In a landmark move, the European Commission has proposed a legally binding target to slash net greenhouse gas emissions by 90% by 2040, compared to 1990 levels. Announced on July 2, 2025, the ambitious proposal is seen as a major step toward aligning the European Union with its long-term climate neutrality goals. However, at the heart of this new target lies a deeply divisive clause: the use of international carbon credits.
Under the plan, EU member states would be allowed to offset up to 3% of their emissions using carbon credits purchased from developing nations through a UN-backed global carbon market. These credits would primarily come from projects such as forest restoration and land-use changes aimed at capturing or avoiding carbon emissions.
EU Climate Commissioner Wopke Hoekstra defended the inclusion of offsets, calling the approach “economically, securely, and geopolitically sensible.” According to Hoekstra, the initiative offers a way to direct climate finance to the Global South while ensuring emissions are reduced where it’s most efficient. “The planet doesn’t care where we take emissions out of the air,” he said, arguing that carbon cuts abroad are just as valid as those made within Europe as long as they’re verifiable and truly “additional.”
However, this clause has triggered a wave of criticism from environmental groups, scientists, and lawmakers across the EU. Many fear that allowing offsets risks derailing domestic decarbonisation efforts and could open the floodgates to so-called “junk credits” offsets that either don’t represent real reductions or would have occurred even without external investment. Greenpeace slammed the move as “dodgy accounting and offshore carbon laundering,” accusing the EU of shifting responsibility to developing countries while continuing to pollute at home.
Critics also argue that the flexibility undermines investment in homegrown clean energy transitions. The EU’s own climate science advisory body had previously recommended a stricter target of 90-95% cuts without relying on foreign offsets, warning that such mechanisms could divert much-needed funding from innovation and decarbonisation in Europe.
The concerns are not entirely new. International carbon markets have long faced scrutiny for lacking transparency, weak oversight, and often failing to deliver the promised environmental benefits. Projects may overestimate the carbon saved or be located in politically unstable areas with limited monitoring capacity. In some cases, carbon credits have even been sold for projects that were already underway or required by law, raising questions about their authenticity.
The debate now centres around a fundamental question: should a country or bloc like the EU be allowed to “offset” its emissions elsewhere, or must climate action be rooted in direct, systemic change at home? For many, the latter is non-negotiable.
Still, the Commission maintains that strict quality criteria will be introduced next year to ensure the environmental integrity of any offsets. These will include rules on verification, permanence, and additionality meaning credits must represent new, measurable, and permanent reductions that would not have happened otherwise.
As the 2040 target begins to take shape, this tug-of-war between pragmatism and principle could define the EU’s climate credibility. With the world inching closer to critical tipping points, the choices made now will set the tone for the next phase of global climate action.
At stake is not only Europe’s ability to meet its own targets, but also the future of international cooperation in addressing climate change. Whether carbon markets emerge as a powerful tool for global justice or as a convenient loophole for wealthy polluters remains to be seen.