The European Commission is set to propose a legally binding 2040 climate target that includes the use of carbon credits from international markets, according to a draft document seen by Reuters. The proposal, due on July 2, aims for a 90% net emissions reduction by 2040 compared to 1990 levels, but with added flexibilities to accommodate pushback from member states and industries.

Under the draft, the EU would allow "high-quality international credits" from U.N.-backed markets to account for 3% of the emissions cuts required to meet the 2040 goal. These credits, phased in from 2036, would fund projects like forest restoration in developing nations, effectively easing the burden on European industries. However, the proposal comes amid skepticism about the integrity of such credits, following scandals where projects failed to deliver promised climate benefits.

The draft also introduces other flexibilities, including integrating CO2 removal credits into the EU’s carbon market and allowing member states more leeway in allocating emissions cuts across sectors. These measures aim to address concerns from countries like Italy, Poland, and the Czech Republic, which argue that steep emissions targets could strain budgets already stretched by defense and other priorities.

A Commission spokesperson declined to comment on the draft, which could still undergo revisions before its official release. The final target will require negotiation between EU countries and the European Parliament, with potential amendments to the Commission’s proposal.

The move reflects Brussels’ attempt to balance ambitious climate goals with economic realities, but it also raises questions about the effectiveness of market-based mechanisms in achieving deep emissions reductions. Critics warn that relying on carbon credits could undermine domestic efforts to decarbonize, while proponents argue they are essential for funding global climate projects.