EU targets 90% emissions cut by 2040, launches Hydrogen Mechanism for clean industry
Author: PPD Team Date: July 8, 2025
The European Commission (EC) has proposed an amendment to the EU Climate Law, targeting a 90% reduction in net greenhouse gas emissions by 2040, compared to 1990 levels. The amendment builds on the legally binding commitment to climate neutrality by 2050, which came into effect in July 2021.
The proposal is grounded in the Commission Political Guidelines for 2024–2029 and is part of a broader push to align industrial competitiveness, energy security, and decarbonisation. According to a recent Eurobarometer survey, 85% of Europeans consider climate change a serious problem, and 81% support the EU’s 2050 climate neutrality goal.
The 2040 target is designed to provide long-term clarity for businesses and investors, encourage clean innovation, and reduce the bloc’s dependence on fossil fuels. The European Union is already on track to meet its 2030 climate target of a 55% emissions cut.
The EC’s strategy includes support for power purchase agreements, an Industrial Decarbonisation Bank, and possible use of international carbon credits from 2036. Domestic permanent removals will also be integrated into the EU Emissions Trading System (ETS). The Clean Industrial Deal, EU Competitiveness Compass, and Affordable Energy Action Plan form the backbone of this integrated approach.
In a parallel move, the European Commission has launched the Hydrogen Mechanism under the EU Energy and Raw Materials Platform. This new initiative aims to support the market development of renewable and low-carbon hydrogen, along with its derivatives such as ammonia, methanol, and electro-sustainable aviation fuel (eSAF).
The mechanism will match demand and supply, help identify infrastructure needs, and guide stakeholders on financial solutions. It will also contribute to the EU’s broader goals of energy independence and industrial decarbonisation.
The first matching session for the Hydrogen Mechanism is scheduled for September 2025. Stakeholders can register on the EU platform. The EC also plans to roll out the Raw Materials Mechanism and the Gas Mechanism in the coming months.
The Hydrogen Mechanism is part of the European Hydrogen Bank’s role under Regulation EU/2024/1789, which mandates support for hydrogen market development until 2029.
