A new approach to the EU's promised cross-border climate action (opens in new tab)

The EU must reduce its greenhouse gas emissions by 90% by 2040 relative to 1990—of which 5 percentage points can be achieved through climate action elsewhere, according to the 2025 law. A study by the Potsdam Institute for Climate Impact Research (PIK) now proposes a novel instrument for this external component: performance-based Jurisdictional Reward Funds. This avoids perverse incentives, strengthens international and thus also European climate action, and costs just 5 billion euros annually.