In a significant move, the European Commission has, on July 2, 2025, proposed a legally-binding climate target to cut net greenhouse gas emissions by 90 per cent by 2040 from 1990 levels. However, this new proposal introduces a notable flexibility to member states which will allow them to use carbon credits purchased from developing nations to meet a limited portion of their emissions offsetting target.
But the question arises, is this really going to balance carbon emissions and will it really lead to effective reduction? Planned to be phased in from 2036 through a United Nations-backed market, up to 3 percentage points of the 2040 goal could be covered by these carbon credits.
The EU will establish strict quality criteria and rules for their use next year. These credits, generated by projects like forest restoration abroad, are seen by EU Climate Commissioner Wopke Hoekstra as “economically, securely, and geopolitically sensible”, creating investment certainty and attracting "huge appetite" from the global South.
Hoekstra asserts that "the planet doesn’t care about where we take emissions out of the air", emphasising the global need for action. He also believes that humanity can overcome challenges to ensure the integrity, certification, and verification of these credits, insisting they must be "additional" to existing efforts. Meaning, this new carbon credits approach shouldn’t replace the existing pledged efforts but should be looked upon as an additional measure to offset the emissions.
This flexibility in the form of offsets has ignited "fury" among green groups, who express "extreme concern". They insist the EU should achieve its targets through domestic emission cuts. The EU's own climate science advisers had recommended slightly steeper cuts of 90-95 per cent and opposed counting foreign credits, warning it would divert vital investments from local industries.
Critics fear the proliferation of "junk offsets" that are ineffective or lack "additionality" meaning the reductions would have happened anyway. As one lawmaker starkly put it, "Europe risks shirking its responsibilities — polluting at home while planting trees abroad to buy a clean conscience". Greenpeace also called this "dodgy accounting and offshore carbon laundering".
This brings us to a crucial question: Are these international carbon markets a genuine, verifiable tool to drive global emission reductions, or do they risk becoming another form of greenwashing, allowing wealthier nations to offset rather than truly transform their domestic economies?