The European Commission is set to propose allowing carbon credits from other countries to count towards the EU’s 2040 climate target, according to a leaked internal document.

The European Commission plans to include carbon credits from abroad in the European Union’s 2040 climate target, a move aimed at easing the emissions cuts required from EU industries.

A draft summary of the upcoming proposal, seen by Reuters, shows the Commission intends to allow "high-quality international credits" from a U.N.-backed carbon market to cover up to 3 percent of the EU’s emissions cuts.

The credits would be phased in from 2036, with new EU legislation to later define sourcing rules, quality standards, and purchasing processes.

This adjustment would effectively reduce the domestic emission cuts European industries need to make to reach the EU’s planned 90 percent emissions reduction from 1990 levels by 2040.

Projects eligible for credits could include initiatives like forest restoration in countries such as Brazil. Supporters say this will help fund CO2 reduction efforts in developing nations. But recent controversies over the credibility of some carbon credit projects have raised concerns about their actual climate impact.

The Commission’s document also outlines additional flexibilities, such as integrating CO2 removal projects into the EU carbon market, allowing industries to buy removal credits to offset emissions.

Countries would also gain more flexibility in deciding which sectors shoulder the biggest emission cuts, helping them meet targets more cost-effectively.

The shift follows pushback from governments including Italy, Poland, and the Czech Republic, who fear the costs of a strict 90 percent target could hurt industries and strain national budgets already stretched by defence spending and other priorities.

The European Commission declined to comment on the leaked draft, which is due for official release on July 2 and may still change before publication.

Once unveiled, the proposal will go through negotiations with EU countries and the European Parliament, who could revise the final target.

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