Changes to EU rules around carbon offsets amount to a watering down of commitments, climate campaigners have said. 

The EU has set a 2040 goal for member states to cut greenhouse gas (GHG) emissions by 90% based on 1990 levels. 

The 90% target represents the lower end of the 90-95% range that the EU’s climate advisers said was possible by 2040. It also allows carbon offsets, or credits, from outside the bloc to be used to meet up to 3% of the target. 

Carbon credits are derived from projects designed to remove GHGs from the atmosphere through efforts such as reforestation, renewable energy or methane capture. But the efficacy of many offset projects has been brought into question in the past. In its policy document, the EU states that any credits utilised would need to be of “high quality” and “come from credible and transformative activities”.

Nevertheless, making use of projects from outside the EU removes the ability for that country to count that particular offset against their own climate targets. Proponents argue that the system encourages member states to spend more on carbon projects abroad that would otherwise not be funded.

“The planet doesn’t discriminate where emissions are being put into the air,” European climate commissioner Wopke Hoekstra said.

Campaigners Carbon Market Watch (CMW) said the carbon offset addition amounted to a “loophole” that was “bad news for climate action and for those hardest hit by rising temperatures”.

“It’s reckless of the Commission to propose counting carbon credits towards the EU’s climate target,” said Jonathan Crook, CMW’s lead expert on global carbon markets. “This loophole will delay urgently needed domestic mitigation, potentially incur billions in costs, and rightfully weaken global trust in the EU as a supposed climate leader.”

The EU argued that its plan would give greater certainty to investors which could spur innovation on ways to tackle climate change. The bloc is currently on track to meet its 2030 target of 55% cuts based on 1990 levels. 

Commission president Ursula von der Leyen said: “As European citizens increasingly feel the impact of climate change, they expect Europe to act. Industry and investors look to us to set a predictable direction of travel. Today we show that we stand firmly by our commitment to decarbonise European economy by 2050. The goal is clear, the journey is pragmatic and realistic.”

The EU’s Emissions Trading System is a ‘cap and trade’ policy designed to establish a price for the right to emit CO₂. This is achieved by imposing a cap on the total emissions from more than 12,000 power and manufacturing plants in 31 countries across Europe. The cap covers 40% of the EU’s emissions.

A study from last year found that pricing carbon emissions did not have a negative economic impact for those manufacturing firms regulated under the policy.