The European Council introduced a provision to postpone the entry into application of the EU emissions trading system for buildings and road transport (ETS2) by one year, from 2027 to 2028. The change is part of the new agreement for the 2040 climate target, of a 90% reduction in net greenhouse gas (GHG) emissions, compared to 1990 levels.
The EU Emissions Trading System (ETS) is the EU's main policy for reducing greenhouse gas (GHG) emissions by putting a price on carbon. Under ETS, fuel suppliers (not individual growers) will buy emission allowances. However, costs will be passed down to greenhouse operators through higher fuel prices.
The Council has maintained the binding 90% reduction of net GHG emissions by 2040 proposed by the Commission. However, it has made some adjustments to reflect concerns about the EU's competitiveness, the need for a just and socially balanced transition, uncertainty related to natural removals and the diverse national circumstances across member states. These changes were also informed by the strategic guidance provided by EU leaders in the European Council conclusions adopted on 23 October 2025.
Scope for flexibility for the member states
The Commission's proposal included three flexibility options, to be appropriately reflected in future Commission legislative proposals for achieving the 2040 target. The Council further clarified these areas of flexibility, which include:
- the possibility to use high-quality international carbon credits to make an 'adequate contribution' towards the 2040 target, quantified as up to 5% of 1990 EU net emissions, from 2036 onwards, including a pilot period for the period 2031-2035
- a role for domestic permanent carbon removals under the EU emissions trading system (ETS) to compensate for residual hard-to-abate emissions
- enhanced flexibility within and across sectors and instruments to support the attainment of targets in simple and cost-effective ways, allowing member states to address shortfalls in one sector without compromising overall progress
The Council presidency will start negotiations with the European Parliament once the latter adopts its position, with a view to agreeing on the final text of the amendment.
