The EU’s emissions trading scheme sectors, industry and power, saw emissions drop by 15% in 2023, putting them on track for their 2030 targets, but expert’s questions whether this was because of – or despite – Europe’s carbon trading framework. The EU’s emissions trading scheme (ETS) puts an annual cap on emission in industry and the power sector – covering 40% of the economy. Companies can buy and sell the right to emit, setting a CO2 price that now hovers above €50 following a slump through 2023.
Most Significant Annual Emissions Reductions Since 2005
Last year’s emissions under the ETS show the most significant annual emissions reductions since it was launched in 2005. The power sector and industry cut emissions by 15.5% compared to 2022 – hitting a 47% cut compared to 2005 levels. This puts the sectors on track for their 2030 target of a 62% reduction.
The lion’s share of reductions came from the power sector, where emissions dropped by 24% owing to added wind and solar power – as well more rain and cooler temperatures, which increased the share of hydropower and nuclear.
Industry, wracked by the energy crisis, saw emissions drop by 7% – both due to efficiency gains and a drop in output. Meanwhile, aviation emissions increased by 10%, driven by a continued post-pandemic recovery.
Long Term Reductions
Observers warn, however, that 2023’s emission reductions may not stick. For Germany, the bloc’s largest and richest country, think-tank Agora Energiewende found that 85% of climate progress is not “ensured long-term”. “A large part of the reduction compared to 2022 is due to an unexpectedly sharp decline in coal consumption, as well as crisis – and cyclical – related declines in production in the energy-intensive industry,” the Berlin-based think-tank said in January.
Conversely, Germany’s Umweltbundesamt, an independent government agency, said that even with renewed economic growth, the emissions cuts will stick, and the 2030 targets are in reach. Other sectors, like the EU’s ‘effort sharing’ framework that sets targets for agriculture, transport and heating, are not as well positioned to deliver, however. Here, the EU is set to reduce emissions by only 34% instead of the targeted 40% by 2030.
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