Context: The European Union (EU) includes International CO2 credits in the climate goal for the first time.
Relevance of the Topic: Prelims: About Carbon credit and EU’s climate targets.
EU’s New Climate Goal and Carbon Credits
- The European Union has proposed a legally-binding climate target to cut net greenhouse gas emissions by 90% by 2040 from 1990 levels.
- This proposal introduces a notable flexibility to member states which will allow them to use carbon credits purchased from developing nations to meet a limited portion of their emissions offsetting target.
- The EU is allowing up to 3% of its target to be met using carbon credits purchased from developing countries, via a UN-backed market from 2036 onwards.
The EU’s existing climate targets require countries to meet the goals entirely by cutting emissions at home.
This also raises questions over the effectiveness of carbon-credits: if they are a verifiable tool to drive global emission reductions, or do they risk becoming another form of greenwashing, allowing wealthier nations to offset rather than truly transform their domestic economies.