The European Banking Federation has published key messages on international carbon credits and the European Union's 2040 climate law targets, supporting an EU framework that would allow limited use of international emission credits as a complement to domestic decarbonization. It says any such regime should preserve the cap and price signal of the EU Emissions Trading System, apply only to clearly defined residual emissions, and operate through a transparent and liquid market with high integrity standards. The federation also argues that international credits could play a stabilizing role in the EU climate framework, including for EU Emissions Trading System sectors. Its proposals stress that emission reductions must remain the priority and that voluntary carbon credits should be effective, permanent, based on high integrity standards, and not used for speculation. The federation calls for an early and predictable regulatory framework that addresses environmental, technology, regulatory, political, counterparty and permanence risks, and says verification of credit credibility, integrity and governance should be performed through rigorous independent processes rather than by financial institutions, with validation bodies separate from project developers and issuers and EU-eligible credits accepted by supervisors and auditors. It describes a 5% cap as appropriate, while favoring a pragmatic approach that allows different high integrity credit types, including nature-based solutions and engineered removals, to avoid supply bottlenecks and support market liquidity. It also says any EU framework should align with Paris Agreement mechanisms, include corresponding adjustments to prevent double counting, ensure a uniform approach across Member States, and consider certificates from foreign emissions trading systems that are closely aligned with the EU Emissions Trading System. For implementation, the federation supports pilot mechanisms to test quality standards and governance before broader application, using a phased approach with partner countries ahead of potential use from 2036.
European Banking Federation 2026-05-04
European Banking Federation backs EU framework for limited international carbon credits with 5% cap and phased use from 2036
The European Banking Federation has set out key messages on integrating international carbon credits into the EU’s 2040 climate law targets, backing limited, high‑integrity use as a complement to domestic decarbonization while preserving the EU ETS cap and price signal. It advocates a transparent, liquid market with rigorous independent verification, a 5% cap on use, alignment with Paris Agreement mechanisms including corresponding adjustments, and a uniform approach across Member States. The federation also supports pilot mechanisms and phased implementation with partner countries ahead of broader use from 2036.