On 2 July 2025, the European Commission announced a proposal to amend EU climate law, introducing new binding target: 90% net emission reduction by 2040 (compared to 1990 levels). This is the most ambitious step taken by the EU in the history of climate policy and a clear signal that Europe intends to maintain its position as a global leader in climate protection.
The new proposal is not just about the environment – it is a comprehensive vision for the transformation of the European economy. At its heart is the pursuit of a modern, low-carbon industry that is resilient to crises and competitive with non-EU economies. This is why the Commission emphasises the importance of integrating industrial, energy and trade policies.
In addition to plans to extend the ETS (EU Emissions Trading System) and create a new support programme, the Clean Industrial Deal, CBAM mechanism (Carbon Border Adjustment Mechanism) is becoming even more important as a tool to protect European companies from unfair competition from non-EU producers who do not bear the costs of emissions.
What is changing and what are the main assumptions of the new climate package?
First of all, the new assumptions are specific, clear and adapted to the new challenges in the EU and its economy. The most important of them are discussed below:
- 📈 Target: −90% net emissions by 2040
The new goal is a significant step towards climate neutrality and requires radical changes across the European economy – from industry and energy to agriculture and transport. - (I.e. Possibility to use up to 3% international offsets from 2036
Companies will be able to cover part of their emissions commitments from CO₂-scavenging projects outside the EU – such as afforestation, peatland restoration. The Commission stipulates that offsets are to be rigorously certified and only a supplement to, not a substitute for, emission reductions. - ️ Inclusion of CO₂ absorption technologies (CCS, DAC) in the ETS system
The ETS will also cover technologies such as carbon capture and storage (CCS) and direct air capture (DAC). This opens up new investment opportunities for heavy industry and energy. - ⚡ Clean Industrial Deal Initiative
The new support program for industry is to simplify public aid rules and create investment incentives for low-emission industrial projects. It assumes, among other things, the acceleration of permitting and simplified financing of investments consistent with the -90% target. - ???? Confirmation of the strategic role of CBAM and announcement of its expansion
The European Commission sees CBAM as a key pillar of climate and industrial policy. The communication announces its extension to other sectors – including plastics and chemicals – and considers using CBAM revenues to finance the transition.
CBAM (Carbon Border Adjustment Mechanism) is not only a transitional mechanism, but is increasingly being presented as a pillar of the new EU climate and economic orderIn the context of the new −90% target, CBAM has three strategic functions:
1. Protection of competitiveness
CBAM prevents the so-called "carbon leakage" - the transfer of production to countries with lower emission standards. The increase in emission costs in the EU requires external tools to protect producers.
2. Transparency in supply chains
Importers must provide data on embedded CO₂ emissions, which improves the quality of climate data and influences purchasing choices.
3. Financing the transformation
Revenues from CBAM can support the development of low-emission technologies and help sectors particularly exposed to cost increases.
(I.e. Eurobarometer: 85% of Europeans consider climate change to be a serious problem.
🔧 Energy-intensive industries they fear cost pressures and loss of competitiveness, although they welcome the support package (Clean Industrial Deal).
(I.e. Ecological organizations criticize the inclusion of international offsets – in their opinion, it risks weakening ambitions and blurring responsibility.
- CBAM will be strengthened and probably expanded to other sectors.
- There will be increased pressure to collect reliable emissions data from non-EU suppliers.
- The industry will need to update its purchasing strategies, ESG and cost calculations.
The new target of -90% by 2040 is not only an ambitious climate policy. It is also a clear signal: The EU is building an integrated system in which industrial, tax and climate policies are consistent with each other.
CBAM is becoming one of the key instruments in this puzzle. That is why it is worth not only following its development, but also preparing now for its settlement stage from 2026.