EU’s 2040 climate target and the high costs of international credits

Carbon Market Watch warns that allowing international carbon credits in the EU's 2040 climate target could lead to the outsourcing of 140 million to 430 million tonnes of emissions. The organization highlights two interpretations of the Commission's '3% of 1990 EU net emissions' proposal: a cumulative scenario (Scenario 1) and a build-up scenario (Scenario 2). Both would result in higher EU emissions than a fully domestic approach and impose significant costs—ranging from €7 billion to over €30 billion—diverting funds from domestic decarbonization and climate finance. The document further contends that such credits undermine the 2040 target, risk exacerbating inequalities in the Global South, and contradict previous impact assessments favoring a domestic 90-95% net emission reduction.

• The European Commission's proposal to allow international credits up to "3% of 1990 EU net emissions" is ambiguous, leading to two distinct scenarios: Scenario 1, where 140 million credits are used cumulatively from 2036 to 2040, and Scenario 2, where a build-up results in 430 million credits over the same period.
• Using international credits would increase EU emissions in 2040 compared to a fully domestic target: by 10% under the cumulative scenario and by 30% under the build-up scenario. If some countries push for a 10% allowance, emissions could be at least 40% higher than with domestic action.
• The financial cost of these credits is substantial and diverts resources from domestic efforts. Based on prices of €50 to €70 per credit, Scenario 1 would cost between €7 billion and €9.8 billion, while Scenario 2 would cost between €21.5 billion and €30.1 billion.
• Relying on Article 6 credits may harm seller countries in the Global South by making it harder for them to reach their own climate goals, as they must subtract sold credits from their own greenhouse gas accounting.
• The European Scientific Advisory Board on Climate Change (ESABCC) assessments indicate that achieving a domestic emission reduction of 90-95% by 2040 is feasible and would maintain a credible path toward climate neutrality by 2050.

APA

Dossi, F. (2025). EU’s 2040 climate target and the high costs of international credits. Carbon Market Watch. https://carbonmarketwatch.org/2025/09/05/eus-2040-climate-target-and-the-high-costs-of-international-credits/

Chicago

Dossi, Federica. EU’s 2040 climate target and the high costs of international credits. Carbon Market Watch, 2025. https://carbonmarketwatch.org/2025/09/05/eus-2040-climate-target-and-the-high-costs-of-international-credits/.

Wikipedia

{{cite press release |last1=Dossi |first1=Federica |title=EU’s 2040 climate target and the high costs of international credits |publisher=Carbon Market Watch |date=5 September 2025 |url=https://carbonmarketwatch.org/2025/09/05/eus-2040-climate-target-and-the-high-costs-of-international-credits/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{dossi2025eus, author = {Dossi, Federica}, title = {{EU’s 2040 climate target and the high costs of international credits}}, publisher = {Carbon Market Watch}, year = {2025}, month = sep, url = {https://carbonmarketwatch.org/2025/09/05/eus-2040-climate-target-and-the-high-costs-of-international-credits/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }