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EU adds international CO2 credits as part of next climate goal

The European Commission proposed a climate target for the EU for 2040 on Wednesday. For the first time, countries will be able to use credits for carbon from developing nations in order to reach a small portion of their emission goal.

The European Union executive has proposed a legally binding target of cutting net greenhouse gas emission by 90% by 2040 from 1990 levels. This is to keep the EU on track to achieve its core climate goal to reach zero net emissions by 2050.

The Commission, however, after facing opposition from France, Germany and other governments, including Italy, Poland, the Czech Republic and France, proposed flexibility to the 90 percent emissions target for European industry.

The EU has some of the most ambitious climate goals among major economies. EU emission targets are based on only domestic emissions reductions.

Carbon credits purchased from other countries via a U.N. supported market can cover up to three percentage points of Germany's 2040 target, reducing the amount of effort needed by the domestic industry.

Carbon credits will be phased-in from 2036. The EU will propose legislation in the next year that will establish the quality standards for the credits and who can buy them.

Wopke Höstra, EU Climate Commissioner, said that the new climate targets would provide investment certainty to industries and governments. He also stated that purchasing foreign carbon credits can help EU diplomacy.

"We will continue to pursue a clean transition." Hoestra stated in a press release that we know the reasons for our clean transition - economic, geopolitical and security.

A draft of the proposal was previously published.

The countries would also have more flexibility in choosing the sectors of their economy that contribute most to the 2040 target.

Climate change has made Europe one of the fastest-warming continents in the world. A severe heatwave last week caused wildfires, disruption and chaos across the continent. But Europe's aggressive policies to combat the temperature rise has stoked tensions among the 27 member bloc.

The European Commission's climate agenda is marketed as a means to increase Europe's security and competitiveness. However, certain governments and legislators say that industries already struggling with high energy prices and U.S. tariffs cannot afford stricter emission rules.

Climate science advisors from the EU warned against counting foreign carbon credits towards the 2040 goal, saying that spending money on them would divert investment away from local industries.

Carbon credits can be generated through projects that reduce CO2 emission abroad, such as forest restoration projects in Brazil. These carbon credits then raise money for these projects. Investigations have revealed that some credits did not deliver the claimed environmental benefits.

EU legislators and countries must agree on the 2040 target. This lawmaking process may take many years, but by mid-September the EU must submit to the U.N. its new 2035 climate goal - which should be derived directly from the current 2040 target - as the Commission had stated. (Reporting and editing by Barbara Lewis; Kate Abnett)

(source: Reuters)