What is the EU's 2035 climate target for cars?

The EU has passed a law that effectively bans the sale of new petrol and diesel cars from 2035. All new cars and vans registered in the EU from that year onwards must be zero-emission. This is a core component of the "Fit for 55" package and is designed to accelerate the transition to electric vehicles.

What is the new 2040 climate target for the EU?

The EU has formally agreed to a target of reducing its net greenhouse gas emissions by 90% by 2040, compared to 1990 levels. This target serves as an intermediate step towards the bloc's legally binding goal of achieving climate neutrality by 2050.

Why were economic concessions necessary for the 2040 agreement?

Concessions were essential to secure the unanimous support of all 27 member states. Many countries, particularly in Central and Eastern Europe, were concerned about the economic impact on their industries and the financial burden on citizens. Issues like rising energy costs, agricultural competitiveness, and the need for a just transition led to demands for greater flexibility and a slower implementation of certain measures.

What is the ETS 2 and why was it delayed?

The Emissions Trading System 2 (ETS 2) is a new carbon market designed to put a price on CO2 emissions from road transport and the fuels used for heating buildings. Its launch was delayed by one year, to 2028, as a key concession. This was done to alleviate concerns that it would lead to a sharp increase in fuel and heating costs for consumers, which could cause social unrest.

How does this plan affect the EU's agricultural sector?

The 2040 agreement acknowledges the unique challenges faced by the agricultural sector. Instead of imposing rigid, top-down emissions cuts on farmers, the deal emphasizes providing support, flexibility, and incentives for sustainable practices. The goal is to balance emissions reduction with the need to ensure food security and the economic viability of farming communities.

What are the next steps for implementing these climate plans?

The 90% target for 2040 is currently a political agreement. The next European Commission will be responsible for proposing concrete legislative measures to make it a reality. This will involve detailed proposals for each sector, setting out the specific policies and regulations required to meet the target, which will then be negotiated by the European Parliament and the member states.

EU Climate Plan 2035 & 2040: Decarbonization, Fit for 55, Car Ban & Compromise

The European Union has long positioned itself as a global leader in the fight against climate change. With its landmark European Green Deal, the bloc has committed to achieving climate neutrality by 2050. This ambitious journey is paved with critical milestones, most notably the climate plans for 2035 and the recently negotiated, and highly contentious, decarbonization agreement for 2040. After marathon negotiations, the 27 member states finalized a deal that sets a clear path forward but also reveals the deep economic and political divides that must be bridged to secure a sustainable future. This agreement, reached in the eleventh hour before the UN's COP30 climate summit, underscores the EU's determination but also highlights the significant concessions required to maintain unity.

The Foundation: The 2035 "Fit for 55" Package

The groundwork for the EU's medium-term climate ambitions is the "Fit for 55" package , a comprehensive suite of legislation designed to reduce the bloc's net greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels. Finalized and adopted into law, this package is the engine driving the transition towards 2035 and beyond. It represents one of the most substantial and legally binding climate action frameworks in the world.

Key Pillars of "Fit for 55"

The package overhauls legislation across multiple sectors, ensuring that all parts of the economy contribute to the climate goals. Its most significant components include:

Phase-Out of Combustion Engine Cars : From 2035, all new cars and vans sold in the EU must be zero-emission. This de facto ban on new petrol and diesel vehicles is a cornerstone of the plan to decarbonize road transport, one of the most significant sources of emissions.
Expansion of the Emissions Trading System (ETS) : The EU's carbon market, which caps emissions from heavy industry and power generation, was strengthened. A new, separate system known as ETS 2 was created to cover emissions from road transport and buildings, placing a price on carbon in sectors that directly impact consumers.
Carbon Border Adjustment Mechanism (CBAM) : To prevent "carbon leakage"—where EU companies move production to countries with laxer environmental rules—the CBAM imposes a levy on certain carbon-intensive goods imported into the EU. This ensures that foreign producers face the same carbon price as domestic ones.
Enhanced Renewable Energy Targets : The Renewable Energy Directive was revised to increase the binding target for renewable energy in the EU's overall energy mix to 42.5% by 2030, with an aspiration to reach 45%.

This legislative framework provides the legal and regulatory certainty needed for the massive investments required to transition away from fossil fuels.

The 2040 Climate Target: A 90% Reduction Forged in Compromise

Building on the "Fit for 55" foundation, the EU has now set its sights on 2040. After more than 15 hours of intense negotiations, EU climate ministers agreed on a target to cut greenhouse gas emissions by 90% by 2040 . This interim goal is a critical stepping stone to achieving the ultimate objective of climate neutrality by 2050.

However, reaching this consensus was fraught with difficulty, requiring significant economic concessions to bring reluctant member states on board. The deal was struck just in time for the COP30 summit, allowing the EU to present a united front on the global stage, but critics argue the target was "watered down" in the process.

The Economic Concessions and Divisions

The final agreement reflects a delicate balance between climate ambition and the economic realities facing member states, particularly those more reliant on fossil fuels or with significant agricultural sectors.

Concession Area	Details of the Compromise	Rationale and Impact
ETS 2 for Transport & Heating	The launch of the new carbon market for transport and heating fuels was delayed by one year, from 2027 to 2028.	Led by countries like Poland, this delay was demanded over fears that the new carbon price would sharply increase energy bills for citizens, potentially triggering a voter backlash. It provides more time for households to adjust.
Agricultural Sector	The final text includes "flexibility" and support mechanisms for the agricultural sector, avoiding stringent, binding targets for emissions reductions from farming.	Acknowledges the immense pressure on farmers, evidenced by widespread protests across Europe. The focus is on ensuring food security and providing a "just transition" for agriculture rather than imposing burdensome regulations.
Industrial Competitiveness	The agreement emphasizes the need to maintain the competitiveness of European industries during the green transition.	Some nations expressed fears that an overly ambitious target would drive businesses out of the EU. The final deal includes language about supporting industry and deploying technologies like carbon capture and storage (CCS).
National Flexibility	The deal provides member states with more flexibility in how they achieve their national contributions to the overall 90% target.	This allows countries to choose their own energy mix—including the use of nuclear power, a key demand from France—and tailor their decarbonization pathways to their specific economic and social circumstances.

Key Enablers for the 2040 Target

Reaching the 90% reduction goal is not just about cutting emissions; it’s about a strategic transformation of the economy. The agreement highlights several key enablers:

Massive Investment: Unlocking public and private funding for renewable energy, grid infrastructure, and industrial innovation.
Carbon Capture and Storage (CCS): Deploying technology to capture CO2 emissions from industrial processes that are hard to abate.
A Just Transition: Ensuring that the costs and benefits of the green transition are distributed fairly, with social safety nets to protect vulnerable households and workers.
Technological Neutrality: Allowing member states to leverage a range of technologies, including nuclear energy and advanced biofuels, to meet their goals.

The Path Forward: From Political Agreement to Concrete Action

While a political agreement has been reached, the hard work is far from over. The 90% target must now be translated into detailed legislation by the next European Commission. This process will reopen debates on the specific contributions of each sector and member state. The overarching challenge remains: how to decouple economic growth from emissions while ensuring the transition is socially equitable and economically viable.

Pitfalls of a Compromise-Driven Climate Policy

While securing a deal was a political victory, a policy forged through heavy compromise carries inherent risks:

Loss of Ambition: The “flexibility” and delays included in the deal could be exploited as loopholes, slowing the real-world pace of emissions reductions.
Delayed Investment Signals: Postponing key measures like the ETS 2 could create uncertainty in the market, causing businesses to delay critical investments in green technologies.
Credibility on the World Stage: While the EU avoided arriving at COP30 empty-handed, a perceived “weakened” target could undermine its claims to global climate leadership.

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Marc-Antoine Lebrun

Editor in chief

Passionate about finance and new technologies for many years, I love exploring and delving deeper into these fascinating fields to better understand them. Curious and always eager to learn, I’m particularly interested in cryptocurrencies, blockchain, and artificial intelligence. My goal: to understand and share the innovations that are shaping our future.

EU's Green Transition: 2035 Climate Plan & 2040 Decarbonization Compromise