EU ETS emissions: continuous decline during COVID 19 pandemic.

Under current and planned measures, EU member states predict that ETS (1) emissions will continue to decline over the coming decades, albeit at a slower pace than historically, according to the latest report European Environment Agency (EEA) annual report “Trends and projections in the EU ETS” published yesterday. According to recent trends, greenhouse gas emissions from fixed installations recorded under the EU's Emissions Trading System (ETS) have decreased by just over 11% by 2019 and 2020

Based on the projections of the Member States submitted to the EEA, emissions of the ETS should decrease from 41% to 48% by 2030 and 55% to 62% by 2040 compared to 2005. most of this decline is expected to occur in the energy sector and a slowdown compared to historical reductions, according to the report "ETS Trends and projections of the EU" . The planned reductions could increase as the 'Fit for 55' package (2) is implemented and Member States include more ambitious measures in their projections.

As for the latest trends, 2020 saw the largest annual decline in emissions since the beginning of the ETS (1) in 2005. While a downward trend in emissions of the ETS has been observed in recent years, including a significant drop of 9% between 2018 and 2019, the decline in electricity demand and industrial activity during the first year of the Covid-19 pandemic resulted in further substantial reductions. The information note is based on a detailed analysis in the report Trends and projections in the EU ETS in 2021 , prepared for the EEA by the European Topic Center on climate change mitigation and energy.

Other findings key fields

• Emissions of greenhouse gases from stationary installations in the EU ETS increased from 1530 million tonnes of carbon dioxide equivalent (MtCO2e) in 2019 to 1355 MtCO2e in 2020, a reduction of 11.4%. This is the largest drop in emissions since the entry into service of the ETS in 2005. It can only be compared to the drop observed in 2009 at the height of the financial crisis.
• This reduction in emissions comes on top of the remarkable 9% reduction that occurred between 2018 and 2019.
• ETS emissions of aircraft operators fell 63%, air transport has almost ceased during the pandemic.
• The number of available allowances exceeded annual emissions for the first time since 2013, mainly due to weak demand. Carbon prices fell sharply in March 2020, but rebounded at the end of the year.
• According to Member States' projections, ETS emissions are expected to decrease by 41% to 48% by 2030 and by 55% to 62% by 2040 compared to 2005.

The EU ETS is a cap and trade system, which covers around 36% of the EU's total greenhouse gas emissions. It sets a limit on emissions from emissions-intensive activities such as power and heat generation, cement manufacturing, iron and steel production, oil refining and other activities. industries, as well as aviation within the European Economic Area. Within the framework of this emissions budget, companies can reduce their emissions and trade allowances to reduce greenhouse gas emissions at the lowest cost.

Notes

(2) - ETS or ETS: The Community Emission Trading System or Emission Trading System is a carbon dioxide emission rights mechanism implemented within the European Union within the framework of the ratification by the EU of the Kyoto Protocol.

(2) - Fit for 55 is a package of 12 legislative proposals published by the European Commission on July 14, 2021. It aims to propose concrete actions to achieve the European Union's objectives of reducing greenhouse gas emissions by at least 55% in 2030 compared to 1990.

Sources

- European Environment Agency - http://www.eea.europa.eu