The EU has agreed to cut emissions by 90 percent. ETS 2's effective date has been postponed by a year

The European Union has reached a legally binding agreement to reduce greenhouse gas emissions by 90 percent below 1990 levels by 2040. This was announced on Wednesday by the European Parliament. Part of the plan includes the use of foreign carbon credits, which will cover about five percent of the needed emissions reductions.

This means that European industries must reduce their emissions by 85 percent. EU countries will offset the rest from 2036 onwards by paying countries outside the Union to reduce emissions for them as well.

For the agreement to become law, it still needs to be formally approved by both the European Parliament and the member states. As a rule, this is just a confirmation of an already agreed compromise.

The new target is more ambitious than the commitments of most of the world's major economies, but is five per cent more lenient than the original proposal. This was due to disagreements between member countries over the speed and cost of the green transformation.

"This agreement shows that climate protection, competitiveness and energy independence are not mutually exclusive. This is a strong but realistic climate law," said Wopke Hoekstra, spokesman for the EU climate commissioner.

The compromise followed months of difficult negotiations. Countries such as Poland, Slovakia and Hungary have resisted greater emissions cuts because their industries are struggling with high energy prices, cheap Chinese competition and US tariffs.

In contrast, countries like the Netherlands, Spain and Sweden pushed for a tougher target - arguing for a growing number of extreme climate events and the need to catch up with China in the production of green technologies.

In order to win the support of sceptical states, the Union also backed down on ETS 2 emission allowances for the road transport and building heating sectors. The system of these allowances will start a year later, at the beginning of 2028.

(reuters, est)