Economic crisis not the main cause of the EU’s CO2 drop, researchers say


Contrary to widespread belief, including at the European Commission, the massive uptake of renewable energies since 2005 has had a greater impact on the reduction of CO2 emissions than the economic slowdown.

A small sentence slipped into a report published by the European Commission in November 2012 stated that “the economic crisis was clearly the major cause of a significant reduction in CO2 emissions”.

But the assertion, which has been widely accepted and repeated by policymakers, now appears false.

According to CDC Climat, an investment group owned by France's sovereign wealth fund, the Caisse des Dépôts, the economic slowdown did not play such a decisive part in the reduction of carbon emissions. Rather, it is the rapid spread of wind-farms and solar panels in electricity production that was more significant in reducing carbon emissions in Europe since 2005.

“The good news is that we believe that CO2 emissions in Europe have declined by about 1.1 gigatons of CO2 since 2005," says Emilie Alberola, who heads CDC Climat's carbon market and energy practice.

"But energy policies in Europe came into conflict: the massive appearance of renewables has undermined the carbon market," says the researcher.

Part of the problem is the energy and climate change "package" of EU legislation adopted in 2009. The package included a series of measures to reduce CO2 emissions by 20% by 2020, while pushing up the share of renewable energy to 20% of the energy mix and increasing energy efficiency by 20%. The roadmap is well on track, according to the European Environment Agency except for the energy efficiency side.

>> Read: Efficiency lags behind in EU's triple energy target

However, the rapid development of renewable energies came as a surprise, a situation that was helped by favourable tax regimes in most European countries.

According to Eurostat, electricity generated from renewable sources rose from under 14% to over 20% of the total in Europe between 2005 and 2011. Photovoltaic panels in the South and wind turbines in the North have revolutionised the European energy mix.

According to the calculations of CDC Climat, these new energies alone explain half of the carbon savings since 2005, representing 500 million tons of avoided CO2 emissions. The economic slowdown, for its part, contributed a smaller share of emissions reduction, estimated at 300 million tons of carbon. This is certainly more important than progress registerd on energy efficiency (-100 to -200 million tons).

The bottomline is that the contribution of the economic crisis in lowering carbon emissions is lesser than initially thought.

These positive developments are not without their casualties however, with the EU's carbon market plummeting. Carbon prices have played a part in reducing emissions but their main effect was to promote fuel switching, from coal to gas. The EU carbon market also helped to reduce emissions outside of Europe, thanks to the so-called "flexible mechanisms" foreseen under the Kyoto Protocol.

But in the end, the carbon market was neutralised by the weakness of the CO2 emissions in Europe, which led to an artificial abundance of emission quotas in circulation. The carbon price has fallen to zero first in 2008, before going up to  nearly €30 per ton in 2009. They currently hover around €6 per ton.

Efficiency of European policies put into question

This is where the CDC Climat study raises the question of the effectiveness of European policies.

The introduction of the carbon market comes at a cost, just like energy efficiency measures or the installation of wind turbines. Chasing the three 2020 objectives simultaneously – 20% renewables, 20% CO2 reduction and 20% energy savings – like the European Commission intended, ended up being self-defeating.

In the meantime, environmentalists are sure to note the low correlation between CO2 levels and growth highlighted in the CDC Climat study. The relationship is not linear, since economic growth may stagnate without causing drastic changes in greenhouse gas emissions.

Meanwhile, the goal of a 30% reduction of CO2 emissions currently under discussion at European level, does makes sense, according to the CDC Climat study. On the one hand the 2020 goal has almost already been reached, seven years ahead of the deadline, since CO2 emissions have fallen by 18% since 1990.

Secondly, CDC says the argument of economic growth, the main political argument against a more ambitious climate policy, no longer seems to hold.

The triple objective on energy is part of the EU’s ‘Europe 2020 targets’ and is also known as the "20/20/20 targets”. The three objectives for 20202 are:

  • A 20% reduction in greenhouse gas emissions in the EU, compared to 1990 levels.
  • A rise of 20% in the share of renewable resources contribution to the EU’s energy needs.
  • Making energy consumption across the EU 20% more efficient.

The targets were endorsed by the European Council in 2007 and implemented through the EU’s 2009climate and energy package and the 2012 energy efficiency directive.

  • 11-22 Nov. 2013: 19th Conference of the United Nations on climate, in Warsaw, Poland


Life Terra

Funded by the LIFE Programme of the EU

The content of this publication represents the views of the author only and is his/her sole responsibility. The Agency does not accept any responsibility for use that may be made of the information it contains.

Subscribe to our newsletters