Regulation (EU) 2026/667 and the 2040 target in the European Climate Law

From the Council's vote to the Official Journal

The Council gave its final approval to the amendment of the European Climate Law on 5 March 2026[3][4]. The Presidents of the European Parliament and of the Council, Roberta Metsola and Marilena Raouna, signed the act at Strasbourg on 11 March 2026[1]. It was published in the L series of the Official Journal on 18 March 2026 as Regulation (EU) 2026/667 of the European Parliament and of the Council[1][2]. Its title describes it as amending Regulation (EU) 2021/1119 as regards the setting of a Union intermediate climate target for 2040[1]. Under its Article 3 the Regulation enters into force on the twentieth day after publication, that is on 7 April 2026, and it is binding in its entirety and directly applicable in all Member States[1].

The procedure took eight months. The Commission proposed the amendment on 2 July 2025. The Council adopted its negotiating position on 5 November 2025 and Parliament adopted its own on 13 November 2025. The two institutions announced a provisional agreement on 10 December 2025[5]. Parliament approved the agreed text on 10 February 2026 by 413 votes to 226, with 12 abstentions[6]. The Council's vote of 5 March closed the procedure[3][4].

What the operative text provides

The core is the new paragraph 3 of Article 4 of Regulation (EU) 2021/1119. The binding Union 2040 climate target is a reduction of net greenhouse gas emissions of 90 per cent compared with 1990[1]. The target is collective. The Regulation sets no national targets, so a Member State may fall short if the Union as a whole meets the figure[2]. The objectives of climate neutrality by 2050 and of a net reduction of at least 55 per cent by 2030 remain in place[2].

Article 4(5)(a) provides that from 2036 high-quality international credits may contribute to the target up to 5 per cent of 1990 Union net emissions[1]. The Council reads that ceiling as a domestic reduction of 85 per cent by 2040[5]. A pilot period from 2031 to 2035 for an international credit market "may be considered"[1]. The credits cannot be used for compliance under the emissions trading system[4]. Article 4(5)(b) provides that domestic permanent removals under the emissions trading system are to compensate for residual hard-to-abate emissions; the rules for their inclusion are to come with the review of the Emissions Trading Directive in 2026[1][4]. If natural removals diverge significantly from expectations, the Commission must propose corrective measures and, if necessary, adjust the target[2].

Article 4(8) contains the review clause. "From 6 March 2027 and every two years thereafter, the Commission shall assess and report" on the implementation of the intermediate targets[1]. The Commission must also report within six months of each global stocktake under the Paris Agreement, the next of which falls in 2028, and must propose revisions of the Regulation where appropriate[2]. Recital 13 sets out the reasoning on credits[1].

Article 2 of the Regulation concerns Directive 2003/87/EC. The operation of emissions trading for buildings, road transport and additional sectors under Chapter IVa of the Directive "shall be postponed until 2028"[1]. Recital 12 explains the postponement[1]. The auctioning of allowances for that system still begins in 2027 as planned, and third-party verification of emission reports is mandatory from 2026[4]. The postponement is the only provision of the Regulation that touches an instrument other than the Climate Law.

What the Regulation binds the institutions to do

The first legal effect is a date. From 7 April 2026 the 90 per cent figure is part of Union law, and every proposal in the post-2030 package must be measured against it. The second effect is a calendar. The first biennial assessment is due on 6 March 2027, eleven months after entry into force and before the 2028 global stocktake[1][2]. The third effect is a reservation. The Commission may, after each assessment, propose to amend the Regulation, including the target itself, on grounds that include industrial competitiveness and energy prices[6]. The Commission is now expected to present the policy and legislative proposals that implement the target[3].

We measure the Regulation against the advice it was meant to follow. The European Scientific Advisory Board on Climate Change recommended in June 2023 a net reduction of 90 to 95 per cent by 2040 and advised the Union to aim for the upper limit of feasible domestic reductions[7]. The Regulation adopts the lower bound and allows five points of it to be met abroad. The Advisory Board also put the Union's carbon budget for 2030 to 2050 at 11 to 14 gigatonnes of CO2 equivalent[7]. Neither the Regulation nor its recitals convert the 2040 target into a budget. That omission matters for people born after 1992. A percentage at a date leaves the cumulative emissions between now and 2040 open; a budget would not. The biennial review will test which way the figure moves. A clause that allows the target to be revised on the grounds of energy prices can also, in law, allow it to be raised on the grounds of science. The Advisory Board's range gives the Commission the material to do so.

We recommend four steps. The Commission should publish, before the end of 2026, the method and the indicators it will use for the assessment due on 6 March 2027. Member States, Parliament and the public would then know in advance what competitiveness, energy prices and net removals will be measured against. The Commission should present the 2026 revision of the Emissions Trading Directive with the rules on permanent removals that Article 4(5)(b) presupposes. It should fix the quality criteria for international credits in that Directive itself, without deferring them to later acts. The Member States should treat the 2028 start of emissions trading for buildings and road transport as final and should use the 2027 auctioning year to prepare the revenue flows that will cushion households. Parliament should ask the Commission, at the first assessment, to express the 2040 target as a 2030 to 2050 carbon budget alongside the percentage. The review could then compare the Union's path with the 11 to 14 gigatonnes recommended by the Advisory Board.