The surplus of CO² emissions allowances on the European carbon market, which led to the collapse in the price of carbon, has started to decline. Much remains to be done, however, to fully resolve the issue, according to a report published by the European Environment Agency (EEA) on Monday 17 October.
This annual report for 2015 on the trends and projections in the EU emissions trading scheme (ETS) shows that the decision to defer the auctioning off of 300 million CO² emissions permits in 2015 (a decision known as “backloading”) helped bring about the 17 % reduction in the surplus that had accumulated in the system since 2008 and was threatening to reach 2.1 billion allowances by 2020 without a change of policy.
The surplus remains, nonetheless, substantial – equivalent to one year’s worth of CO² emissions in the EU ETS, the EEA says.
Emissions from installations covered by the ETS (industry and energy) declined by 0.7 % in 2015 compared to 2014. This downward trend is expected to continue with the current policies and measures in place under the 2020 climate-energy package, although at a much slower pace than between 2005 and 2015.
According to national forecasts, emissions in 13 member states (Belgium, Croatia, France, Hungary, Ireland, Italy, Latvia, Lithuania, Romania, Slovakia, Slovenia, Spain and Sweden) will rise until 2030.
These projections do not all take account of the proposed structural reform of the ETS for the period from 2021 until 2030, which plans a 2.2% year-on-year reduction of the total number of allowances allocated (see EUROPE 11360) or the market stability reserve, to be put in place in 2018 to provide a lasting solution to the shortcomings of the ETS (see EUROPE 11392).
The EEA analysis is based on the latest data available from the European Commission and member states. (Original version in French by Aminata Niang)