ETS emissions fall as EU cuts surplus carbon quotas

The EU's electricity sector cut its emissions by 0.9% between 2014 and 2015. [John Horton / Flickr]

Greenhouse gas emissions from the main sectors covered by the European carbon market fell between 2014 and 2015, according to the European Environment Agency (EEA). EURACTIV’s partner Journal de l’Environnement reports.

The EEA’s latest report contains encouraging news. According to the Copenhagen-based institution, the European Union’s greenhouse gas emissions trading system (ETS) finally appears to be bearing fruit.

The aviation sector is now partly subject to the ETS. Last year, flights within the EU emitted 57 million tonnes (mt) of CO2, up 4% on the previous year. The main emitters were Ryanair (7.4mt, +11.5%), easyJet (4.7mt, +6.2%), Lufthansa (3.8mt, -3.3%), British Airways (2.6mt, +2.4%) and Air France (2.4mt, no change).

24% cut in ten years

Between 2005 and 2015, greenhouse gas (GHG) emissions from the sectors covered by the quota scheme fell by 24%. The reduction over the last two years has been less impressive: overall, the 11,000 installations covered by the ETS cut their emissions by 0.7% between 2014 and 2015. While it may be modest, this positive result is down to savings in the electricity (-0.9%), cement (-2%), steel (-1.2%) and paper (-1.2%) sectors.

Cutting the surplus

At the same time, the total number of quotas allocated was reduced by 17%, with the biggest reduction in the electricity sector (-24.5%). The EU’s 28 member states have finally agreed to freeze 300 million quotas. This is a step towards reducing the structural surplus of emissions quotas, now an estimated 1.7 billion quotas, compared to some 2bn in 2014.

Back to business as usual

This change pushed up the quota price. In 2015, one tonne of GHG emissions cost an average of €7.60, up 29% on the previous year. But the increase did not last. Since July 2016, the price has been stuck at around €5. It looks like business as usual again.

Strangely, EU countries are still not making the most of their surplus ETS quotas to boost their budgets. Introduced in 2012, the auctioning of national quotas brings in little to the public purse. Germany earned €2.7bn selling emissions quotas between 2012 and 2015, while France brought in just €900m.

So what next for the ETS? The EEA predicts that the total GHG emissions covered by the ETS will fall by 12% between 2015 and 2030. This is not fast enough. The EU’s 2030 climate and energy framework (still under negotiation) obliges ETS sites to cut their emissions by 43% by 2030, compared to 2005 levels.

Too slow

From 2021, Europe’s heavy industries will have to cut their emissions by 2% per year, a pace three times faster than that observed between 2014 and 2015. A rise in the carbon quota price would surely speed up progress.

The EU’s policy challenge will be to ensure the availability of quotas becomes more restricted, even as emissions fall.

Global deal on aviation emissions puts EU scheme under pressure

The 191 members of the International Civil Aviation Organisation (ICAO) sealed a deal on Thursday (6 October) aimed at ensuring carbon neutral growth for the booming sector after 2020, calling into question the future of the EU’s existing scheme to reduce airlines emissions.

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