LUXEMBOURG — A draft proposal from the European Commission would allow the limited use of carbon credits from projects in other countries to meet EU climate goals.
The draft amendment to the European Climate Law sets the bloc’s 2040 emissions-cutting target at 90 percent below 1990 levels, while permitting countries to meet part of the goal by sponsoring climate projects outside the EU, usually in poorer countries.
The Commission will publish the final proposal on July 2.
The proposal mirrors a deal struck during talks that formed the German government coalition, which called for limiting the use of such credits to 3 percentage points of the overall target.
The details of the draft, which is still the subject of debate both inside and outside the Commission, were described to POLITICO by someone familiar with its contents. Details about that person were kept anonymous to allow them to discuss the confidential document.
Using carbon credits would allow the EU, individual member governments or companies — depending on the legislative details — to pay for an emissions-cutting measure in another country and count the resulting greenhouse gas reduction toward its own climate target rather than the tally of the country hosting the project.
The EU’s existing climate targets require countries to achieve those reductions solely with domestic efforts, and critics warn that relying on credits even partially would slow the pace of decarbonization at home.
Nonetheless, the idea has gained traction in EU capitals.
On Tuesday, a French Ecological Transition Ministry official told reporters that EU Climate Commissioner Wopke Hoekstra had also raised a 3-point cap in their discussions.
But France believes such a cap is too low. “From what we understand — from what Germany has signaled, but also from what Commissioner Hoekstra has signaled — there is some discussion around 3 percent,” said the official, like others in this article granted anonymity to speak candidly. “We think it could go beyond that.”
A senior official from one EU government confirmed Hoekstra had mentioned the 3-point limit in discussions with countries.
Officials from two other EU governments, who asked that their countries not be identified, said they had also heard the Commission was leaning toward a 3 percentage point cap, but said the EU executive had not confirmed the figure would be included in the proposal. Dutch newspaper De Volkskrant reported a similar number on Tuesday.
Hoekstra lobbied the two German coalition partners to include carbon credits in their 2040 position, participants in those talks told POLITICO earlier this month. Yet the 3-point figure came from the German side, one participant said.
The European Union’s independent board of scientific advisers recently warned that carbon credits would put the integrity of the EU’s climate goals at risk. The Commission’s vice president for climate and competition issues, Teresa Ribera, has also expressed skepticism.
But for many, including France, the credits are viewed as a way to ease the burden on European industry to cut emissions.
The French official declined to name a figure at which carbon credits should be capped, saying: “We don’t have a position whether it should be 5 percent or 10 percent, but we think it is an element of flexibility that we should negotiate on … and I think we might need to go a little bit beyond 3 percent.”
The European Commission declined to comment.
Setting standards
France is also “open-minded” about what kind of credit-generating projects to finance, the same official said.
“I think nature-based solutions is something we like very much. But if, with that money, you can shut down a coal plant and replace it with renewable or low-carbon technologies, that is also very useful.”
In contrast, Germany wants any EU-financed carbon credits to fund “permanent” emissions cuts with projects of “high quality” — indicating opposition to nature-based projects such as reducing pollution through tree-planting, as these methods can only temporarily bind CO2.
France’s Ecological Transition Minister Agnès Pannier-Runacher suggested that one reason the EU should opt for carbon credits is to compensate for the declining carbon absorption capacity of the bloc’s own forests.
“We see [carbon credits] particularly as a way of responding to the uncertainty about our natural carbon sinks,” she told reporters on the sidelines of a Tuesday meeting of environment ministers in Luxembourg. “We know that given water stress, pests and climate change, there is a risk they will diminish.”
Her Finnish colleague Sari Multala took a similar position, telling reporters upon arriving at the ministerial meeting that “there could be some possibilities” to balance the declining EU carbon absorption capacity with international credits. Finland’s extensive forests have become a source rather than a sink of CO2, in part because of over-harvesting.
That makes Finland the 10th EU country to support international offsets, piling pressure on the Commission to allow carbon credits to reach an agreement on the 2040 target.
While carbon credits “should be a last-resort option,” Multala said, “I think it’s something we might have to be adopting, because otherwise we might not have a solution.”
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