Emissions Trading System led the way in lowering EU greenhouse gas levels in 2019


Greenhouse gas emissions in the 27 European Union member countries decreased by 3.7 % year-on-year, while GDP grew by 1.5%. The emissions have now been reduced by 24% compared to 1990 levels, new report by the European Commission reveals.

The Climate Action Progress Report ‘Kick-Starting the Journey Towards A Climate Neutral Europe’ describes progress made by the EU and its member states in reducing greenhouse gas emissions, as well as reporting on recent developments in EU climate policy.

Frans Timmermans, Executive Vice-President for the European Green Deal, said: “The European Union is proving it is possible to reduce emissions and grow your economy.

“However, this report again confirms we need to step up our efforts across all sectors of the economy to reach our common goal of climate neutrality by 2050.

“The transition is feasible if we stick to our commitment and seize the opportunities of the recovery to reboot our economy in a greener, more resilient way and create a healthy, sustainable future for all.”

Emissions covered by the Emissions Trading System (EU ETS) saw the greatest reduction in 2019, dropping by 9.1%, or about 152 million tonnes carbon dioxide equivalent (Mt CO2eq), compared to 2018.

This drop was driven mainly by the power sector, where emissions fell by almost 15%, mainly due to coal-fired electricity production being replaced by electricity production from renewables and gas.

Emissions from industry decreased by close to 2%.

Verified emissions from aviation, which currently only cover flights within the European Economic Area, continued to grow, increasing by 1%, or about 0.7 Mt CO2eq, compared to 2018.

Emissions that are not covered by the EU ETS, such as those from non-ETS industry, transport, buildings, agriculture and waste, saw no significant change compared to 2018 levels.

EU expenditure on climate action, financing of green technologies, deployment of new solutions and international cooperation increased in 2019, and is expected to see a further increase as Europe recovers from COVID-19.

EU ETS auction revenue is an increasingly important source of climate financing.

The total revenue received by Member States, the UK and EEA countries from the auctions between 2012 (the start of auctioning under the EU ETS) and mid-2020 was over €57 billion, with more than half generated in 2018 and 2019 alone.

In 2019, total auction revenue exceeded €14.1 billion. Of this total, 77% will be used for climate and energy purposes, 7 percentage points higher than the 70% share reported in 2018.

In addition, a growing number of EU-funded climate projects are financed through the monetisation of emission allowances via the NER 300 programme, the Innovation Fund and the Modernisation Fund.

In June, the Department for Business, Energy and Industrial Strategy (BEIS) confirmed that the first phase of the UK Emissions Trading System, which replaces the EU ETS, will be running from 2021-2030, operating either as a linked or standalone system.

Emissions trading systems work by setting a cap on the total amount of greenhouse gases that can be emitted from certain sectors – in the UK’s case by energy intensive industries such as steel, the power generation sector and aviation. The cap is reduced over time so that total emissions fall.

After each year, every covered company must surrender enough carbon allowances – each representing tonnes of carbon dioxide – to cover all its emissions, or additional fines of up to £100 per allowance are imposed.

Carbon allowances can be bought at auction and traded, and these markets determine their cost (the ‘carbon price’).

Around a third of UK emissions and around 1,000 UK factories and plants are currently covered by the EU ETS and will continue to be covered by the UK system.

The full Climate Action Progress report can be read from the European Commission website.