On July 2, 2025, the European Commission announced a climate strategy with the goal of reducing the European Union's net greenhouse gas emissions by 90% by 2040, compared to 1990 levels. This is part of the EU's broader plan to achieve climate neutrality by 2050.
To support this, the Commission introduced a compensation scheme for EU-based exporting industries, including aluminum and steel producers. These sectors will lose free carbon permits as the EU implements its carbon border levy next year.
The compensation, funded by the EU's new carbon border tariff, is estimated at €70 million for 2026. The proposal also includes allowing member states to use international carbon credits to meet up to 3% of their emissions reduction targets starting in 2036.
The 2040 climate target and associated measures are subject to approval from the European Parliament and EU member states. The EU aims to balance ambitious climate goals with the economic realities of its industries, leading in clean technology markets while maintaining global competitiveness.