions on potential future connections — from the UK to Asian markets — are ongoing.
Carbon market advocates argue that linking systems can lower overall costs, increase market liquidity, and create a unified carbon price signal that drives global decarbonization. Critics counter that differences in monitoring and enforcement could weaken environmental integrity.
“The EU has a chance to set the gold standard for carbon markets,” said Dirk Forrister, president of the International Emissions Trading Association. “But it must do so in a way that others can adopt without feeling they are surrendering sovereignty.”
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Under Article 6 of the Paris Agreement, countries can trade emissions reductions internationally, provided they avoid double counting. The EU has so far taken a cautious approach, prioritizing domestic reductions over imported offsets. But with the 2040 target looming, pressure may grow to embrace high-quality international credits.
Agriculture and the land-use dilemma
One sector likely to come under sharper focus is agriculture, which accounts for about 11% of EU greenhouse gas emissions. Unlike energy and industry, emissions from farming — especially methane from livestock and nitrous oxide from fertilizers — are harder to eliminate.
The Commission’s communication hints at greater integration of agriculture into carbon pricing mechanisms, a move that could reshape rural economies.
“If agriculture is brought into the ETS, it must be done fairly and gradually,” said Pekka Pesonen, secretary-general of the EU farmers’ lobby Copa-Cogeca. “Farmers are already facing pressure from climate change itself, from droughts to floods. They need support, not just obligations.”
Land use, land-use change, and forestry (LULUCF) policies will also be critical. Healthy forests and soils can absorb significant amounts of CO₂, making them essential allies in reaching net zero. But climate change is already stressing Europe’s natural carbon sinks, raising concerns about their reliability.
The energy transformation challenge
The EU’s 2040 target cannot be met without a massive acceleration in renewable energy deployment, electrification, and grid modernization. The REPowerEU plan, launched after Russia’s invasion of Ukraine, has already sped up investment in solar, wind, and hydrogen, but current trajectories suggest more is needed.
Analysts warn that bottlenecks in permitting, supply chain disruptions, and public resistance to infrastructure projects could slow progress. At the same time, the phase-out of coal and, in some countries, nuclear power adds complexity to the energy mix.
“Energy policy is no longer just about climate; it’s about security, competitiveness, and resilience,” said Fatih Birol, head of the International Energy Agency. “Europe must align all three if it wants to lead.”
Public opinion and political divides
For all the policy complexity, public support remains a key variable. Eurobarometer surveys consistently show that climate change ranks among the top concerns for EU citizens, but support for strong action can falter when it translates into higher household costs.
In several member states, far-right and populist parties are framing the climate agenda as elitist overreach. The upcoming European elections could therefore influence the political appetite for aggressive measures.
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“Climate policy will not survive if it is perceived as socially unfair,” warned Pascal Canfin, chair of the European Parliament’s environment committee. “We need a just transition that leaves no one behind.”
The international ripple effect
The EU likes to present itself as a global climate leader, and its 2040 target will inevitably shape international negotiations. If successfully implemented, it could encourage other major economies — from the US to China — to tighten their own timelines.
However, in climate diplomacy, leadership is as much about trust as it is about ambition. Developing nations will be watching closely to see whether Europe delivers on its promises, including climate finance commitments and technology transfers.
Failure to meet the target, or perceptions of hypocrisy, could weaken the EU’s influence in forums such as the UN climate conferences.
Can the EU deliver?
The road to 2040 is paved with both opportunity and risk. Technological innovation, from green hydrogen to advanced carbon capture, offers hope for deep decarbonization. But economic headwinds, geopolitical instability, and political resistance could slow the journey.
Ultimately, the EU’s credibility as a climate leader will hinge on turning a headline target into concrete, enforceable policies that balance environmental urgency with economic reality.
As Hoekstra put it: “The 2040 target is not the endgame. It’s the bridge between where we are and where we must be. And it is a bridge we cannot afford to burn.”
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