CALL FOR EVIDENCE

FOR AN IMPACT ASSESSMENT

This document aims to inform the public and stakeholders on the Commission's future legislative work so they can provide feedback on the Commission's understanding of the problem and possible solutions, and give us any relevant information that they may have, including on possible impacts of the different options.

Title of the initiative

Legal framework for the possible use of international credits towards the 2040 EU climate target under the European Climate Law

Lead DG (responsible unit)

D.G CLIMA: Unit A2 (Foresight, Economic Analysis & Modelling) and Task Force (International carbon pricing and markets diplomacy).

Likely type of initiative

Legislative framework

Indicative timetable

Q4 2026

Additional information

European Climate Law - Climate Action - European Commission

This document is for information purposes only. It does not prejudge the final decision of the Commission on whether this initiative will be pursued or on its final content. All elements of the initiative described, including its timing, are subject to change.

A. Political context, problem definition and subsidiarity check

Political context

The Commission proposed an amendment to the European Climate Law (2025/0524 COD) for an intermediate target of a 90% reduction in net greenhouse gas (GHG) emissions by 2040, relative to 1990 levels, with several flexibility options for designing the policy architecture after 2030, including the limited use of high-quality international credits under Article 6 of the Paris Agreement from 2036 to 2040, to complement domestic action to achieve climate neutrality in 2050. The EU co-legislators have reached provisional agreement on the amendment, which will enter into force following formal adoption by both the European Parliament and the Council. The amendment requires the Commission to reflect, starting in 2036, an adequate contribution towards the 2040 climate target of high-quality international credits of up to 5% of 1990 EU net emissions and provides for a possible pilot period between 2031 and 2035, to initiate a high-quality and high-integrity international credit market.

The assessment of the role of international credits is related to other initiatives. First, the wider review of national targets and flexibilities in the EU climate policy framework after 2030, including the EU Emissions Trading System, the Effort Sharing Regulation and the Land Use, Land Use Change and Forestry Regulation. Second, the review of the Regulation on the Governance of Energy Union and Climate Action which includes the reporting, monitoring and planning requirements related to national climate and energy targets. Certain elements may at a later stage be moved and integrated across initiatives.

Problem the initiative aims to tackle

This initiative will explore how to implement the amended European Climate Law provisions on the potential use of international credits towards the 2040 Climate target. Achieving climate neutrality by 2050 will require a transformation of the EU economy with efforts by all economic sectors and territories, as well as the enhancement of removals. The EU needs to stay on an ambitious and cost-efficient decarbonisation pathway to reach climate neutrality while ensuring competitiveness, independence and a just transition. This pathway and EU measures for after 2030 need to provide certainty and cost-efficiency, to attract the investment needed to achieve climate neutrality, with competitive industries, technologies and jobs.

To contribute to achieving the goals of the Paris agreement, the EU must provide global leadership and work with partners around the world to encourage ambitious global climate action to keep 1.5 degrees warming in reach, through action in line with sustainable development. Facilitating the achievement of the 2040 climate target through the limited use of high-quality international credits could support this global effort in a more cost-effective way for the EU, while safeguarding its competitiveness and promoting technological leadership. Ensuring the environmental integrity and high quality of international credits is essential for effective and credible global climate change mitigation. This initiative will implement the provisions for international credits in the amended European Climate Law. The objective is to do so in a way that puts the EU on the most efficient path towards achieving net-zero emissions in the EU by 2050, and negative emissions thereafter, while ensuring a prosperous economic transition in the EU and supporting ambitious action in partner countries.

Basis for EU action (legal basis and subsidiarity check)

Legal basis

The legal basis of this initiative is Article 192(1) of the Treaty on the Functioning of the European Union (TFEU). This initiative aims to implement provisions set out in the amended European Climate Law (Regulation (EU) 2021/1119).

Practical need for EU action

Climate change is a cross-border problem, where coordinated EU action needs to supplement and reinforce national and local action. EU coordination enhances climate action and EU action is justified on grounds of subsidiarity, in line with Article 191 of the Treaty on the Functioning of the European Union. Since 1992 the EU has worked to develop joint solutions and bring about a global agreement to fight climate change.

EU action is required to ensure that the EU-wide 2040 climate target of 90% net greenhouse gas emissions reduction, including through the adequate use of high-quality international credits, is achieved. Implementing the provisions regarding an adequate use of international credits will have implications across the EU economy. EU action is required to ensure a level playing field between Member States, avoid fragmentation and establish coherent, consistent and robust EU-wide rules on the origin, quality, acquisition and use of international credits, as required by the European Climate Law. Implementation at EU level will also allow for economies of scale and provide benefits. Coordinated climate action at EU level is also of central importance for international climate action, in the context of the EU’s climate diplomacy. The climate integrity and the economic efficiency of any mechanism integrating international credits into the EU climate framework may better be upheld by establishing clear and codified common objectives and procedures at the EU level.

B. Objectives and policy options

The main objective is to implement provisions for the use of international credits towards the EU’s 2040 climate target of a 90% net emissions reduction relative to 1990 levels, as an integral part of the post-2030 climate policy framework. This should be done in a way that is both ambitious and cost-efficient and which is in line with the rules of the Paris Agreement, and consistent with the EU’s pathway towards climate neutrality and negative emissions thereafter. The aim is to harness the potential of the international carbon market to achieve higher emissions abatement at optimised cost and with enhanced socio-economic benefits for the EU and its partners, to ensure the achievement of their climate objectives and work towards achieving the goals of the Paris agreement.

A number of policy options will be assessed for the design of the framework for the purchase of high-quality international carbon credits and for their use towards the EU’s 2040 climate target as part of the EU post-2030 climate framework. The options will address a number of central questions – namely, how to ensure that credits purchased by the EU meet quality level required by the Paris Agreement; how to design the purchase and use of credits to best achieve the EU’s climate and broader policy objectives, including the type (sector, technology, emissions reductions, technical removals, land-based removals etc.) and origin of credits; how to finance the purchase of credits and how to integrate international credits into the post-2030 policy framework while ensuring the integrity of EU and international climate action.

C. Likely impacts

Likely economic impacts

Recent Impact assessments by the European Commission, including the one on the 2040 climate target published in 2024 (SWD(2024) 63 final), have highlighted that while the overall impact of the measures needed to transition to climate neutrality on GDP is likely to be limited, ambitious action is essential in order to avoid the important costs of inaction that would reduce GDP. It also shows that the transition will transform the EU economy and that significant changes will need to take place in production processes and consumption patterns. The transition towards climate neutrality is expected to require a significant increase in investment by businesses, households and the public sector, together with a reallocation of capital across sectors or technologies.

The macroeconomic impacts of the integration of international credits into the EU’s climate architecture, at the volumes specified in the European Climate Law, are likely to be relatively limited at the level of economic output, with potentially bigger impacts on specific sectors or regions, varying across various policy options.

The design choice for the purchase and use of international credits will affect the level of investment and activity in different sectors. The economic impacts of international credit use will be assessed, so that these can be compared to the impacts of equivalent domestic action and to allow decisions that ensure that the costs of international credit use do not exceed the costs of achieving a 90% net reduction in the EU domestically by 2040.

Likely social impacts

A just transition is a key part of achieving climate neutrality by 2050. The implications of trends and the distributional effects of the post-2030 measures and use of international credits to meet the 2040 target will be assessed for the EU. The implications of the purchase by the EU of international credits for sustainable development in third countries will also be considered. As mentioned above, this initiative is part of a broader package of measures for the post-2030 climate and energy policy framework.

Likely environmental impacts

The key environmental objective of this initiative is to tackle climate change, including through strengthening the EU’s global leadership in the fight against climate change. Co-benefits, synergies and potential trade-offs with air pollution, water supply, waste management, resource efficiency, the bioeconomy, the circular economy and biodiversity also exist and must be taken into account.

The European Climate Law is clear that international credits should come from credible and transformative activities, and should support third countries with net emission reduction trajectories that are compatible with the Paris Agreement objective of keeping the increase in the global average temperature to well below 2 °C and pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels, while enabling and supporting supply chains needed for the transition to net-zero emissions. In line with Article 6 of the Paris Agreement, the EU should agree with third countries concerned on the sharing of mitigation benefits. The assessment will also examine the permanence and reversibility risks of different categories of international credits. 

The impact assessment will consider in detail the impact on the EU’s climate objectives as well as other potential environmental impacts and benefits of different available options and their alignment with the requirements set out above.

Likely impacts on fundamental rights and equality

The initiative is in line with Article 37 of the Charter of Fundamental Rights, which states that a high level of environmental protection and the improvement of the quality of the environment must be integrated into the policies of the EU and ensured in accordance with the principle of sustainable development. No relevant impacts on other fundamental rights are expected.

D. Better regulation instruments

Impact assessment

An impact assessment supporting this initiative is to be published in Q4 2026.

The impact assessment will consider the economic, social and environmental impacts of the different options for the purchase and use of credits and their effectiveness in addressing the following, among other things: the balance between domestic and international climate action; credit integrity and standards; environmental and social sustainability; impacts on investment, trade, EU security and independence; and the implications for innovation, growth and competitiveness, economic development and mitigation in partner countries.

Consultation strategy

The Commission will collect the views of key stakeholders through a 12-week public consultation launched alongside this call for evidence. These views will be integrated into the impact assessment on the use of international credits towards the 2040 target.

·The public consultation will take the form of a questionnaire to which respondents can attach position papers.

·The public consultation will be accessible on the Commission's central public consultations portal ‘Have your say’ and the DG CLIMA website.

·Stakeholder documents other than position papers submitted through the portal, such as policy briefs or roadmaps, will also be considered.

·The public consultation will be published in all 24 official EU languages.

The public consultation will inform the impact assessment. A factual summary report will be published within eight weeks of the closure of the public consultation. A synopsis report summarising the results of all consultation activities will be annexed to the impact assessment report.

In line with the European Commission’s Better Regulation policy to develop initiatives informed by the best available knowledge, the Commission invites scientific researchers, as well as academic organisations, learned societies, and scientific associations with expertise in the analysis of climate change mitigation strategies, carbon markets and credits and in the analysis of the impacts of climate change to submit relevant published and pre-print scientific research, analyses and data. Submissions that synthesise the current state of knowledge in relevant fields are particularly welcome.

Why we are consulting?

The public consultation will allow evidence and feedback to be collected from stakeholders on how the limited use of up to 5% of high-quality international carbon credits can best support the achievement of the 2040 target, through flexibility and efficiency in how the 2040 target is met, and achievement of the goals of the Paris Agreement. This will provide valuable evidence for the Commission’s assessment of options for the design of the framework for the purchase and use of credits towards the 2040 target the 2040 target and will inform the analysis of the available options in the Impact Assessment.

This initiative is related to other initiatives on which the Commission is currently also consulting the public. These include the wider review of national targets and flexibilities in the EU post-2030 climate policy framework, including the Effort Sharing Regulation and the Land Use Land Use Change and Forestry Regulation, and the review of the Governance Regulation, which includes the reporting, monitoring and planning requirements related to national targets.

Target audience

The public consultation is aimed at the general public and at stakeholders for whom the use of international credits by the EU may have a more direct impact and/or be of more direct interest, such as national, regional and local governments and authorities, financial institutions and crediting agencies, relevant industrial sectors and related associations, project developers, social partners, consumers and professional organisations, NGOs, research and academic institutions and public procurement authorities.