On June 28, 2021, the European Council approved the Climate Law that was conditionally approved by the European Parliament on April 21, 2021. The Climate Law provides a framework for a climate-neutral EU by 2050 and sets a binding EU climate target to reduce net greenhouse gas emissions (emissions after deduction of removals) by at least 55 percent by 2030, as compared to 1990.

The Climate Law also contemplates an “intermediate climate target for 2040, as appropriate, at the latest within six months after the first global stocktake carried out under the Paris Agreement.”

At the same time, the European Commission will publish a projected indicative greenhouse gas budget for the EU for the period 2030-2050 and its underlying methodology. The budget is defined as “the indicative total volume of net greenhouse gas emissions (expressed as CO2 equivalent and providing separate information on emissions and removals) that are expected to be emitted in that period without putting at risk the [EU’s] commitments under the Paris Agreement.”

The Climate Law also establishes a European Scientific Advisory Board on Climate Change. The board will provide independent scientific advice and produce reports on EU “measures, climate targets and indicative greenhouse gas budgets and their coherence with [the Climate Law] and the [EU's] international commitments under the Paris Agreement.” This seems closely analogous to the role of the UK's Climate Change Committee.

The EU will need to rely on a number of tools to achieve its objective, including the EU Emissions Trading System. As part of the EU's broader plans for climate neutrality, the Commission intends to propose a WTO-compatible carbon border adjustment mechanism. (See our Legal Update.) Equally, the EU will need to engage in offsetting emissions, which will require progress to be made under the Paris Agreement negotiations.