2040 Decarbonization Target: France’s Strategy and the Risk of Inaction

As the European Commission prepares to present, before the summer and ahead of COP30, its trajectory toward a 90% cut in greenhouse gas emissions by 2040, France stands out with a discordant stance. In a confidential note sent to Brussels, Paris has made its support conditional on several demands: sectoral flexibilities, explicit recognition of nuclear power as a decarbonized energy source (and more broadly, of the principle of technological neutrality), and a clearer breakdown of effort-sharing between Member States.

Behind the French government’s stated intention to protect a strained industrial base, excessive reliance on international credits risks undermining the collective ambition of the EU’s climate transition. Allowing up to 7% in international credits within a 90% reduction target by 2040 would amount to outsourcing roughly 245 million tonnes of CO₂ equivalent—about the combined annual emissions of the Netherlands and Belgium. This would mean offshoring a substantial portion of Europe’s decarbonization effort, with fewer domestic emissions reductions and, crucially, diverting major industrial and technological investments away from Europe, funded with European money.

International credits can certainly lower emissions at a cheaper cost than domestic investments. But this approach would dilute the transformative potential of the 90% target—a target meant, above all, to reshape Europe’s industrial base around low-carbon technologies.

The use of international carbon credits is not illegitimate in itself. It can indeed help finance the energy transition in the Global South. But it cannot replace a European industrial strategy, nor serve as a convenient excuse for inaction. At its core, this is a matter of political choice: clinging to the status quo in hopes it survives the global transition? Or worse, reinvesting in fossil-based assets doomed to become stranded? Or instead, make the strategic decision to invest now in the industrial tools of tomorrow?

It is the only coherent course of action that will allow Europe to innovate, invest, and retain sovereignty over its future in the transitions to come.

Ambition as a Driver of Innovation

Reducing emissions will inevitably disrupt certain existing models. Companies innovate in response to the signals they receive—and if the long-term direction is unclear, if the 2040 target becomes a political bargaining chip, Europe’s industrial decarbonization champions will never emerge.

It is these political signals that guide capital toward clean industrial projects, first and foremost through carbon pricing. Without a clear and stable target, those pathways—and their associated price signals—will lose momentum. Europe, by offshoring its decarbonization through international credits, would be forced to import the technologies and goods it failed to develop itself.

When it comes to the clean tech race, it is time to break free from fatalism. China is by no means unbeatable in clean innovation. Europe and France must stop being afraid of their own ambitions. They should fully embrace their role as pioneers, aiming to be in the global lead in clean value chains, and to set the pace of innovation worldwide.

Europe still holds a leading position in many industrial segments crucial to decarbonization: nuclear components, hydraulic turbines, wind generators, steam turbines, membranes for electrolysis, cadmium-based batteries, and innovations in carbon capture and utilization (such as electrochemistry). These strengths must be reinforced through investment, not diluted. And in other sectors—like electric vehicle batteries—a catch-up strategy is still possible, provided the right tools are in place. That includes strong local content requirements to ensure that clean technologies are not just imported, but built and scaled within Europe.

Breaking Free from the Fossil Illusion

The argument of "realism", often invoked to justify inertia, barely conceals the defense of vested interests. It also reveals the anxiety provoked by the imminent end of free allowances under the EU Emissions Trading System (ETS), combined with a lack of confidence in the effectiveness of the Carbon Border Adjustment Mechanism (CBAM).

While concerns about European competitiveness are legitimate, they should not justify a strategic retreat. Europe does not have the fossil resources—nor the fiscal space—to subsidize fossil use in a world undergoing transition. Slowing down decarbonization targets under the guise of pragmatism would only entrench an expensive dependency and delay necessary transformations.

Europe’s competitiveness problem does not stem from its climate ambition, but from flawed and poorly coordinated policies across governance levels. Every euro of public funding for energy and industry should support clean, made-in-Europe solutions, especially in lead markets where the industrial future is being shaped—such as low-carbon steel or clean hydrogen.

It is in France’s interest to strengthen—not hinder—the EU’s decarbonization momentum. This involves gradually redirecting fossil fuel subsidies toward clean transition investments (for instance, by progressively shifting electricity taxes onto gas), and establishing a true European financing tool. The Clean Industrial Deal points to an ambitious path but does not go far enough. What Europe needs is massive, pooled investment, which could be unlocked, for example, by anticipating future carbon revenues—allowing the EU to mutualize the investments required to meet its 2040 goals.

Flexibility Must Not Become an Escape Route

France’s call for "flexibility" in the 2040 targets—particularly in how efforts are shared between countries or sectors—is reasonable. But flexibility must not become an escape route. The use of carbon credits can only be legitimate within a strict, traceable framework—far beyond the current standards of Article 6 of the Paris Agreement—and should be limited to sectors where decarbonization is technologically most difficult to achieve in the short term (such as parts of the chemical industry or cement production).

These credit exchanges could even be integrated into the future Clean Trade and Investment Partnerships, which the European Commission aims to promote with key trading partners, such as Brazil. This would offer a smart way to align decarbonization, trade and technology cooperation, and climate finance. However, the use of such credits must be capped at a low share of the target—certainly not 7 to 8%. Any large-scale use would mean that the investments needed for Europe’s industrial future would happen elsewhere.

Reaching a 90% emissions reduction will undoubtedly require deep structural changes and come at a cost. It implies transforming our industry, not outsourcing what we are unwilling to do ourselves. The CBAM must be expanded, strengthened, and used as a tool for reindustrialization. It should cover processed products, close regulatory loopholes, and be backed by assertive climate diplomacy. This is the real strategic battle France should lead in Brussels. We must fully commit to choosing "made in Europe".

China Is Moving Forward—Europe Must Not Slow Down

China now closely ties its geopolitical strategy to a supposed climate leadership—though this leadership remains highly relative. In 2024, China invested $676 billion in the energy transition—more than any other country. That same year, Europe invested only half as much. China is deploying these investments without setting climate targets as ambitious as Europe’s, leveraging a tightly integrated industrial and investment policy—a model Europe cannot replicate identically. But if the EU wants to stay in the race while relying on private investment, it must maintain a strong and undiluted decarbonization path to send a clear signal to investors.

China is exporting its technologies to the Global South, financing the rollout of low-carbon solutions, and imposing its industrial standards. It also views Europe not just as a market for its technologies, but as a weakened continent, struggling to protect its industries and support its champions.

If we dilute our ambitions, the technologies of the future will not only be developed elsewhere, but often by our own companies operating outside Europe. Europe and France still possess substantial industrial assets. But they must be better protected, stop being naive about the strategies of other powers, and assert their own vision.

Decarbonization, Competitiveness, Sovereignty, and Simplification Go Hand in Hand

An ambitious 2040 target—one that is not diluted by excessive use of international carbon credits—is the cornerstone of a credible industrial, trade, and energy security strategy. It must be embedded within an industrial pact grounded in competitiveness and international cooperation—particularly with partner economies outside the U.S.–China rivalry, such as Japan, South Korea, India, Mercosur countries, and African nations.

A commitment to technological neutrality is essential, but it cannot mean “we’ll figure it out later.” It requires a clear, stable, and ambitious trajectory to steer innovation, investment, and workforce training.

Copyright image : Fabrice COFFRINI / AFP