Bloomberg and Politico reported on a leak of the European Commission’s forthcoming 2040 target proposal this weekend. The leak confirms that the expected 90% reduction compared to 1990 levels has been maintained with flexibility measure caveats.

Reportedly, the proposal includes the possibility to use international credits under Article 6 of the Paris Agreement as a flexibility measure towards reaching the 2040 target. These credits will not be eligible for use within the EU ETS or the EU ETS 2.

Previous reporting had indicated that the credit usage limit would be held at 3% although 3% of what was unclear. With this leak, the European Commission has made clearer that the approximate volume of Article 6 credits that may be used is around 139 Mt, or 3% of 1990 emissions between 2036 and 2040. Note that currently there are no valid Article 6 credits.

To put the volume of international credits into context, the February 2024 impact assessment report on the 2040 climate target envisaged a total of 75 Mt of CO2 in industrial carbon removal (BECCS and DACCS) in 2040, roughly 1.6% of 1990 emissions.  International credits will be just one of several flexibility measures, including opening the EU ETS to the industrial carbon removals described above.

The proposal includes a total of 18 measures intended to add flexibility and enhance the palatability of the target to member states and MEPs that have shown a recent willingness to backtrack on climate ambition. France, notably, has joined with Hungary and Poland in pushing for the decoupling of the 2035 NDC, due in September, and the 2040 target, citing ‘time constraints.’

The leaked document is in the final days leading up to its release but may still undergo changes. We expect the 2040 proposal to be presented on Wednesday following the College of Commissioners. Follow the press conference broadcast live at this link.