Wildlife Works, an international green organisation that runs a carbon credit scheme in Kenya, has so far managed to conserve some 75,000 acres of forest at Rukinga Wildlife Ranch in Maungu by creating awareness of the benefits of a swap from forest destruction for charcoal to selling carbon credits.
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The European Union is poised to make one of its most significant climate policy shifts in more than a decade: reintroducing international carbon credits as part of its emissions reduction strategy. Under a proposal unveiled in Brussels, from 2036 the EU could meet up to 3% of its legally binding 2040 climate target through high-integrity credits generated abroad under Article 6 of the Paris Agreement.
For the first time since phasing out its use of such credits in 2013, Europe is signalling that carefully designed carbon markets can complement domestic decarbonisation – and play a vital role in financing climate action where it is most urgently needed.
“The intention is clear: this is not a shortcut to avoid cutting emissions at home. It is a parallel channel to mobilise capital for high-impact climate solutions abroad.”
Three percent may sound small, but in climate terms it is a significant concession. It is currently defined as 3% of the EU’s total emissions in 1990. According to WEF, that equates to about 460 million tonnes of carbon dioxide equivalent – nearly a third of the proposed 2040 target. The proposal only allows credits to start being used from 2036, and if the EU reaches the full 3% by 2040, it could retire about 140 million credits that year, with a potential cumulative total of 300-400 million credits by 2040, costing €10 billion or more (at a price of €30per credit).
That single-year figure is roughly equivalent to the entire greenhouse gas emissions of the Netherlands – a reminder that what looks like a marginal percentage in Brussels, translates into volumes large enough to displace investment unless accompanied by very strong governance.
Climate finance gaps in the global south are widening, as evidenced by tensions at COP29 in Baku over the new global target. Conventional channels have not delivered at the pace or scale required: the $100bn pledge arrived too late, and prospects are dimming further with shifting US policy, weakening of USAID and strained budgets across donor countries.
Against this backdrop it is understandable developing nations fear new approaches. But if designed with integrity and equity in mind – making sure the errors of the past are not revisited – carbon credits can unlock additional flows for high-impact projects in economically poorer countries, delivering benefits for people on the ground while reinforcing global climate efforts.
European Commission Vice President Teresa Ribera proposed the EU’s climate target for 2040 in July (Photo by Dursun Aydemir/Anadolu via Getty Images)
Anadolu via Getty Images
Critically, through this proposal, the EU is learning from past mistakes. The plan keeps international credits out of the EU Emissions Trading System, avoiding the risk of depressing carbon prices for European industry. Instead, Brussels will create a dedicated, tightly regulated framework with “robust and high-integrity criteria and standards” governing credit quality, origin, timing and use.
The intention is clear: this is not a shortcut to avoid cutting emissions at home. It is a parallel channel to mobilise capital for high-impact climate solutions abroad – without diluting the EU’s domestic ambition, nor the essential domestic investment in the energy transition that will help drive the EU’s future competitiveness.
Rebuilding trust in international carbon credits is essential and ongoing. Too often in the past, projects failed to deliver real or additional climate benefits. The EU can change that by applying strict environmental integrity checks, aligning with initiatives like the Integrity Council for the Voluntary Carbon Market’s Core Carbon Principles.
Quality is only part of the equation. High-integrity credits should also deliver benefit sharing: a fair portion of revenue flowing to local communities, with transparent reporting on social and economic outcomes. This not only strengthens the legitimacy of the market but also helps to ensures climate finance supports a just transition.
Finally, Paris Agreement alignment must be non-negotiable. Credits should fund activities that go beyond a host country’s existing national climate commitments – ensuring the EU’s investment delivers a genuine net benefit to the planet.
Opportunity And Risk
Used well, the EU’s re-entry into the international carbon market could set a new global benchmark for credibility, transparency and impact. It could spur private investment, stabilise demand, and expand the pipeline of high-quality projects.
It could also demonstrate that climate cooperation works in practice: that a wealthy bloc can meet its own targets while supporting development, resilience and biodiversity in countries on the frontlines of climate change.
The risks are real. Poorly designed criteria could open the door to low-integrity credits; opaque benefit sharing could undermine trust; and public perception could harden around the idea that Europe is “buying” its way out of climate responsibility. That is why transparency, independent verification, and regular public reporting must be built into the system from the start.
If anything, this mechanism – limited, regulated, and delayed until 2036 – could prove to be one of the most impactful tools in the EU’s climate arsenal.
A Model For The World
The use of carbon credits has been debated for years, but strong governance and integrity standards can ensure they complement rather than replace direct decarbonisation. If decarbonisation is our shared goal, pragmatism means keeping every credible option on the table to get there together.
If Europe gets this right – building a high-integrity, high-impact market that funds solutions where they are most needed – it won’t just meet its own targets. It will leave behind a stronger, more credible global carbon market, capable of helping the world decarbonise faster.