Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) 2021/1119 establishing the framework for achieving climate neutrality
Date: 2025-07-02
Institutions: Directorate-General for Climate Action, European Commission
Subjects: EU environmental policy, climate change, environmental law, greenhouse gas, joint implementation, pollution control measures, reduction of gas emissions

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   EUROPEAN COMMISSION  Brussels, 2.7.2025  COM(2025) 524 final 2025/0524 (COD)  Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) 2021/1119 establishing the framework for achieving climate neutrality {SWD(2025) 524 final}  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

• 
As confirmed in the Competitiveness Compass1, Europe has set out an ambitious framework 
to become a decarbonised economy by 2050. It will stay the course, with a Clean Industrial 
Deal,  aimed  at  securing  the  EU  as  an  attractive  location  for  manufacturing,  including  for 
energy  intensive  industries,  and  promoting  clean  tech  and  new  circular  business  models,  in 
order to meet its agreed decarbonisation objectives. Their implementation will also strengthen 
the  EU’s  energy  independence  from  imported  fossil  fuels.  As  highlighted  in  the  Draghi 
Report  on  the  Future  of  European  Competitiveness2,  decarbonisation  is  not  only  crucial  for 
the  planet,  but  also  a  key  driver  of  economic  growth  when  integrated  with  industrial, 
competition, and trade policies. 

The  EU  has  set  its  climate  targets  for  2030  and  2050  in  Regulation  (EU)  2021/1119 
establishing the framework for achieving climate neutrality (the European Climate Law). 

Article 4(3) of the European Climate Law requires an intermediate 2040 climate target to set 
the  pace  for  EU-wide  reductions  of  net  GHG  emissions.  Setting  a  2040  target  will  provide 
investors  and  EU  businesses  with  predictability  and  a  clear  indication  of  the  transition 
pathway needed, to drive business decisions and unlock private investment.  

On  6  February  2024,  the  Commission  published  a  Communication  on  the  Union’s  climate 
target  for  20403,  setting  a  path  from  the  already-agreed  intermediate  2030  target  to  climate 
neutrality  by  2050.  Taking  into  account  the  scientific  advice  by  the  European  Scientific 
Advisory Board on Climate Change and based on a detailed impact assessment and report on 
the  carbon  budget4,  the  Communication  presented  a  90%  net  GHG  emission  reduction 
compared to 1990 levels as the recommended target for 2040. 

A  90%  target  puts  the  EU  on  the  pathway  which  provides  the  greatest  overall  benefits  in 
terms of competitiveness, resilience, independence, autonomy, a just transition and ensuring 
that the EU meets its commitments under the Paris Agreement.  

The  EU  recognises  climate  change  as  an  existential  threat  closely  linked  to  global  security, 
peace  and  sustainable  development.  With  the  2040  target  the  EU  stays  the  course  on  its 
climate  action  while  continuing  to  diplomatically  engage  partner  countries  to  reduce  global 
emissions and reach climate neutrality. 

• 

Consistency with existing policy provisions in the policy area 

The EU has been pursuing an ambitious decarbonisation agenda. The ‘Fit for 55’ package of 
legislation  set  the  EU  on  a  path  to  reach  its  climate  targets  in  a  fair,  cost-effective  and 
competitive way.  Full  implementation of the legislative framework in  place  for meeting the 
2030  climate  and  energy  targets  is  a  precondition  for  the  EU  to  stay  on  course  to  the  2040 
target on the way to climate neutrality in 2050.  

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COM(2025) 30 final. 
The Draghi report on EU competitiveness. 
COM(2024) 63 final. 
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The  impact  assessment5  accompanying  the  2040  climate  target  communication  shows  that 
achieving a 2040 climate target would imply greenhouse gas emission reduction efforts by all 
sectors, and enhancement of removals, which need to be enabled by various policies. All zero 
and  low  carbon  energy  solutions  (including  renewables,  nuclear,  energy  efficiency,  storage, 
CCS, CCU, carbon removals, geothermal and hydro-energy, and all other current and future 
net-zero  energy  technologies)  are  necessary  to  decarbonise  the  energy  system  by  2040. 
Following  the  setting  of  the  target  for  2040,  and  in  line  with  the  foreseen  reviews,  the 
Commission  will  prepare  a  policy  architecture  beyond  2030  taking  into  account  fairness, 
technological  neutrality  and  cost-efficiency,  strengthening  EU  competitiveness,  ensuring  a 
just transition and enhancing environmental sustainability.  

In  designing  such  future  architecture,  the  Commission  will  examine  how  simplification  and 
flexibilities  across  sectors  could  facilitate  the  achievement  of  the  2040  target,  fostering 
convergence  while  taking  into  account  Member  States  specificities.  New  technological 
developments,  including  space  technology,  should  also  be  taken  into  account.  The  future 
architecture should also reflect the necessary investment needs and opportunities, in order to 
address social, economic and environmental impacts of the transition. Policies to implement 
the 2040 climate target will be guided by solidarity and fairness to ensure a just transition for 
all Member States and their citizens. 

In designing the policy architecture beyond 2030, the Commission envisages to include a role 
for the limited use of high-quality international credits under Article 6 of the Paris Agreement 
in the second part of the 2030-2040 decade. Their specific role and deployment would need to 
be  based  on  a  thorough  impact  assessment  and  subject  to  the  development  of  Union  law 
setting robust and high integrity criteria and standards, and  conditions on origin, timing and 
use of such credits.  The Commission should analyse in  the impact  assessments on the post-
2030 framework the possible limited use of international credits, so that 3% of 1990 EU  net 
emissions  could  be  counted  towards  the  2040  target.  Should  the  post-2030  package,  as 
adopted by the co-legislators, include a different percentage of credits, the Commission could 
propose to amend the Climate Law in the context of the review set out in Article 11. These 
international  credits  should  not  play  a  role  for  compliance  in  the  EU  carbon  market.  These 
international  credits  should  be  accounted  on  the  basis  of  a  linear  trajectory  and  they  should 
come  from  credible  and  transformative  activities,  and  support  third  countries  with  net 
emission reduction trajectories that are compatible with the Paris Agreement objective to hold 
the increase in the global average temperature to well below 2 °C and pursue efforts to limit 
the temperature increase to 1,5 °C above pre-industrial levels while enabling and supporting 
the creation of net-zero supply chains. In line with Article 6 of the Paris Agreement, the EU 
should agree with the concerned third countries on the sharing of the mitigation benefits.  

The future architecture should  also  include incentives, e.g.  on the occasion of the review of 
the ETS Directive in 2026, to build a business case for domestic permanent carbon removals 
(for  example  Biogenic  emissions  Capture  with  Carbon  Storage  (BioCCS)  and  Direct  Air 
Capture with  Carbon Storage (DACCS)) to compensate  for  residual  emissions from  hard to 
abate sectors.  

As  a  next  step,  the  Commission  will  work  with  the  Council  Presidency  to  finalise  the 
communication  of  the  NDC,  which  will  also  include  an  indicative  figure  for  2035,  to  the 
UNFCCC ahead of COP 30.  

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The Commission has also assessed the consistency of the initiative with the European Climate 
Law’s  objectives,  as  required  by  Article  6(4)  of  the  European  Climate  Law,  in  the  impact 
assessment accompanying the 2040 climate target Communication.  

• 

Consistency with other Union policies 

The initiative is linked to many other policy areas, as all EU actions and policies should foster 
EU competitiveness, and a just transition towards climate neutrality and a sustainable future. 
With the Competitiveness Compass and the Clean Industrial Deal, the Commission has set the 
course  to  reignite  economic  dynamism  in  the  EU  with  a  growth  and  prosperity  strategy 
bringing  together  climate  and  competitiveness.  The  Clean  Industrial  Deal  for  competitive 
industries and quality jobs sets out the workplan to support and create the right conditions for 
companies to reach common decarbonisation goals and to benefit from the rapidly expanding 
global  market  for    net-zero  technologies,  which  is  projected  to  triple  to  an  annual  worth  of 
around EUR 600 billion globally by 2030.6 To achieve the long-term competitiveness of EU 
industry  as  it  transitions  to  climate  neutrality,  the  Clean  Industrial  Deal  envisages  several 
measures, including a new Clean Industrial Deal State Aid Framework,  the establishment of 
an  Industrial  Decarbonisation  Bank  aiming  to  mobilise  up  to  €100  billion  in  funding  for 
innovative  decarbonisation  projects,  a  revised  public  procurement  framework  to  support  the 
development of lead markets for clean technologies and products. The Clean Industrial Deal 
also  envisages  initiatives  to  improve  access  to  critical  materials,  to  promote  circular 
production methods and to ensure a level playing field for the EU industry. Innovation plays a 
central role across all these efforts, driving the development and deployment of breakthrough 
technologies, accelerating industrial transformation, and enabling EU companies to lead in the 
global net-zero economy. The Union aims to increase sustainable and resilient production in 
Europe  and  should  create  the  right  conditions  to  crowd  in  private  and  public  investment 
across the value chain. These efforts will help the EU’s industrial renewal while reducing its 
environmental footprint and strengthening the resilience of its supply chains.  

The  new  Clean  Industrial  Deal  State  Aid  framework  was  published  on  25  June  and  further 
simplifies the process for Member States to grant aid to energy-intensive industries and clean-
tech sectors, without creating undue competitive distortions. Moreover, the Commission is on 
track  to  launch  a  pilot  for  the  upcoming  Industrial  Decarbonisation  Bank  already  in  2025. 
This pilot will be an auction with a budget of EUR 1 billion aimed at decarbonising industrial 
process heat and will benefit companies across various industrial sectors. 

Securing  affordable  energy  is  a  key  condition  for  the  competitiveness  of  our  industry.  As 
highlighted  in  the  Draghi  Report  and  the  Clean  Industrial  Deal,  Europe’s  dependence  on 
imported  fossil  fuels  is  one  of  the  main  causes  of  high  and  volatile  energy  prices.  The 
implementation of the Affordable Energy Action Plan7, which envisages immediate concerted 
action to  lower  energy  costs,  has  advanced,  notably  with  the  establishment  of  the  Energy 
Union Task Force . Grids and interconnections are crucial for the well-functioning of the EU 
electricity  market  and  accelerating  the  roll-out  of  clean  energy.  The  European  Investment 
Bank (EIB), in collaboration with the Commission, developed new products to offer counter-
guarantees  to  scale  up  manufacturing  of  grid  components  and  to  boost  Power  Purchase 
Agreements.  In  2025,  the  Commission  will  also  put  forward  a  legislative  proposal  for  an 
Industrial  Decarbonisation  Accelerator  Act  (IDAA),  with  the  aim  to  foster  competitive, 
sustainable and resilient production in energy-intensive industries in the EU.  

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Achieving  the  2040  climate  target  will  require  a  number  of  enablers,  such  as  ensuring  the 
competitiveness of the European industry, including through simplification; a greater focus on 
a  just  transition  that  leaves  no  one  behind;  and  a  level  playing  field  with  international 
partners,  as  shown  in  the  2040  climate  target  Communication.  On  the  basis  of  active 
engagement  with  business  leaders,  social  partners  and  civil  society,  since  the  beginning  of 
2025  the  Commission  launched  a  number  of  sectorial  strategic  dialogues  with  industry.  As 
one  of  the  outcomes  of  the  Strategic  Dialogue  on  the  Future  of  the  European  Automotive 
Industry,  the  co-legislators  have  reached  an  agreement  on  a  targeted  amendment  to  the 
regulation  on  CO2  standards  for  new  passenger  cars  and  vans,  that  aims  to  provide  car 
manufacturers  with  flexibility  to  meet  their  emissions  target  for  2025  and  preserve  their 
investment  capacity  on  the  path  to  zero-emission  mobility.  The  Commission  will  also  put 
forward  a  proposal  for  clean  corporate  fleets  at  the  end  of  20258.  To  support  the 
decarbonisation  of  transport  while  fostering  industrial  development  in  Europe,  the 
Commission  will  also  put  forward  a  Sustainable  Transport  Investment  Plan  later  this  year, 
which will notably aim at de-risking investment for the production and uptake of sustainable 
alternative fuels in hard-to-abate sectors, including aviation and waterborne transport. In order 
to  preserve  the  competitiveness  of  the  EU’s  steel  and  metals  industry,  the  Commission  has 
adopted the European Steel and Metals Action Plan with measures aimed at ensuring  access 
to  clean  and  affordable  energy,  preventing  carbon  leakage,  protecting  European  industrial 
capacities, and promoting circularity for metals.  

The  clean  transition  has  to  be  accompanied  by  appropriate  funding  opportunities,  that  will 
combine  existing  supporting  mechanisms  with  new  and  innovative  sources  of  funding.  The 
new  Clean  Industrial  Deal  State  Aid  Framework  will  reduce  investment  risks  for 
decarbonization projects and crowd in private finance. The Recovery and Resilience Facility, 
with a total of EUR 648 billion, continues to be an important tool for financing the transition 
with  an average of 42% of the total  budget dedicated to green measures across all Member 
States. Since 2013, the EU’s Emissions Trading System generated more than EUR 230 billion 
of  revenues  to  be  reinvested  in  climate  and  energy  measures,  including  to  address  social 
aspects in lower- and middle-income households. From 2026 onwards, the newly established 
Social  Climate  Fund  (SCF)  will  make  available  EUR  86.7  billion  to  support  vulnerable 
individuals  and  micro-enterprises  in  the  energy  and  transport  transitions.  The  upcoming 
proposal  on  the  Multiannual  Financial  Framework  will  provide  further  clarity  on  the  public 
financing available for the transition, as well as necessary synergies with private investments 
and innovative financial tools. 

A  true  level  playing  field  for  businesses  in  Europe  and  globally  is  created  when  other 
countries  adopt  carbon  pricing  of  their  own,  which  would  also  contribute  to  an  increase  of 
global climate ambition. The Commission’s Task Force for International Carbon Pricing and 
Markets Diplomacy continues to engage with and support partner countries to set up carbon 
markets and develop a global approach to carbon pricing. After the current transitional phase, 
the Carbon Border Adjustment Mechanism (CBAM) will apply in its definitive regime from 
2026. By confirming that a price has been paid for the embedded carbon emissions generated 
in  the production of  certain  goods imported into  the EU, the CBAM will ensure the carbon 
price of imports is  equivalent to  the carbon price of domestic production, and that the EU's 
climate  objectives  are  not  undermined.  Moreover,  the  Communication  “Delivering  on  the 
Clean Industrial Deal” of 2 July announced additional measures which will reduce the risk of 
carbon leakage for European exporters of CBAM goods. 

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The objectives of the Clean Industrial Deal to strengthen EU’s resilience and competitiveness 
are  further  reinforced  by  four  Simplification  Omnibus  packages  aimed  at  reducing  the 
administrative burden for companies, especially SMEs. In particular, the agreement between 
the European Parliament and Council on the CBAM simplification proposal includes a new de 
minimis threshold which will exempt 90% of importers from CBAM rules, while maintaining 
environmental ambition, with 99% of total CO2 emissions still covered by the CBAM. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The  legal  basis  for  the  proposal  is  Article  192(1)  of  the  Treaty  on  the  Functioning  of  the 
European  Union  (TFEU).  In  accordance  with  Articles  191  and  192(1)  TFEU,  the  European 
Union  shall  contribute  to  the  pursuit,  inter  alia,  of  the  following  objectives:  preserving, 
protecting and improving the quality of the environment, promoting measures at international 
level to deal with regional or worldwide environmental problems, and in particular combating 
climate change. 

• 

Subsidiarity (for non-exclusive competence)  

Climate change is a trans-boundary problem. For trans-boundary problems, individual action 
by Member States is unlikely to lead to optimal outcomes. Instead, coordinated EU action can 
effectively supplement and reinforce national and local action. Coordination at the European 
level enhances the effectiveness of climate action. 

A Union-wide climate target for 2040 will have implications across the entire EU economy. It 
is  needed to  guide a wide range of EU policies and will require EU level  policy responses, 
beyond climate policy. Through coordinated action it will be possible to take into account the 
different  capabilities  of  Member  States  and  regions  to  act  and  to  use  the  power  of  the  EU 
single  market  as  a  driver  for  cost-efficient  change.  Moreover,  coordinated  climate  action  at 
EU level is of importance for international climate action, in particular in view of determining 
the EU’s Nationally Determined Contribution under the Paris Agreement to be communicated 
in autumn 2025. 

• 

Proportionality 

The proposal aims to provide a direction by further defining the path to climate neutrality. It 
does  not  prescribe  specific  policies,  technologies  or  measures,  leaving  Member  States 
flexibility, taking into account the regulatory framework to achieve greenhouse gas emission 
reduction  targets.  The  impact  assessment  report  accompanying  the  2040  climate  target 
Communication9 found that a reduction of 90-95% (option 3) was the most proportionate to 
bring the EU  economy  to climate neutrality  by 2050 and for the EU to  contribute to  global 
climate  action  in  accordance  with  the  Paris  Agreement  temperature  goals  of  limiting  the 
temperature  increase  to  well  below  2°C  above  pre-industrial  levels  and  pursuing  efforts  to 
limit the temperature increase to 1,5°C above pre-industrial levels.  

• 

Choice of the instrument 

The aim of this initiative is to set an intermediate Union-wide climate target for 2040 with a 
view to achieving the climate-neutrality objective by 2050, as required by Article 4(3) of the 
European  Climate  Law.  Therefore,  the  objective  of  the  proposal  is  best  pursued  through  a 
Regulation, following the form of the existing legislative instrument. 

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3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Stakeholder consultations 

The  initiative  is  informed  by  the  broad  debate  following  the  2040  climate  target 
Communication. Both in the European Parliament and in the Council, discussions have taken 
place on the Communication. In preparation for the 2040 climate target Communication and 
the  accompanying  impact  assessment,  the  Commission  carried  out  a  public  consultation, 
running from 31 March 2023 to 23 June 2023. The initiative is also informed by the advice of 
the  European  Scientific  Advisory  Board  on  Climate  Change  (ESABCC).  In  June  2023,  the 
Advisory Board published advice recommending a 2040 target for the EU to reduce net GHG 
emissions  in  the  range  of  90-95%  compared  to  199010.  The  Advisory  Board  also  adopted  a 
report  in  which  it  assessed  progress  and  policy  consistency11.  In  June  2025,  the  Advisory 
Board adopted  a report revisiting its 2023 recommendation in  light  of the  evolving context, 
reaffirming its earlier recommendation12. 

• 

Impact assessment 

In  the  context  of  the  2040  climate  target  Communication,  the  Commission  carried  out  a 
detailed  impact  assessment,  providing  a  detailed  analysis  of  different  levels  of  net  GHG 
emissions in 2040 and the associated sectoral pathways bridging 2030 to climate neutrality by 
2050. The Commission also published a report on the projected indicative Union greenhouse 
gas budget for the 2030-2050 period, as required under the European Climate Law.  

The analysis in the impact assessment covers all sectors in which action is needed for the EU 
to reach its 2050 climate-neutrality objective. It is based on the Green Deal legislation and the 
REPowerEU actions to address the energy crisis. 

The impact assessment looked in detail at the implications of three target options for 2040. 

The main difference among the options is in the pace of the transition. The impact assessment 
found that option 3 is the most effective in bringing the EU to climate neutrality by 2050, with 
a greater reduction in net greenhouse gas emissions ahead of 2040. As a consequence, it will 
imply  less  additional  effort  after  2040  to  reach  net  zero  emissions  by  2050.  Option  3  also 
leads to the lowest GHG cumulative emissions (the ‘GHG budget’) for the EU, making it the 
best  option  in  terms  of  the  EU’s  contribution  to  limiting  climate  change  and  providing  the 
most  credible  push  to  the  EU’s  partners  worldwide  to  accelerate  climate  action.  The 
Commission’s recommended target of 90% is the lower end of option 3 and the upper end of 
option 2.  

The Regulatory Scrutiny Board issued a positive opinion with reservations on 22 December 
202313,  with  recommendations  for  improvement.  The  impact  assessment  was  amended 
accordingly. 

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European Scientific Advisory Board on Climate Change, Scientific advice for the determination of an 
EU-wide 2040 climate target and a greenhouse gas budget for 2030-2050, DOI: 10.2800/609405. 
European  Scientific  Advisory  Board  on  Climate  Change,  Towards  EU  climate  neutrality:  progress, 
policy gaps and opportunities, Assessment Report 2024, DOI:10.2800/216446. 
European Scientific Advisory Board on Climate Change, Scientific advice for amending the European 
Climate Law – Setting climate goals to strengthen EU strategic priorities, DOI: 10.2800/1978453.  
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In  addition,  in  May  2024,  the  Commission  published  a  report  on  the  operation  of  the 
European Climate Law14. It details the actions taken since the European Climate Law’s entry 
into force to speed up the transition to climate neutrality. 

• 

Fundamental rights 

The  proposal  respects  the  fundamental  rights  and  observes  the  principles  recognised  in 
particular  by  the  Charter  of  Fundamental  Rights  of  the  European  Union.  In  particular,  it 
contributes to the objective of a high level of environmental protection in accordance with the 
principle of sustainable development as laid down in Article 37 of the Charter of Fundamental 
Rights of the European Union15. 

4. 

BUDGETARY IMPLICATIONS 

The  indirect  impacts  on  Member  States’  budgets  will  depend  on  their  choice  of  national 
policies and measures for greenhouse gas emission reductions and other mitigation action, and 
will follow mostly from the possible complementary proposals to revise related instruments or 
propose new ones to deliver the additional greenhouse gas emission reductions necessary. 

The implementation of this proposal will not require an increase in capacity from the services 
of the Commission, as set out in the attached legislative financial and digital statement. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

Transparent and regular reporting by Member States coupled with robust assessments by the 
Commission and mechanisms to ensure that progress is  assessed are essential to ensure that 
the  EU  remains  on  track  towards  achieving  the  EU  2050  climate-neutrality  objective.  The 
initiative  does  not  alter  the  arrangements  for  tracking  progress  towards  achieving  the 
European Climate Law’s objectives. 

• 

Detailed explanation of the specific provisions of the proposal 

Article 1 contains all the proposed amendments to the European Climate Law, namely: 

Article  1  on  subject  matter  and  scope:  to  include  a  reference  to  the  2040  climate  target  in 
relation to the scope of the European Climate Law. 

Article 4 on intermediate Union climate targets: to set the Union-wide target for 2040, based 
on the detailed impact assessment accompanying the 2040 climate target Communication, and 
taking  into  account  the  scientific  advice  of  the  ESABCC.  The  Commission’s  EU-wide 
assessment of the final updated national energy and climate plans16 (NECPs) shows that the 
EU is  currently on course to  reduce net  greenhouse gas emissions by around 54% by 2030, 
compared  to  1990  levels,  if  Member  States  implement  fully  existing  and  planned  national 
measures  and  EU  policies.  The  EU  is  thus  well  on  track  to  reach  the  EU  2030  target  of 
reducing net greenhouse gas emissions by at least 55% compared to 1990. The Commission 
also took into account the conclusions of the progress assessments made in the 2023 Climate 
Action Progress Report, the outcomes of the global stocktake, and considered the elements set 

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out in Article 4(5) and the report on the projected indicative Union greenhouse gas budget for 
the 2030-2050 period. The net greenhouse gas emissions covered by the target correspond to 
the  Union-wide  greenhouse  gas  emissions  and  removals  regulated  in  Union  law17.  The 
amended  provision  replaces  Article  4(3)-(5)  which  set  out  the  process  leading  up  to  this 
amendment.  Consistently  with  the  EU  2030  climate  target  of  at  least  55%  reduction  of  net 
greenhouse  gases  and  its  associated  policy  framework,  with  climate  neutrality  in  2050  and 
with the proposed 2040 target of a 90% reduction, the resulting indicative “GHG budget” for 
the EU over the 2030-2050 period is estimated at 16 GtCO2-eq, as explained in Annex 14 to 
the  impact  assessment  accompanying  the  2040  climate  target  Communication.  This  GHG 
budget  falls  within  the  range  analysed  by  the  ESABCC  from  feasible  scenarios  compatible 
with a 1,5°C global warming. 

17 

As  explained  in  the  technical  information  accompanying  the  Report  from  the  Commission  to  the 
European Parliament and the Council EU Climate Action Progress Report 2024, SWD(2024) 249 final, 
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2025/0524 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EU) 2021/1119 establishing the framework for achieving climate 
neutrality 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 192(1) thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Economic and Social Committee1,  
Having regard to the opinion of the Committee of the Regions2,  

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

1 
2 
3 
4 
5 

The  outcome of the  first global stocktake3 under  the Paris Agreement4, concluded at 
the United Nations Climate Change Conference at the end of 2023, found that parties 
are putting  increasingly  effective climate policies in  place, but  that urgent  additional 
action  is  needed  to  put  the  world  fully  on  track  for  achieving  the  goals  of  the  Paris 
Agreement. 

Through the adoption of Regulation (EU) 2021/1119 of the European Parliament and 
of  the  Council5,  the  Union  has  enshrined  in  legislation  a  binding  objective  of 
economy-wide climate neutrality by 2050, thus reducing emissions to net zero by that 
date,  and  the  aim  of  achieving  negative  emissions  thereafter,  established  a  binding 
Union 2030 intermediate climate target and provided for the setting of a Union-wide 
intermediate climate target for 2040. 

Taking  into account the scientific advice by the European Scientific Advisory Board 
on  Climate  Change  and  based  on  a  detailed  Impact  Assessment,  the  Commission 
presented  a  recommended  target  of  a  90%  net  greenhouse  gas  emission  reduction 
compared  to  1990  levels  for  2040  in  its  Communication  of  6  February  2024  on 

OJ C , , p. . 
OJ C , , p. . 
Decision 1/CMA.5. 
OJ L 282, 19.10.2016, p. 4. 
Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing 
the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 
ELI: 
(‘European 
2018/1999 
http://data.europa.eu/eli/reg/2021/1119/oj). 

9.7.2021, 

Climate 

Law’) 

243, 

(OJ 

1, 

p. 

L 

EN 

9 

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(4) 

(5) 

(6) 

(7) 

Securing  our  future:  Europe's  2040  climate  target  and  path  to  climate  neutrality  by 
2050 building a sustainable, just and prosperous society6.  

In order to propose the Union 2040 climate target, the Commission considered the best 
available  and  most  recent  scientific  evidence,  including  the  latest  reports  of  the 
Intergovernmental  Panel  on  Climate  Change  (IPCC)  and  the  Advisory  Board;  the 
social, economic and environmental impacts, including the costs of inaction; the need 
to  ensure  a  just  and  socially  fair  transition  for  all;  cost-effectiveness  and  economic 
efficiency; competitiveness of the Union’s economy, in particular small and medium-
sized  enterprises  and  sectors  most  exposed  to  carbon  leakage;  best  available  cost-
effective, safe and scalable technologies; energy efficiency and the ‘energy efficiency 
first’  principle,  energy  affordability  and  security  of  supply;  fairness  and  solidarity 
between  and  within  Member  States;  the  need  to  ensure  environmental  effectiveness 
and progression over time; the need to maintain, manage and enhance natural sinks in 
the  long  term  and  protect  and  restore  biodiversity,  including  in  the  marine 
environment;  investment  needs  and  opportunities;  international  developments  and 
efforts undertaken to achieve the long-term objectives of the Paris Agreement and the 
ultimate objective of the  United Nations  Framework Convention on Climate Change 
(UNFCCC);  existing  information  on  the  projected  indicative  Union  greenhouse  gas 
budget for the 2030-2050 period. 

In order to achieve the 2040 climate target it is essential to, inter alia, fully implement 
the  agreed  2030  framework,  ensure  and  provide  support  to  the  competitiveness  and 
resilience of the European industry, ensure transition pathways based on best available 
cost-effective,  safe  and  scalable  technologies,  set  a  greater  focus  on  a  just  transition 
that  leaves  no  one  behind,  ensure  fair  competition  with  international  partners, 
decarbonise  the  energy  system  with  all  zero  and  low  carbon  energy  solutions 
(including  renewables,  nuclear,  energy  efficiency,  storage,  CCS,  CCU,  carbon 
removals,  geothermal  and  hydro-energy,  and  all  other  current  and  future  net-zero 
energy  technologies),  and  organise  a  strategic  dialogue  on  the  post-2030  framework 
with all relevant sectors. With the Clean Industrial Deal, the EU is putting in place the 
conditions for a successful transition, focussing on both decarbonisation and industrial 
renewal, including support mechanisms for European industry, better access to public 
and private finance, a global level playing field, and clear enabling conditions for the 
uptake  and  scaling  of  clean 
industrial 
competitiveness and innovation in the EU.  

to  strengthen 

technologies, 

in  order 

In  light  of  the  2050  climate-neutrality  objective,  by  2040  greenhouse  gas  emissions 
should  be  reduced  and  removals  enhanced,  to  ensure  that  the  net  greenhouse  gas 
emissions,  that  is  emissions  after  deduction  of  removals,  are  reduced  economy-wide 
by 90 % by 2040 compared to 1990 levels. 

Priority  should  be  given  to  domestic  reductions  in  greenhouse  gas  emissions, 
complementing  it  by  increased  removals,  including  through  both  natural  and 
technological  solutions.  In  the  development  of  the  post-2030  policy  package,  due 
attention should be paid to the contribution of gross emission reductions versus natural 
and technological  removals.  Nature-based and industrial  removals  play an increasing 
role  in  the  Union’s  economy  in  the  next  decades,  in  view  of  the  need  to  balance 
greenhouse gas emissions and removals at the latest by 2050 and negative emissions 
thereafter.  Incentives  will  be  developed  on  the  occasion  of  the  review  of  Directive 

6 

COM(2024) 63 final. 

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(8) 

2003/87/EC  of  the  European  Parliament  and  of  the  Council7  in  2026,  where  the 
Commission  envisages  to  provide  for  domestic  permanent  carbon  removals  in  the 
system for greenhouse gas emission allowance trading within the Union (‘EU ETS’) to 
compensate for residual emissions from hard to abate sectors.  

The Union has in place a regulatory framework to achieve the 2030 climate target. The 
legislation  implementing  that  target  consists,  inter  alia,  of  Directive  2003/87/EC, 
which establishes the EU ETS, Regulation (EU) 2018/842 of the European Parliament 
and of the Council8, which introduced national targets for reduction of greenhouse gas 
emissions by 2030, and Regulation (EU) 2018/841 of the European Parliament and of 
the  Council9,  which  sets  net  carbon  removal  targets  for  the  land  use  sector.  The 
Commission  should  assess  how  the  relevant  Union  legislation  would  need  to  be 
amended  in  order  to  achieve  the  2040  climate  target.  When  designing  the  future 
architecture,  the  Commission  should  prepare  detailed  impact  assessments,  including 
the impacts on competitiveness and small and medium enterprises, and consider taking 
necessary  measures,  including  legislative  proposals  as  appropriate.  A  number  of 
elements  to  facilitate  the  achievement  of  the  2040  target  should  be  appropriately 
reflected,  including  a  potential  limited  contribution  towards  the  2040  target  of  high-
quality international credits under Article 6 of the Paris Agreement, in the second part 
of  the  2030-2040  decade,  in  line  with  accounting  rules  of  the  Paris  Agreement;  the 
role  of  domestic  permanent  removals  (Biogenic  emissions  Capture  with  Carbon 
Storage (BioCCS) and Direct Air Capture with Carbon Storage (DACCS)) in the EU 
ETS; enhanced  flexibility  across  sectors.  In order to  assess  the social, economic and 
environmental  impacts,  the  future  architecture  should  be  based  on  robust  impact 
assessments. The future architecture should also foster convergence while taking into 
account  fairness  and  Member  States’  specificities,  including  those  of  islands  and 
outermost regions.  

(9) 

Since the objective of this Regulation, namely to set a Union-wide climate target for 
2040, cannot be sufficiently achieved by the Member States but can rather, by reason 
of  its  scale  and  effects,  be  better  achieved  at  Union  level,  the  Union  may  adopt 
measures, in accordance with the principle of subsidiarity as set out in Article 5 of the 
Treaty on European Union. In accordance with the principle of proportionality, as set 
out  in  that Article, this Regulation  does not  go beyond what  is  necessary in  order to 
achieve that objective. 

(10)  Regulation (EU) 2021/1119 should therefore be amended accordingly, 

7 

8 

9 

Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a 
system  for  greenhouse  gas  emission  allowance  trading  within  the  Union  and  amending  Council 
Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32, ELI: http://data.europa.eu/eli/dir/2003/87/oj).  
Regulation (EU) 2018/842 of the European Parliament and of the Council of 30 May 2018 on binding 
annual  greenhouse  gas  emission  reductions  by  Member  States  from  2021  to  2030  contributing  to 
climate  action  to  meet  commitments  under  the  Paris  Agreement  and  amending  Regulation  (EU)  No 
525/2013 (OJ L 156, 19.6.2018, p. 26, ELI: http://data.europa.eu/eli/reg/2018/842/oj). 
Regulation  (EU)  2018/841  of  the  European  Parliament  and  of  the  Council  of  30  May  2018  on  the 
inclusion of greenhouse gas emissions and removals from land use, land use change and forestry in the 
2030  climate  and  energy  framework,  and  amending  Regulation  (EU)  No  525/2013  and  Decision  No 
529/2013/EU (OJ L 156, 19.6.2018, p. 1, ELI: http://data.europa.eu/eli/reg/2018/841/oj). 

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HAVE ADOPTED THIS REGULATION: 

Article 1 

Amendments to Regulation (EU) 2021/1119 

Regulation (EU) 2021/1119 is amended as follows: 

(1) in Article 1, second paragraph, the following sentence is added: 

‘This Regulation also sets out a binding Union target for 2040.’; 

(2) in Article 4, paragraphs 3, 4 and 5 are replaced by the following: 

‘3. In order to reach the climate-neutrality objective set out in Article 2(1), the binding 
Union  2040  climate  target  shall  be  a  reduction  of  net  greenhouse  gas  emissions 
(emissions after deduction of removals) by 90 % compared to 1990 levels by 2040. 

4. With a view to the period after 2030, the Commission shall review relevant Union 
legislation in  order to  enable the achievement of  the target  set  out  in  paragraph 3 of 
this  Article  and  the  climate-neutrality  objective  set  out  in  Article 2(1)  and  consider 
taking the necessary measures as appropriate and based on detailed impact assessment, 
in accordance with the Treaties. 

While  some  enabling  policies  have  already  been  implemented  and  their  impact  is 
already visible, this is not yet the case for all. The Commission shall aim to accelerate 
and  strengthen  the  enabling  framework  to  ensure  that  conditions  are  in  place  to 
support European industry and citizens throughout the transition, in full respect of EU 
law. 

Within the framework of the review referred to in the first subparagraph, in order to 
facilitate  the  achievement  of  the  target  set  out  in  paragraph  3  of  this  Article,  the 
Commission shall ensure that the following elements are appropriately reflected in the 
legislative proposals:  

(a)  Starting from 2036, a possible limited contribution towards the 2040 target of 
high-quality international credits under Article 6 of the Paris Agreement of 3% 
of 1990 EU net emissions supporting the EU and third countries in achieving 
net greenhouse gas reduction trajectories compatible with the Paris Agreement 
objective to hold the increase in the global average temperature to well below 2 
°C  and  pursue  efforts  to  limit  the  temperature  increase  to  1,5  °C  above  pre-
industrial  levels  -  the  origin,  quality  criteria  and  other  conditions  concerning 
the acquisition and use of any such credits shall be regulated in Union law;   

(b) 

the  role  of  domestic  permanent  removals  under  the  greenhouse  gas  emission 
allowance  trading  system  within  the  Union  (‘EU  ETS’)  to  compensate  for 
residual emissions from hard to abate sectors; 

(c) 

enhanced  flexibility  across sectors,  to  support the  achievement of targets  in  a 
cost-effective way; 

(d)  Member States post-2030 targets and efforts should reflect cost-efficiency and 

solidarity, in light of national circumstances; 

EN 

12 

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(e) 

(f) 

(g) 

(h) 

(i) 

(j) 

(k) 

the  best  available  and  most  recent  scientific  evidence,  including  the  latest 
reports of the IPCC and the Advisory Board; 

the social, economic and environmental impacts; 

the costs of inaction and the benefits of action over mid-term to long-term; 

the need to ensure a just and socially fair transition for all; 

simplification,  technology  neutrality,  cost-effectiveness,  economic  efficiency, 
and economic security; 

climate action as a driver for investment and innovation; 

the need to strengthen the global competitiveness of the Union’s economy, in 
particular  small  and  medium-sized  enterprises  and  industrial  sectors  most 
exposed to carbon leakage so as to ensure fair competition;  

(l) 

best available cost-effective, safe and scalable technologies; 

(m)  energy  affordability,  security  of  supply,  energy  efficiency  and  the  ‘energy 

(n) 

(o) 

(p) 

(q) 

(r) 

efficiency first’ principle; 

fairness and solidarity between and within Member States; 

the need to ensure environmental effectiveness and progression over time; 

the need to  maintain, manage  and enhance natural  sinks in  the long  term  and 
protect  and  restore  biodiversity,  as  well  as  take  into  account  uncertainties 
notably those linked to the impacts of climate change in the land use sector; 

investment  needs  and  opportunities,  including  access  to  public  and  private 
finance; 

international  developments  and  efforts  undertaken  to  achieve  the  long-term 
objectives of the Paris Agreement and the ultimate objective of the UNFCCC, 
as well as the support of the Union to its partners in addressing climate change 
and its impacts.’.  

Article 2 

Entry into force 

This Regulation shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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LEGISLATIVE FINANCIAL AND DIGITAL STATEMENT 

1. 

1.1. 

1.2. 

1.3. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE ................................................. 3 

Title of the proposal/initiative ...................................................................................... 3 

Policy area(s) concerned .............................................................................................. 3 

Objective(s) .................................................................................................................. 3 

1.3.1.  General objective(s) ..................................................................................................... 3 

1.3.2.  Specific objective(s) ..................................................................................................... 3 

1.3.3.  Expected result(s) and impact ...................................................................................... 3 

1.3.4. 

Indicators of performance ............................................................................................ 3 

1.4. 

1.5. 

The proposal/initiative relates to: ................................................................................. 4 

Grounds for the proposal/initiative .............................................................................. 4 

1.5.1.  Requirement(s) to be met in the short or long term including a detailed timeline for 

roll-out of the implementation of the initiative ............................................................ 4 

1.5.2.  Added value of EU involvement (it may result from different factors, e.g. 

coordination gains, legal certainty, greater effectiveness or complementarities). For 
the purposes of this section 'added value of EU involvement' is the value resulting 
from EU action, that is additional to the value that would have been otherwise 
created by Member States alone. ................................................................................. 4 

1.5.3.  Lessons learned from similar experiences in the past .................................................. 4 

1.5.4.  Compatibility with the multiannual financial framework and possible synergies with 
other appropriate instruments ....................................................................................... 5 

1.5.5.  Assessment of the different available financing options, including scope for 

redeployment ................................................................................................................ 5 

1.6. 

1.7. 

2. 

2.1. 

2.2. 

2.2.1. 

2.2.2. 

Duration of the proposal/initiative and of its financial impact .................................... 6 

Method(s) of budget implementation planned ............................................................. 6 

MANAGEMENT MEASURES................................................................................... 8 

Monitoring and reporting rules .................................................................................... 8 

Management and control system(s) ............................................................................. 8 

Justification of the budget implementation method(s), the funding implementation 
mechanism(s), the payment modalities and the control strategy proposed .................. 8 

Information concerning the risks identified and the internal control system(s) set up 
to mitigate them............................................................................................................ 8 

2.2.3.  Estimation and justification of the cost-effectiveness of the controls (ratio between 

the control costs  and the value of the related funds managed), and assessment of the 
expected levels of risk of error (at payment & at closure) ........................................... 8 

2.3. 

3. 

3.1. 

Measures to prevent fraud and irregularities ................................................................ 9 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE ............ 10 

Heading(s) of the multiannual financial framework and expenditure budget line(s) 
affected ....................................................................................................................... 10 

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3.2. 

Estimated financial impact of the proposal on appropriations ................................... 12 

3.2.1.  Summary of estimated impact on operational appropriations.................................... 12 

3.2.1.1.  Appropriations from voted budget ............................................................................. 12 

3.2.1.2.  Appropriations from external assigned revenues ....................................................... 17 

3.2.2.  Estimated output funded from operational appropriations......................................... 22 

3.2.3.  Summary of estimated impact on administrative appropriations ............................... 24 

3.2.3.1. Appropriations from voted budget .............................................................................. 24 

3.2.3.2.  Appropriations from external assigned revenues ....................................................... 24 

3.2.3.3.  Total appropriations ................................................................................................... 24 

3.2.4.  Estimated requirements of human resources.............................................................. 25 

3.2.4.1.  Financed from voted budget....................................................................................... 25 

3.2.4.2.  Financed from external assigned revenues ................................................................ 26 

3.2.4.3.  Total requirements of human resources ..................................................................... 26 

3.2.5.  Overview of estimated impact on digital technology-related investments ................ 28 

3.2.6.  Compatibility with the current multiannual financial framework.............................. 28 

3.2.7.  Third-party contributions ........................................................................................... 28 

3.3. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

Estimated impact on revenue ..................................................................................... 29 

DIGITAL DIMENSIONS .......................................................................................... 29 

Requirements of digital relevance .............................................................................. 30 

Data ............................................................................................................................ 30 

Digital solutions ......................................................................................................... 31 

Interoperability assessment ........................................................................................ 31 

Measures to support digital implementation .............................................................. 32 

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1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative 

Proposal for a Regulation of the European Parliament and of the Council amending 
Regulation  (EU)  2021/1119  establishing  the  framework  for  achieving  climate 
neutrality 

1.2. 

Policy area(s) concerned  

Climate Action 

Heading 3 Natural resources and Environment 

Title 9 – Environment and Climate Action 

1.3. 

Objective(s) 

1.3.1.  General objective(s) 

The  proposal  delivers  on  the  Commission’s  obligation,  set  in  Article  4(3)  of  the 
European  Climate  Law,  to  make  a  legislative  proposal  to  amend  the  European 
Climate Law to include the Union 2040 climate target.  

1.3.2. 

Specific objective(s) 

Set the Union 2040 climate target 

1.3.3.  Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

The proposal  sets  a Union 2040 climate target,  on the way to  climate-neutrality  by 
2050. It will inform the preparation of the post-2030 framework. It does not propose 
new  policy  measures  or  set  new  sector-specific  targets.  The  post-2030  framework 
will determine which stakeholders are affected. 

1.3.4. 

Indicators of performance 

Specify the indicators for monitoring progress and achievements. 

Level  of  reduction  of  greenhouse  gas  emissions  in  the  EU  (as  reported  under 
Regulation (EU) 2018/1999) 

1.4. 

The proposal/initiative relates to:  

 a new action  
 a new action following a pilot project / preparatory action27  

✓  the extension of an existing action  

 a merger or redirection of one or more actions towards another/a new action 

27 

As referred to in Article 58(2), point (a) or (b) of the Financial Regulation. 

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1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term including a detailed timeline for 

roll-out of the implementation of the initiative 

Following the setting of the climate target for 2040, and in line with reviews foreseen 
in legislation, a climate policy architecture beyond 2030 will be prepared. 

1.5.2.  Added  value  of  EU  involvement  (it  may  result  from  different  factors,  e.g. 
coordination gains, legal certainty, greater effectiveness or complementarities). For 
the  purposes  of  this  section  'added  value  of  EU  involvement'  is  the  value  resulting 
from  EU  action,  that  is  additional  to  the  value  that  would  have  been  otherwise 
created by Member States alone. 

Climate  Change  is  a  trans-boundary  challenge  and  cannot  be  solved  by  national  or 
local action alone. Coordinated EU action can effectively supplement and reinforce 
national and local action and enhances climate action. 

1.5.3.  Lessons learned from similar experiences in the past 

The  EU  has  put  in  place  a  comprehensive  framework  of  policies  to  reduce 
greenhouse  gas  emissions.  It  has  already  started  to  modernise  and  transform  the 
economy  with  the  aim  of  climate  neutrality.  In  2023  total  net  greenhouse  gas 
emissions  were  37%  below  their  1990  level,  with  GDP  growing  by  68%  over  the 
same period, as shown in the EU Climate Action Progress Report 2024 (COM(2024) 
498).   

1.5.4.  Compatibility with the multiannual financial framework and possible synergies with 

other appropriate instruments 

The  proposal  aims  to  complement  the  existing  policy  framework  by  setting  a  2040 
climate target.  

It is compatible with the multiannual financial framework 2021-2027. 

1.5.5.  Assessment  of  the  different  available  financing  options,  including  scope  for 

redeployment 

- 

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1.6. 

Duration of the proposal/initiative and of its financial impact 

 limited duration  

–    in effect from [DD/MM]YYYY to [DD/MM]YYYY  

–    financial  impact  from  YYYY  to  YYYY  for  commitment  appropriations  and 

from YYYY to YYYY for payment appropriations.  

✓ unlimited duration 

–  Implementation with a start-up period from 2025 to 2026, 

–  followed by full-scale operation. 

1.7.  Method(s) of budget implementation planned28  

✓ Direct management by the Commission 

–  ✓ by its departments, including by its staff in the Union delegations;   

–    by the executive agencies  

 Shared management with the Member States  

 Indirect management by entrusting budget implementation tasks to: 

–   third countries or the bodies they have designated 

–   international organisations and their agencies (to be specified) 

–   the European Investment Bank and the European Investment Fund 

–   bodies referred to in Articles 70 and 71 of the Financial Regulation 

–   public law bodies 

–   bodies governed by private law with a public service mission to the extent that 

they are provided with adequate financial guarantees 

–   bodies governed by the private law of a Member State that are entrusted with 
the  implementation  of  a  public-private  partnership  and  that  are  provided  with 
adequate financial guarantees 

–   bodies or persons entrusted with the implementation of specific actions in the 
common  foreign  and  security  policy  pursuant  to  Title  V  of  the  Treaty  on 
European Union, and identified in the relevant basic act 

–  bodies  established  in  a  Member  State,  governed  by  the  private  law  of  a 
Member  State  or  Union  law  and  eligible  to  be  entrusted,  in  accordance  with 
sector-specific  rules,  with  the  implementation  of  Union  funds  or  budgetary 
guarantees,  to  the extent that such bodies are controlled by public law bodies or 
by bodies governed by private law with a public service mission, and are provided 
with adequate financial guarantees in the form of joint and several liability by the 
controlling bodies or equivalent financial guarantees and which may be, for each 
action, limited to the maximum amount of the Union support. 

Comments  

28 

Details of budget implementation methods and references to the Financial Regulation may be found on 
the BUDGpedia site: https://myintracomm.ec.europa.eu/corp/budget/financial-rules/budget-
implementation/Pages/implementation-methods.aspx. 

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The  current  team  will  continue  managing  the  initiative.  No  additional  staff  required.  

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2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

The proposal continues the European Climate Law with the same assessments to be 
carried by the Commission as is already the case. The European Climate Law builds 
on  the  robust  transparency  framework  for  greenhouse  gas  emissions  and  other 
climate information  of the Regulation  on the Governance of the Energy  Union and 
Climate  Action,  rather  than  establishing  additional  reporting  streams  by  Member 
States. 

2.2.  Management and control system(s)  

2.2.1. 

Justification  of  the  budget  implementation  method(s),  the  funding  implementation 
mechanism(s), the payment modalities and the control strategy proposed 

Not  applicable.  The  proposal  is  not  implementing  a  financial  programme  but 
implementation 
designing  a 
mechanisms, payment modalities and control strategy in relation to error rates are not 
applicable. 

long-term  policy.  Management  mode,  funding 

2.2.2. 

Information concerning the risks identified and the internal control system(s) set up 
to mitigate them 

Under the Climate Law, the Commission carries out regular assessment of progress 
with possible recommendations and additional measures.  

Member  States  may  become  delayed  in  their  planning  and  reporting  obligations 
under  the  Regulation  on  the  Governance  of  the  Energy  Union  and  Climate  Action. 
Thanks  to  the  already  existing  and  well-established  reporting  systems  on  climate 
information  (under  the  Monitoring  Mechanism  Regulation  and  integrated  in  the 
Governance  Regulation),  there  are  procedures  in  place  for  ensuring  that  reports  on 
greenhouse  gas  emissions  arrive  on  time,  are  quality  controlled,  that  gaps  can  be 
addressed,  and  that  Member  States  not  fulfilling  their  reporting  obligations  can  be 
assisted. 

2.2.3.  Estimation  and  justification  of  the  cost-effectiveness  of  the  controls  (ratio  between 
the control costs  and the value of the related funds managed), and assessment of the 
expected levels of risk of error (at payment & at closure)  

This initiative does not bring about new significant controls/risks that would not be 
covered be an existing internal control framework. No specific measures beyond the 
application of the Financial Regulation have been envisaged. 

2.3.  Measures to prevent fraud and irregularities  

No specific measures beyond the application of the Financial Regulation have been 
envisaged. 

EN 

7 

  EN 

3. 

3.1. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget 
line(s) affected  

•  Existing budget lines  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of 
expenditure 

Contribution  

Heading of 
multiannual 
financial 
framework 

Number  

09 02 03 00 

3 

Diff./Non-
diff.29 

from 
EFTA 
countries
30 

from 
candidate 
countries 
and 
potential 
candidates
31 

From 
other 
third 
countries 

other assigned 
revenue 

Diff. 

YES 

YES 

NO 

YES 

•  New budget lines requested  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of 
expenditure 

Heading of 
multiannual 
financial 
framework 

Number  

Diff./Non-
diff. 

from 
EFTA 
countries 

Contribution  

from 
candidate 
countries 
and 
potential 
candidates 

from 
other 
third 
countries 

other assigned 
revenue  

[XX.YY.YY.YY] 

[XX.YY.YY.YY] 

[XX.YY.YY.YY] 

Diff./Non
-diff. 

Diff./Non
-diff. 

Diff./Non
-diff. 

YES/NO  YES/NO  YES/NO 

YES/NO 

YES/NO  YES/NO  YES/NO 

YES/NO 

YES/NO  YES/NO  YES/NO 

YES/NO 

29 
30 
31 

Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations. 
EFTA: European Free Trade Association.  
Candidate countries and, where applicable, potential candidates from the Western Balkans. 

EN 

8 

  EN 

 
 
 
 
 
 
 
 
 
 
3.2. 

Estimated financial impact of the proposal on appropriations  

3.2.1. 

Summary of estimated impact on operational appropriations  

–  ❖  The proposal/initiative does not require the use of operational appropriations  

–    The proposal/initiative requires the use of operational appropriations, as explained below 

3.2.1.1.  Appropriations from voted budget 

Heading of multiannual financial framework  

Number 

EUR million (to three decimal places) 

DG: <…….> 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL MFF 
2021-2027 

Operational appropriations  

Budget line 

Budget line 

Commitments 

Payments 

Commitments 

Payments 

(1a) 

(2a) 

(1b) 

(2b) 

Appropriations of an administrative nature financed from the envelope of specific programmes32 
Budget line 

(3) 

TOTAL appropriations 
for DG <…….> 

Commitments 

Payments 

=1a+1b+3 

=2a+2b+3 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

TOTAL 

operational 

appropriations   Commitments 

(4) 

0.000 

0.000 

0.000 

0.000 

0.000 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL MFF 
2021-2027 

32 

Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former ‘BA’ lines), indirect research, direct research. 

EN 

9 

EN 

 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
Payments 

TOTAL  appropriations  of  an  administrative  nature  financed 
from the envelope for specific programmes  

TOTAL appropriations under 
HEADING <….> 

Commitments 

of the multiannual financial framework 

Payments 

(5) 

(6) 

=4+6 

=5+6 

•  TOTAL  operational  appropriations 
operational headings) 

(all 

Commitments 

Payments 

•  TOTAL  appropriations  of  an  administrative  nature  financed 
from  the  envelope  for  specific  programmes  (all  operational 
headings) 

TOTAL appropriations Under          

Heading 1 to 6 

Commitments 

of the multiannual financial framework 
(Reference amount) 

Payments 

(4) 

(5) 

(6) 

=4+6 

=5+6 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

Year 

2024 

Year 

2025 

0.000 

Year 

2026 

0.000 

Year 

2027 

0.000 

0.000 

TOTAL MFF 
2021-2027 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

Heading of multiannual financial  framework  

7 

‘Administrative expenditure’33 

DG: <…….> 

 Human resources  
 Other administrative expenditure  

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL 
MFF 2021-
2027 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

33 

The necessary appropriations should be determined using the annual average cost figures available on the appropriate BUDGpedia webpage. 

EN 

10 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL DG <…….> 

Appropriations  

0.000 

0.000 

0.000 

0.000 

0.000 

DG: <…….> 

 Human resources  
 Other administrative expenditure  
TOTAL DG <…….> 

Appropriations  

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

TOTAL 
MFF 2021-
2027 

0.000 

0.000 

0.000 

TOTAL appropriations under HEADING 7 of the multiannual financial 
framework  

(Total 
commitments 
= Total 
payments) 

0.000 

0.000 

0.000 

0.000 

0.000 

EUR million (to three decimal places) 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL MFF 
2021-2027 

TOTAL appropriations under HEADINGS 1 to 7 

Commitments 

0.000 

0.000 

0.000 

0.000 

of the multiannual financial framework  

Payments 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

TOTAL 

operational 

appropriations  

Commitments 

Payments 

TOTAL  appropriations  of  an  administrative  nature  financed 
from the envelope for specific programmes  

(4) 

(5) 

(6) 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL MFF 
2021-2027 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

TOTAL appropriations under 
HEADING <….> 

Commitments 

=4+6 

0.000 

0.000 

0.000 

0.000 

0.000 

EN 

11 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
of the multiannual financial framework 

Payments 

=5+6 

0.000 

0.000 

0.000 

0.000 

0.000 

TOTAL 

operational 

appropriations  

Commitments 

Payments 

TOTAL  appropriations  of  an  administrative  nature  financed 
from the envelope for specific programmes  

TOTAL appropriations under 
HEADING <….> 

Commitments 

of the multiannual financial framework 

Payments 

(4) 

(5) 

(6) 

=4+6 

=5+6 

•  TOTAL  operational  appropriations 
operational headings) 

(all 

Commitments 

Payments 

•  TOTAL  appropriations  of  an  administrative  nature  financed 
from  the  envelope  for  specific  programmes  (all  operational 
headings) 

TOTAL appropriations under Headings 1 
to 6 

Commitments 

of the multiannual financial framework (Reference 
amount) 

Payments 

(4) 

(5) 

(6) 

=4+6 

=5+6 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL MFF 
2021-2027 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

Year 

2024 

Year 

2025 

0.000 

Year 

2026 

0.000 

Year 

2027 

0.000 

0.000 

TOTAL MFF 
2021-2027 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

EN 

12 

EN 

 
 
  
 
 
 
 
 
 
 
 
 
 
Heading of multiannual financial framework  

7 

‘Administrative expenditure’34 

DG: <…….> 

 Human resources  
 Other administrative expenditure  

TOTAL DG <…….> 

Appropriations  

DG: <…….> 

 Human resources  
 Other administrative expenditure  

TOTAL DG <…….> 

Appropriations  

EUR million (to three decimal places) 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

TOTAL 
MFF 2021-
2027 

0.000 

0.000 

0.000 

TOTAL 
MFF 2021-
2027 

0.000 

0.000 

0.000 

TOTAL appropriations under HEADING 7 of the multiannual 
financial framework  

(Total 
commitments 
= Total 
payments) 

0.000 

0.000 

0.000 

0.000 

0.000 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL MFF 
2021-2027 

EUR million (to three decimal places) 

TOTAL appropriations under HEADINGS 1 to 7 

Commitments 

0.000 

0.000 

0.000 

0.000 

0.000 

of the multiannual financial framework  

Payments 

0.000 

0.000 

0.000 

0.000 

0.000 

34 

The necessary appropriations should be determined using the annual average cost figures available on the appropriate BUDGpedia webpage. 

EN 

13 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
EN 

14 

EN 

 
 
 
3.2.3. 

Summary of estimated impact on administrative appropriations  

–    The  proposal/initiative  does  not  require  the  use  of  appropriations  of  an 

administrative nature  

–    The proposal/initiative requires the use of appropriations of an administrative 

nature, as explained below 

3.2.3.1. Appropriations from voted budget 

VOTED APPROPRIATIONS 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL 
2021 - 2027 

HEADING 7 

Human resources  

Other administrative expenditure  

Subtotal HEADING 7 

Outside HEADING 7 

Human resources  

Other expenditure of an administrative nature 

Subtotal outside HEADING 7 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

TOTAL 

0.000 

0.000 

0.000 

0.000 

0.000 

3.2.4.  Estimated requirements of human resources  

–    The proposal/initiative does not require the use of human resources  

–    The  proposal/initiative  requires  the  use  of  human  resources,  as  explained 

below 

3.2.4.1.  Financed from voted budget 

Estimate to be expressed in full-time equivalent units (FTEs)35 

VOTED APPROPRIATIONS 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

 Establishment plan posts (officials and temporary staff) 

20 01 02 01 (Headquarters and Commission’s Representation Offices) 

20 01 02 03 (EU Delegations) 

01 01 01 01 (Indirect research) 

01 01 01 11 (Direct research) 

Other budget lines (specify) 

• External staff (inFTEs) 

20 02 01 (AC, END from the ‘global envelope’) 

20 02 03 (AC, AL, END and JPD in the EU Delegations) 

Admin. Support 
line 
[XX.01.YY.YY] 

- at Headquarters 

- in EU Delegations  

01 01 01 02 (AC, END - Indirect research) 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

35 

Please specify below the table how many FTEs within the number indicated are already assigned to the 
management of the action and/or can be redeployed within your DG and what are your net needs. 

EN 

15 

  EN 

 
  
 
 
 01 01 01 12 (AC, END - Direct research) 

Other budget lines (specify) - Heading 7 

Other budget lines (specify) - Outside Heading 7 

TOTAL 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

No additional resources required. The current team will continue managing the initiative. No additional 
staff required.    

3.2.5.  Overview of estimated impact on digital technology-related investments 

TOTAL Digital and IT appropriations 

Year 

Year 

Year 

Year 

2024 

2025 

2026 

2027 

TOTAL 
MFF 
2021 - 
2027 

HEADING 7 

IT expenditure (corporate)  

Subtotal HEADING 7 

Outside HEADING 7 

Policy IT expenditure on operational 
programmes 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

Subtotal outside HEADING 7 

0.000 

0.000 

0.000 

0.000 

0.000 

TOTAL 

0.000 

0.000 

0.000 

0.000 

0.000 

3.2.6.  Compatibility with the current multiannual financial framework  

The proposal/initiative: 

–    can be fully financed through redeployment within the relevant heading of the 

multiannual financial framework (MFF) 

No  additional  resources  required.  The  current  team  will  continue  managing  the 
initiative.  

–    requires use of the unallocated margin under the relevant heading of the MFF 

and/or use of the special instruments as defined in the MFF Regulation 

–    requires a revision of the MFF 

3.2.7.  Third-party contributions  

The proposal/initiative: 

–    does not provide for co-financing by third parties 

–    provides for the co-financing by third parties estimated below: 

Appropriations in EUR million (to three decimal places) 

Year  
2024 

Year  
2025 

Year  
2026 

Year  
2027 

Total 

Specify the co-financing body  

TOTAL appropriations co-
financed  

EN 

16 

  EN 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
3.3. 

Estimated impact on revenue  

–    The proposal/initiative has no financial impact on revenue. 

–    The proposal/initiative has the following financial impact: 

– 

– 

– 

Budget revenue line: 

Article …………. 

 

 

on own resources  

on other revenue 

  please indicate, if the revenue is assigned to expenditure lines 

Appropriations 
available for the 
current financial 
year 

     EUR million (to three decimal places) 

Impact of the proposal/initiative36 

Year 2024 

Year 2025  Year 2026 

Year 2027 

For assigned revenue, specify the budget expenditure line(s) affected. 

Other  remarks  (e.g.  method/formula  used  for  calculating  the  impact  on  revenue  or 
any other information). 

4. 

DIGITAL DIMENSIONS 

4.1. 

Requirements of digital relevance 

No  requirements  of  digital  relevance.  The  proposal  is  setting  the  2040  climate  target  in 
legislation, providing predictability and a clear indication of the transition pathway needed. 
It  does  not  prescribe  specific  policies  or  measures,  nor  does  it  include  reporting 
requirements  or  any  other  requirements.  Digital  means  cannot  be  utilised  to  set  the  2040 
climate  target.  The  possible  complementary  proposals  to  revise  related  instruments  or 
possible new ones  to  deliver the additional greenhouse gas emission reductions necessary 
may have requirements of digital relevance, which will then be assessed in the context of 
these proposals if relevant.  

4.2. 

Data 

No requirements of digital relevance identified. 

4.3. 

Digital solutions 

No requirements of digital relevance identified. 

36 

As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net 
amounts, i.e. gross amounts after deduction of 20% for collection costs. 

EN 

17 

  EN 

 
 
 
 
 
 
 
 
 
 
4.4. 

Interoperability assessment 

No requirements of digital relevance identified.  

4.5.  Measures to support digital implementation 

No requirements of digital relevance identified. 

EN 

18 

  EN