The European Union (EU) member states recently agreed to amend the European Climate Law, adopting a new intermediate target to reduce emissions by 90% by 2040. This development is one of Europe’s most critical political and environmental changes.
For Cyprus, the agreement holds particular significance as it incorporates proposals and assurances that acknowledge the specific characteristics of an island nation, offering tools for flexibility and protecting social cohesion and economic viability. This step reinforces Cyprus’s role in the EU’s green transition, ensuring that the path to climate neutrality is fair, realistic, and adapted to national needs.
The European Green Deal, introduced by the European Commission in 2019, defined the Union’s strategy to achieve “climate neutrality” by 2050. This goal is pursued through actions to decarbonise energy, industry, and transport, while promoting the circular economy and resource efficiency.
The EU legally enshrined the 2050 climate neutrality target in the European Climate Law. The intermediate target for 2030 was set at achieving at least a 55% reduction in emissions compared to 1990 levels.
The Green Deal highlighted that the transition is not merely an environmental challenge but also a comprehensive economic and developmental model, offering opportunities for competitiveness, innovation, and social cohesion. Achieving climate neutrality by 2050 aligns with the Union’s need to secure its energy security and independence from non-EU oil imports.
Following 2023, the EU faced several political, technological, and international challenges, including the need for increased investment, harmonisation of industrial sectors, and political pressure from geopolitical conditions and energy security concerns. Technical studies showed that the path to 2050 requires new tools, more renewable energy sources (RES), electric mobility, energy storage, and carbon removals.
In this context, the European Commission proposed in July 2025 to amend the European Climate Law to include an intermediate emissions reduction target of 90% by 2040 compared to 1990. This 90% target was based on a recommendation from the European Scientific Advisory Board on Climate Change.
On 5 November 2025, EU member states reached a common political position on the 2040 target, following extensive political negotiations at the European Council of Environment and three Councils of Environment Ministers. This common position aims for a 90% reduction in net emissions by 2040. The agreement establishes a clear intermediate milestone for 2040, reinforcing political and investment continuity and ensuring the Union remains on track for climate neutrality by 2050.
The final text of the amended Climate Law includes special provisions and commitments reflecting the concerns and needs of all member states, including Cyprus. Specifically, the final text incorporates elements that the Cypriot side advocated for and secured, ensuring that the country’s particular circumstances and priorities are taken into account:
- Recognition of Island State Specificities: The text explicitly mentions the special conditions faced by island nations. It acknowledges that states like Cyprus, which are energy isolated from mainland Europe, face unique challenges in the energy transition. This addition, a request by the Cypriot government, ensures that future policies will consider the constraints and needs of island states.
- Postponement of New Emissions Trading System (ETS2) Implementation: During negotiations, the Commission accepted the postponement of the start of the new Emissions Trading System for the heating of buildings and road transport sectors. This provision, consistently supported by Cyprus, will allow more time for households and small businesses to adapt, reducing social pressure during the initial phase when fuel and heating costs are expected to rise. Furthermore, the European Commission will immediately submit new legislative regulations for ETS2 to minimise the additional cost to society when the new system is implemented. This delay was secured following a Cypriot initiative adopted by a group of member states.
- Emphasis on Climate Crisis Impacts in the Region: The agreement acknowledges the problems caused by natural disasters, particularly forest fires, which Mediterranean countries experience more intensely. Cyprus raised this issue and successfully included a reference to natural disasters and their climate impacts. This recognition means the EU acknowledges the vulnerability of regions like Cyprus and will consider these risks when developing proposals concerning forest carbon removals. References to natural disasters are also included in the target revision clause.
- Additional Flexibility to Achieve Targets: To make the ambitious 2040 target realistic for all member states, three key flexibilities were agreed upon, which are crucial for Cyprus:
- International Carbon Credits: The text allows the use of international carbon credits, up to 5% of 1990 European emissions (starting from 2036), enabling states to cover part of the target through emission reduction investments outside the EU. This effectively lowers the required in-EU target to 85%, providing relief to countries with limited domestic reduction capabilities, such as Cyprus.
- Domestic Carbon Removals: The agreement allows a role for permanent domestic carbon removals (e.g., CO₂ capture technologies) within the Emissions Trading System (ETS).
- Cross-Sectoral Flexibility: Flexibility is introduced between different sectors and policy tools. If a country faces reduction difficulties in one sector (e.g., transport), it can compensate with additional reductions in another sector without jeopardising its overall progress. This provision helps Cyprus manage emission reductions more easily in difficult sectors while maintaining its overall target. This flexibility also extends between different environmental legislations.
- Revision Clause to Protect the Economy: Another significant benefit is the strengthened revision clause for the target. The text stipulates that progress toward the 2040 goal will be assessed biannually based on the latest scientific data and economic conditions. If the implementation of climate policy is found to have severe negative impacts on the EU’s competitiveness or society, the European Commission is politically committed to proposing an amendment to the Climate Law, potentially including an adjustment of the 2040 target itself. This provides a guarantee to more vulnerable economies that the target will be achieved in a socially just and economically viable manner.
- Commitment to Competitiveness, Food Security, and Just Transition: The agreement also includes references to the need to safeguard economic competitiveness and social balance during the climate transition, as well as strengthening food security in Europe. These terms ensure that the transition will be fair and realistic, without risking economic stability, food sufficiency, or the living standards of citizens. For Cyprus, a small island economy, these assurances are highly significant as the EU is now clearly committed to supporting citizens, farmers, and businesses on the path to climate neutrality.
In summary, the benefits secured by Cyprus focus on flexibility, realism, fairness, and the recognition of national reality. Cyprus actively supported the compromise text as it addresses its concerns by providing adaptation tools, political assurances from the European Commission for support where needed, and guarantees that no country will be left behind due to specific circumstances or limitations. The agreement ensures that the future European climate policy will be socially equitable and realistic for all.