EU carbon market emissions dropped 4.2% in 2018

Greenhouse gas (GHG) emissions from stationary installations regulated under the Europen Union’s (EU) carbon market decreased by 4.2% last year to 1,679mn tonnes, according to the carbon research team at Refinitiv.

In the power and heat sector, 2018 emissions came in at 893mn tonnes, down 61mn tonnes, or 6.4% year-on-year. ‘Rapid growth in renewable deployment across Europe continues to squeeze out coal in the power sector, putting emissions on a sustained downward path,’ comments Yan Qin, Senior Modeling Analyst at Refinitiv. ‘Last year’s sharp rally in carbon prices also resulted in fuel switching, reducing emissions further. With the average carbon price of €16/t in 2018, switching from coal-fired to gas-fired generation has led to a 20mn tonnes decrease in emissions.’

Meanwhile, emissions from industrial manufacturers decreased by 12mn tonnes, or 1.5%, to 786mn tonnes. ‘The decline took place against the backdrop of EU GDP growing 1.9% last year,’ explains Ingvild Sørhus, Lead Carbon Analyst at Refinitiv. ‘Strong economic growth led to robust industrial activities, with the cement sector seeing the largest growth. But the slight decline in emissions shows that carbon intensity improvement has outweighed the effects of production growth. The surge in carbon prices might also have played a role here.’

The aviation sector is also regulated under the carbon market, and airlines have to report emissions for all flights that take off from and land at European airports. Aviation sector emissions increased by 5.7% last year, rising to 68.6mn tonnes, according to the analysts. With aviation included, total EU Emissions Trading Scheme (EU ETS) emissions were 1,757mn tonnes, down 3.3% year-on-year.