What's happening? EU climate ministers have agreed to cut greenhouse gas emissions by 90% by 2040 compared to 1990 levels, but the deal has been criticised for weakening Europe’s climate ambition ahead of COP30. In last-minute negotiations, ministers allowed countries to use foreign carbon credits for up to 5% of the reduction target, effectively lowering domestic cuts to around 85%, and left open the option for another 5% in future. The agreement also delays the launch of the EU’s new carbon market to 2028. While the deal ensures the EU arrives at COP30 with a united position, it reflects growing political and industrial resistance to ambitious green policies. (Reuters)

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Why does this matter? The agreement reveals deep tensions between climate ambition and political pragmatism. The compromise allows member states to use international carbon credits to meet up to 10% of their target, meaning the domestic reduction could be as low as 80%. Supporters argue it balances environmental goals with competitiveness and social stability, while critics warn that outsourcing emissions cuts could undermine Europe’s credibility as a global climate leader and divert investments away from domestic decarbonisation.

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Carbon credit controversy – At the heart of the debate lies Article 6 of the Paris Agreement, which permits countries to purchase carbon credits generated abroad rather than reducing emissions at home. The Council's deal allows international carbon credits to offset up to 5% of the EU's 1990 emission, an increase from the already contentious 3% proposed earlier this year. According to Carbon Market Watch calculations, this 2% increase could cost up to €48.9bn ($52.5bn), assuming a conservative price of €70 per credit and result in EU emissions being 50% higher than under a fully domestic target.

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Furthermore, the effectiveness of carbon credits remains hotly contested. A 2023 Guardian investigation found that 90% of rainforest carbon offset projects led by Verra, one of the world's largest certifiers, were "worthless" and amounted to "phantom credits". Of 94.9 million carbon credits claimed – each representing one mt of CO2 equivalent – only 5.5 million mt had actually been fulfilled. The scheme has also been compared to colonialism, as richer countries continue to profit off polluting industries while transferring the burden of generating carbon sinks to other counties. This creates a type of land grabbing, affecting poorer communities with less rights as they are forcibly removed from their lands and homes, with one report finding 70% of Indigenous Peoples and local communities harmed through carbon offsetting schemes.

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Delayed action – To secure support from all member states, the EU made additional concessions. Ministers agreed to postpone the launch of the new Emissions Trading System for road transport and buildings (ETS2) from 2027 to 2028. The Council also supported delaying the phase-out of free emissions allowances for heavy industries beyond 2028, resulting in at least €20bn in lost government revenues.

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These delays reflect growing concerns about industrial competitiveness, with some member states such as Poland arguing that stricter targets would harm their economies. Officials have framed the compromise as balancing climate ambition with economic stability – a necessary trade-off in an increasingly fractious political landscape.

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The leadership question – The weakened target raises fundamental questions about the EU's role in global climate governance. A 2024 report highlighted that the EU lacks a long-term strategy for climate diplomacy, relying instead on annually developed near-term strategies that primarily focus on COP negotiating positions. UK Prime Minister Sir Keir Starmer recently warned that "consensus is gone" on fighting climate change, underscoring the deteriorating international cooperation. Critics argue that by postponing action, the EU is shifting the burden onto future generations. Yet supporters contend that a unified EU position, however imperfect, remains essential in the face of backsliding from other major emitters such as the US.

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As COP30 begins and protestors storm the entrance of COP30 to be heard, the EU's compromise reflects the uncomfortable reality of climate policy in 2025 – the gap between what science demands and what politics has delivered continues to widen. Dubbed the "era of implementation", COP30 must now demonstrate that climate action can be achieved through inclusive policies, innovative solutions and concrete progress that restores ambition for the future.

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