European Commission proposes binding 90% emissions cut by 2040

The European Commission proposed amending the EU Climate Law to set a binding target of cutting net greenhouse gas emissions 90% by 2040 against 1990 levels. The intermediate milestone tightens global decarbonisation benchmarks that shape expectations for Indian exporters and ESG-aligned investors.

The European Commission proposed a pivotal amendment to the EU Climate Law, setting a binding target to reduce net greenhouse gas emissions by 90% by 2040 compared to 1990 levels. The Commission says the EU is on track for its 2030 goal of a 55% emissions reduction, framing the 2040 target as a continuation of that trajectory. The proposal draws on recommendations from the Intergovernmental Panel on Climate Change and the European Scientific Advisory Board on Climate Change, and is intended to enhance investment certainty and energy independence.

EU industry, financial markets, and member states are most affected, as the target is developed alongside the EU Competitiveness Compass, the Clean Industrial Deal, and the Affordable Energy Action Plan to support innovation, affordability, and job creation. Public sentiment underpins the move: 85% of EU citizens view climate change as a serious threat and 81% support full climate neutrality by 2050. A parallel Communication on delivering the Clean Industrial Deal sets out early actions for decarbonising industry, a sector central to meeting the benchmark.

The next steps involve submitting the proposed amendment to the European Parliament and the Council. If adopted, the law will serve as a cornerstone for post-2030 EU climate policy and provide a long-term roadmap for stakeholders. The EU Climate Law, originally passed in July 2021, enshrines net-zero emissions by 2050, and the new proposal reinforces that commitment with intermediate milestones. Affected industries and investors should monitor the legislative process and the Clean Industrial Deal measures shaping post-2030 decarbonisation requirements.

Key figure — Proposed target: 90% net emissions cut by 2040 versus 1990