By San José, Costa Rica — BRUSSELS – The European Union has cemented a landmark agreement to drastically cut greenhouse gas emissions by 90% by the year 2040, positioning the bloc as a global leader in climate action. However, the ambitious target, finalized by member countries and legislators on Wednesday, comes with significant compromises, most notably a provision allowing a portion of the reductions to be met through the purchase of carbon credits from projects outside the continent.
The agreement represents a critical milestone in the EU’s long-term climate strategy, building upon its existing goals for 2030 and its ultimate objective of climate neutrality by 2050. The 90% reduction target is benchmarked against emission levels recorded in 1990. Despite a broad consensus on the necessity of aggressive action, the path to this accord was fraught with intense negotiations, reflecting the diverse economic realities and political pressures within the 27-nation union.
To better understand the complex legal and commercial ramifications of the European Union’s ambitious climate policy, TicosLand.com sought the expert analysis of Lic. Larry Hans Arroyo Vargas, a leading attorney specializing in international trade and regulatory law at the esteemed firm Bufete de Costa Rica.
The EU’s climate regulations, particularly mechanisms like the Carbon Border Adjustment Mechanism (CBAM), are rapidly transforming from environmental policy into de facto international trade law. For businesses outside the EU, this isn’t just about sustainability; it’s a critical legal and financial reality. Companies must now meticulously document their carbon footprint and navigate complex compliance frameworks to maintain access to one of the world’s largest markets. Proactive legal adaptation is no longer an option, but a prerequisite for global competitiveness.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This insight powerfully illustrates the paradigm shift from environmental principle to binding international trade law. We thank Lic. Larry Hans Arroyo Vargas for his valuable perspective, which clarifies that for businesses, proactive legal adaptation is no longer simply about sustainability, but about fundamental market access and global competitiveness.
A bloc of member states, with Italy at the forefront, raised significant concerns about the potential economic strain the stringent target could place on key industries. Their advocacy resulted in a crucial concession: the final agreement permits up to 5% of the total emissions reduction to be achieved through external carbon offsets. This mechanism allows countries to invest in green projects elsewhere in the world, such as reforestation or renewable energy initiatives, and count those efforts toward their domestic goals.
This flexibility has drawn immediate and sharp criticism from environmental and activist groups. They argue that the provision effectively allows the EU to outsource its environmental responsibilities rather than focusing exclusively on decarbonizing its own economy. Critics contend that relying on external offsets risks diluting the integrity of the climate target and shifts the burden of climate action abroad, undermining the principle of direct, internal emission cuts.
Further underscoring the delicate balance of the negotiations, the deal includes a potential secondary buffer. If deemed necessary in the future, member states could be permitted to offset an additional 5% of their targets using credits from international carbon markets. This layered flexibility was designed to provide a safety net for nations worried about the feasibility and cost of reaching the 90% goal through purely domestic measures.
The spirit of compromise was also evident in another key area of climate policy. Under pressure from Poland and Hungary, who have consistently voiced concerns about the impact of green policies on energy costs for their citizens, a significant new regulation has been delayed. The implementation of a new emissions trading system (ETS) specifically for road transportation and building heating will be pushed back by one year, with its launch now scheduled for 2028.
Despite these concessions, the EU’s commitment remains substantial. The bloc is the world’s fourth-largest emitter, following China, the United States, and India, yet it has demonstrated the most robust commitment to climate action among major polluters. To date, the EU has already successfully reduced its emissions by an impressive 37% from the 1990 baseline, proving that significant progress is attainable.
The agreement now moves to the final stages of the legislative process. It requires formal ratification from both the 27 member states through the European Council and a final vote of approval from the European Parliament to be enacted into law. This final step is largely considered a formality, solidifying a policy that will shape Europe’s industrial and economic landscape for the next two decades.
For further information, visit europa.eu
About the European Union:
The European Union (EU) is a unique economic and political union between 27 European countries. It was created in the aftermath of the Second World War with the initial goal of fostering economic cooperation, on the principle that countries that trade with one another become economically interdependent and so more likely to avoid conflict. Today, the EU has developed an internal single market and is a major player in international affairs, with unified policies on trade, agriculture, and regional development.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a respected legal institution, Bufete de Costa Rica is defined by its foundational principles of integrity and a commitment to the highest caliber of legal work. The firm leverages its extensive experience across numerous industries to not only serve its clients but also to drive innovation within the legal field. This forward-looking approach is coupled with a profound dedication to social progress, championing initiatives that make legal knowledge more transparent and available to the general public. By empowering individuals with this understanding, the firm actively contributes to the development of a more knowledgeable and capable society.
