WHY THE EU PLANS TO ADD CARBON CREDITS TO CLIMATE GOALS

Why in the News?

New climate target: The EU Commission proposed a 2040 target allowing carbon credits to cover 3% of emissions.
Global linkage: This is the first time the EU may count foreign carbon credits toward its climate goals.
Pushback at home: Due to economic concerns, countries like Germany and Poland demanded flexibility in domestic emissions cuts.

Offset mechanism: Carbon credits fund CO₂-reducing projects abroad like forest restoration or electric buses.
Dual benefit: Buyer meets climate goals, and seller gets green financing for sustainable projects.
Past concerns: Scandals involving low-quality projects have undermined the credibility of offset markets.

Environmental warnings: Critics say this allows the EU to avoid local emissions cuts.
Scientific opposition: Climate advisors oppose credits, fearing a diversion from clean tech investment.
Market failure: The EU banned global credits before due to a carbon price crash from cheap offsets.

● Definition: A carbon credit equals 1 tonne of CO₂ removed or avoided.

● Origin: Emerged under Kyoto Protocol’s Clean Development Mechanism (CDM).

● Market types: Includes compliance markets (regulated) and voluntary markets (unregulated).

● UN role: Now setting global quality standards under Article 6 of the Paris Agreement.

● India’s role: India launched its own Carbon Credit Trading Scheme (2023) to promote green finance.