The European Union is preparing to reintroduce international carbon credits into its climate policy as part of its proposed goal to cut net greenhouse gas emissions by 90% by 2040 compared to 1990 levels. Under the draft plan, from 2036 the EU could offset up to 3% of its 1990 emissions—equivalent to around 460 million tonnes of CO₂ equivalent—through credits under Article 6 of the Paris Agreement. This approach combines domestic “permanent” removals with limited, high-integrity international credits, potentially retiring up to 140 million credits annually by 2040 and creating cumulative demand worth over €10 billion. If implemented, the EU could become the largest sovereign buyer of international credits, second only to CORSIA, with significant influence on global carbon markets.
Advocates see the move as a cost-effective way to ease compliance costs for European industries while channeling finance toward high-impact mitigation projects in the Global South, supporting a just transition and delivering co-benefits like biodiversity protection. However, critics warn of risks such as offshoring climate action, undermining domestic investment, and repeating past issues where credits failed to deliver real emissions cuts. To address this, the EU has set three guiding principles: environmental integrity, fair benefit-sharing with local communities, and Paris Agreement alignment. Recommendations stress the need to embrace diverse project types with strong risk management, ensure transparent and equitable revenue flows, and target credits that go beyond host countries’ NDC commitments.
The policy’s success will depend on careful implementation, with calls for a phased, consultative process that engages both the private sector and stakeholders in the Global South. Striking the right balance between cost-effectiveness, credibility, and climate ambition will determine whether the EU’s strategy strengthens global cooperation or fuels skepticism about the role of carbon markets in achieving net zero.
Link: https://www.weforum.org/stories/2025/07/eu-return-to-international-carbon-credits/
