Since the introduction of the European Union’s Emissions Trading System (ETS) in 2005, greenhouse gas (GHG) emissions from electricity, heat production and energy-intensive industries have fallen by around 43%, a figure that is well above the 21% target set in the EU ETS Directive (2003/87), reported the European Commission on Tuesday 26 October in a report on the functioning of the EU carbon market in 2020.
According to this document, which is based on data for 2020 and the first half of 2021, emissions from the sectors covered by the ETS fell particularly sharply between 2019 and 2020 as a result of the Covid-19 pandemic – a decrease of 11.4% for electricity production and the majority of industrial production and a decrease of 63.5% for aviation.
Emissions from sectors not covered by the ETS – such as transport, buildings, agriculture and the waste sector – decreased by 6% over the same period and by 16% compared to 2005.
Without additional measures, however, emissions from transport and agriculture are not expected to fall substantially, “as they have remained largely unchanged since 2005, except for the fall in transport emissions in 2020 due to the Covid-19 pandemic”, said the European Commission.
A further European Commission report on the progress of EU climate action, which was published the same day (see EUROPE 12820/3), shows that in total, the EU’s GHG emissions have decreased by 31% compared to 1990 levels. This result should be put into context, however, since the economic downturn caused by Covid-19 has played a significant role. This has resulted in an unprecedented reduction in EU emissions of almost 10% in 2020 compared to 2019.
In addition, the European Commission has proposed a revision of the ETS that would raise the emissions reduction target by 2030 for sectors covered by this carbon market to 61% (compared to 2005 levels) from the current target of 43% (see EUROPE 12762/1). This revision proposal is part of the ‘Fit for 55 package’ that was presented on 14 July.
Increase in ETS revenues
As for the revenues generated by the ETS system (collected by the auctioning of emission allowances), they increased from €3.2 billion in 2013 to €14.4 billion in 2020 due to the increase in emission allowance prices since 2018. In 2020, 76% of this revenue was used – or was planned to be used – by Member States for the purposes of climate and energy.
See the report on the functioning of the ETS: https://bit.ly/3bmgZrf
See the report on the progress of EU climate action: https://bit.ly/3BjIPzb (Original version in French by Damien Genicot)