EU Considers New Fund for Cross-Border Climate Action to Meet 2040 Emissions Target
The European Union aims to reduce its greenhouse gas emissions by 90% by 2040 compared to 1990 levels, with 5 percentage points of this reduction potentially achieved through climate action outside the EU, according to a 2025 law. A study from the Potsdam Institute for Climate Impact Research (PIK) has introduced a novel mechanism called performance-based Jurisdictional Reward Funds to facilitate this external component. This proposed instrument seeks to avoid negative incentives and enhance international and European climate efforts.
The European Union is committed to a significant reduction in greenhouse gas emissions, targeting a 90% decrease by 2040 relative to 1990 levels. A provision within a 2025 law indicates that 5 percentage points of this ambitious goal can be met through climate action undertaken in other regions.
A study conducted by the Potsdam Institute for Climate Impact Research (PIK) proposes a new instrument to address this external component of the EU's climate strategy. The proposed mechanism is termed performance-based Jurisdictional Reward Funds.
According to the study, this novel approach is designed to prevent perverse incentives, thereby strengthening both international and European climate action. The implementation of these funds is estimated to cost approximately 5 billion euros annually.
(Source: Phys.org)
