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European Climate Law
The European Climate Law sets the 2050 climate neutrality target in EU law and raises the 2030 GHG reduction target from 40% to 55% compared to 1990 levels. In 2025 the co-legislators also declared the intermediate climate target for 2040 of a 90% compared to 1990 levels. The regulation aims to make the EU's transition to climate neutrality irreversible, provide long-term direction for fair and cost-effective policy alignment, offer clarity for economic actors, and establish a monitoring system for future actions.
To meet regulatory targets, the Commission began a major legislative review in July 2021, including new laws and revisions in energy, climate, and transport fields. The notable Fit for 55 package started in July 2021, while the Hydrogen and Decarbonised Gas package launched in December 2021. Since then, the EU has all but finished this first wave of climate legislation (except for the Energy Taxation Directive’s revision), and moved to simplification, revision and additional industrial regulation.
The Commission is conducting regular assessments, beginning with the 2023 Climate Action Progress Report, to monitor Member States' progress toward climate neutrality and adaptation goals. The Climate Law also requires Member States to update their National Energy and Climate Plans (NECP) to meet shared objectives.
In their 2025 amendment to the Climate Law, the co-legislators added certain flexibility elements to enable the post-2030 climate framework, such as the possibility to use high-quality international credits to make up to 5% contribution of the 90% reduction target by 2040. The role of domestic permanent carbon removals under the ETS is also raised to compensate for residual emissions, in addition to flexibility within and across sectors and instruments. The co-legislators also chose to postpone the ETSII scheme by one year, from 2027 to 2028.
What's in it for hydrogen?
Climate neutrality demands all sectors adopt technologies to reduce or eliminate emissions. The EU Climate Law outlines the goals and timeline, providing clarity for clean tech investors. Raising the target to a 55% emissions reduction by 2030 further motivates research and deployment of breakthrough technologies.
The revision of all relevant climate-related policy instruments and the introduction of new ones includes the reform of the EU ETS, connected with the establishment of the CBAM, and, more broadly, a coherent and effective carbon pricing policy that is climate-aligned. Concretely, the adoption of the more ambitious 2030 emission reduction target and the 90% 2040 target will lead to the alignment of the ETS to comply with the upward revision and, therefore, to a stronger reduction in allocated EU Allowances and increased carbon market prices.
Clean hydrogen is considered a key solution for decarbonising hard-to-abate sectors and mobility, helping achieve climate targets under the Climate Law. The Commission aims to accelerate clean hydrogen technology adoption in both ETS and non-ETS sectors, creating opportunities across industries. The Climate Law’s comprehensive framework supports the development and scaling of new clean technologies in the EU.
Links to Legislation and additional information:
EU Green Deal Communication COM (2019) 640 final
Climate Action Progress Report 2023EU-wide assessment of the draft updated National Energy and Climate Plans European Climate Law
Communication on European Green Deal Investment Plan COM(2020) 21 final
