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Belgium intends to allocate carbon credits as part of its climate goal for the year 2040.

European Climate Strategy Adjustments

Belgium intends to award CO2 accreditation towards its 2040 climate target.
Belgium intends to award CO2 accreditation towards its 2040 climate target.

Belgium intends to allocate carbon credits as part of its climate goal for the year 2040.

Europa's Climate Approach: Brussels mulls incorporating international carbon credits towards 2040 climate objective

The European Commission is considering incorporating international carbon credits as part of its strategy to meet the 2040 climate objective, aiming to ease the burden on EU member states in achieving environmental goals. This information was shared with EU country representatives at a recent meeting, as confirmed by EU Climate Commissioner Wopke Hoekstra, according to Reuters' reporting, which cited several diplomats.

To secure support from EU member states for the ambitious goal of reducing net greenhouse gas emissions by 90% compared to 1990 levels by 2040, the Commission seeks to offer a degree of flexibility in implementation. Previously, the EU's climate targets were to be achieved solely through internal measures.

Reports indicate that the proposal, scheduled for July 2nd, would provide leeway to reach the 90% target by potentially easing industrial emissions requirements. This could entail setting a reduced emissions reduction target for industry, coupled with the option for countries to purchase international CO2 credits from overseas climate projects to help reach the 90% goal.

A Commission spokesperson refrained from commenting on the plans. The EU Commission had pledged to uphold Europe's climate goals, and criticism from EU member states has grown due to concerns regarding the costs faced by businesses with high energy prices and potential U.S. tariffs.

Notably, the EU's climate targets involve a 90% reduction in greenhouse gas emissions by 2040 compared to 1990 levels. The Commission has proposed offering "flexibilities" as part of this goal, but the extent to which international carbon credits are included remains unclear. The EU's Emissions Trading System (ETS) and Carbon Border Adjustment Mechanism (CBAM) form central components of the bloc's climate strategy, with CBAM designed to address carbon leakage by requiring importers to account for and pay for carbon embedded in goods entering the EU.

The use of international carbon credits under the EU ETS has largely been phased out since 2012, and current rules do not allow for the use of such credits to meet ETS compliance obligations. The EU's climate policy has historically emphasized domestic emissions reductions and investments, rather than relying on offsets from outside the bloc.

If the proposal moves forward, it could potentially offer flexibility and lower costs for EU member states, particularly for sectors where abatement is costlier. However, careful regulation is necessary to avoid undermining the integrity of the EU's climate goals. The European Commission's current policy does not permit EU member states to count international carbon credits towards their 2040 climate targets under the ETS or mainstream climate legislation. However, discussions around introducing flexibility, including allowing verified reductions from non-EU countries, are ongoing.

  1. To align the European Commission's climate policy with the 2040 climate objective, a potential policy revision is under consideration, which may involve incorporating international carbon credits, primarily from climate projects in the science field, as part of the strategy.
  2. The proposed changed policy might ease the burden on EU member states by providing a flexible approach to achieving environmental goals, as it may include the option for countries to purchase emissions permits from industries active in tackling climate-change, contributing to the financial sector's funding of environmental-science projects.
  3. The ongoing discussions revolve around the implementation of international carbon credits not only in the European Union Emissions Trading System (ETS) but also in mainstream climate legislation, fostering energy-efficient practices in industries across various sectors, including finance and energy.

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