Background and progress on achieving greenhouse gas reduction targets
At the end of May the European Union advised that it is on track to reach its 2030 climate targets. It has now clarified its ambitions to cut greenhouse gas emissions up to 2040 that it will allow some limited use of international carbon credits. At the same time, Ireland is going backwards in its attempts to achieve its national and EU greenhouse gas emissions reduction targets, according to the latest analysis by the Environmental Protection Agency (EPA). What are the financial implications for Ireland, and other EU member states, that overshoot their targets? Will carbon credits worth billions of Euros need to be purchased to compensate for these overruns? Does the new framework for the operation of Carbon Markets under the Paris Climate Agreement provide a viable pathway to contribute to achieving global goals for climate action and sustainability? Will this open up new opportunities for new partnerships between Ireland and African countries?
The European Commission expects greenhouse gas emissions to fall by 54% by 2030 compared to 1990, very close to its 55% target following an analysis of member states’ energy and climate plans for the coming year. This analysis indicates that emissions across the EU are down 37% since 1990, while the economy has grown nearly 70%. However, Ireland is facing a more difficult challenge to meet its national and EU greenhouse gas emissions reduction targets. The EPA’s most recent emissions, report, published at the end of May, concludes that even with the best-case scenario, and using available flexibilities, Ireland simply will not meet its EU target based on all the additional climate policy measures outlined and planned by the Government.
Apart from Ireland’s national obligation to reduce greenhouse emissions by 51% compared to 2018 levels, it is also obliged to achieve a separate EU emissions reductions target of 42% compared to 2005 levels, by 2030. This latter target arises as part of the EU effort sharing decision. The latest greenhouse gas emissions projections from the EPA indicate that emissions would fall by up to 23% by 2030 if every climate policy and measures currently planned by the Government is fully implemented on time. This is down from a 29% reduction predicted last year, and means the gap between what is currently achievable and Ireland’s legally binding emissions-reduction target of 51% is widening.
The European Commission has now proposed a target to cut EU greenhouse gas emissions by 90% by 2040 compared to 1990 levels. This goal is part of the EU’s plan to become “climate neutral” or net-zero by 2050. Achieving the 2040 climate targets entails substantial financial commitments. The EU estimates a need for around €660 billion annually in energy investments during the 2031-2050 period. This represents about 3.2% of the EU’s GDP.
Carbon credits
The Paris Agreement introduced a new system under Article 6 to improve the way international carbon credits (ITMOs) work. This system includes rules to avoid double counting, ensure credits are real, and improve transparency. The rules for the use of International Transferable Mitigation Outcomes (ITMOs) were finalised at last year’s Climate Conference of the Parties (COP) in Baku.
Until now, the EU’s climate target focus has been based only on domestic efforts and the EU has said that that it does not intend to use international carbon credits under Article 6 of the Paris Climate Agreement to meet its overall 2030 emission reduction target. This position has been supported by the European Scientific Advisory Board on Climate Change which has recently said the bloc should not use international carbon credits to count towards its climate targets, arguing that it would undermine domestic efforts to cut emissions. However, on the 2nd July the European Commission proposed a target 90% reduction in net greenhouse gas emissions by 2040 compared with 1990 levels. However, some flexibility is now introduced whereby up 3% of the target can now be met by relying on Article 6 international carbon credits.
Wopke Hoekstra, the EU Climate Commissioner, has made a strong case for the use of high-integrity carbon credits as a means of generating emission reductions to meet future targets, as well as much needed finance for climate action and sustainability projects in developing countries. Some EU countries are moving ahead anyway. Sweden has signed bilateral cooperation agreements on Article 6 with Kenya and Zambia. Norway has also signed a cooperation agreement with Zambia and Switzerland has signed a cooperation agreement with Ghana.
Potential to build carbon partnerships with Africa
Many African countries now recognise that carbon credits offer a significant opportunity to boost climate finance and build resilience. They argue that the generation of credits in areas where they are in high demand, will support the protection of tropical forests and ecosystems.
The African Carbon Market Outlook 2025, which was published in May 2025 by the Africa Carbon Market Network concludes that Africa’s carbon markets, both for voluntary and compliance carbon credits, are expected to see rapid expansion in 2025 and succeeding years underpinned by the continent’s extensive natural resources and ecosystems. Equally important for African carbon markets is the demand for social integrity in carbon projects. As the carbon market expands, there is increasing scrutiny of the social and ecological impacts of offset projects. Africa is in a unique position to lead the way in ensuring that carbon market growth aligns with the principles of climate justice. With these systems in place, Africa is poised to become a global leader in Carbon Markets with projected annual growth of 15% -20% and 30 million jobs by 2030, with revenue expected to surge to $120 billion by 2050.
The report also highlights that countries such as South Africa, Kenya, Zimbabwe, Tanzania and Ghana are leading the way in aligning their policies with global carbon pricing mechanisms. The private sector’s interest in Africa’s carbon markets is an undeniable trend for 2025. International companies, climate finance institutions, and development banks are heavily investing in Africa’s carbon offset projects. Key sectors such as renewable energy projects, sustainable agriculture and forest conservation and expansion are poised to attract substantial investments.
The Tánaiste and Minister for Foreign Affairs Simon Harris has recently highlighted the significant potential for Ireland to increase its trading relationship with Africa, urging Irish businesses to develop stronger links and new markets in Africa. Speaking at the Africa Ireland Trade Horizons Conference at Dublin Castle, on 25th June, the Tánaiste acknowledged the huge economic potential of Africa as an export market for Irish businesses. Total trade in goods between Ireland and Africa grew to a record €2.6 billion in 2024, with trade in services accounting for in excess of a further €6 billion. Ireland’s mutually beneficial trading relationship with countries across Africa will grow significantly in the years ahead.
Ireland’s trade and political links with Africa have grown significantly in recent years guided by Ireland’s Africa Strategy 2022-2025. This Strategy is now due for renewal and update. Ireland, in common with other first moving European countries, should take the opportunity to develop bilateral carbon market partnership arrangements with African countries. Such collaboration will not only strengthen economic ties and broaden business opportunities but greatly enhance the pathway to achieving global goals on climate action and sustainability.
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