Official: EU industrial emissions fall 4.5 per cent in 2014

Official: EU industrial emissions fall 4.5 per cent in 2014

Greenhouse gas emissions from industrial facilities and power plants covered by the EU’s emissions trading scheme (ETS) fell around 4.5 per cent last year, providing further evidence the link between economic growth and emissions growth is being severed across the bloc. The European Commission today published the latest wave of ETS emissions data in its

Greenhouse gas emissions from industrial facilities and power plants covered by the EU’s emissions trading scheme (ETS) fell around 4.5 per cent last year, providing further evidence the link between economic growth and emissions growth is being severed across the bloc.

The European Commission today published the latest wave of ETS emissions data in its Union Registry, confirming verified emissions from more than 11,000 power plants and industrial sites amounted to 1,812 million tonnes of CO2-equivalent in 2014, a reduction of 4.5 per cent on 2013 levels.

“Even while our economies are getting back in the growth track, emissions continue to decrease,” said European Commissioner responsible for Climate Action and Energy, Miguel Arias Cañete, in a statement. “This once again shows that economic growth and climate protection can go hand in hand. This sends a powerful signal ahead of the new global climate deal to be agreed in Paris this December: carbon markets deliver cost-effective reductions.”

However, the reduction in emissions will further contribute to the surplus in carbon allowances that has dogged the ETS since the financial crisis hit. The latest data shows the cumulative surplus in emission allowances has been slightly reduced from around 2.1 billion to some 2.07 billion EU Allowances (EUAs) for the 2014 compliance year, in large part because the volume of allowances released at auction was reduced by 400 million last year as the Commission kicked off its so-called ‘backloading’ programme.

The “backloaded” allowances are currently meant to be returned to the market before 2020, meaning the surplus could once again increase leading to downward pressure on carbon prices. Member states have agreed a fix for the market that would see these excess allowances moved into a new Market Stability Reserve, designed to ensure carbon prices move towards a level where they encourage investment in low carbon infrastructure. However, disagreements remain over when the reserve should start and how ambitious the bloc should be in removing the surplus allowances from the market.

“The recession continues to have a lasting impact on our carbon market,” Cañete admitted. “I therefore warmly welcome the ambitious political deal on the Market Stability Reserve agreed by the Parliament and the Council very recently.”

The latest data also reveals a high level of compliance with the ETS scheme, with less than one per cent of installations covered by the scheme failing to surrender EUAs in line with their reported emissions. “These installations are typically small and together account for less than 0.5 per cent of emissions covered by the EU ETS,” the Commission added. “A small number of installations – accounting for less than 0.2 per cent of emissions in the previous year – did not report their 2014 emissions by 30 April 2015 according to registry data.”

Crucially, the vast majority of those airlines that are now required to comply with the ETS also met the deadline for reporting on their emissions in 2013 and 2014 ahead of surrendering EUAs by the end of April this year. A number of airlines pursued legal action against the regulations, but the EU today reported that aircraft operators responsible for 99 per cent of aviation emissions covered under the EU ETS complied with the rules. The submitted data revealed aviation activities carried out between airports located in the European Economic Area amounted to 54.9 million tonnes of CO2 in 2014, an increase of 2.8 per cent on 2013.

Oliver Joy, spokesman for the European Wind Energy Association, said investment in renewable energy was playing a major role in driving down emissions across the bloc. But he also warned that without significant further reform to the ETS it would struggle to mobilise long term investment in low carbon infrastructure.

“It’s telling that power sector emissions fell substantially more than industrial emissions,” he said. “A mild winter and low demand played a part in this but more importantly the rise in renewable power generation in the EU has had a significant impact. Last year, the wind industry installed more new capacity than gas and coal combined with renewable power plants accounting for 79.1 per cent of new EU power installations in 2014

“However, it is a fallacy to attribute the fall in EU-wide emissions to a functioning ETS. The Commission’s flagship tool is still failing to hold Europe’s worst polluters to account or remove them from the power system altogether. We need policymakers to come forward with sturdy and robust reforms to the ETS for the post-2020 period if the system is to have any impact on Europe’s most polluting assets. An early start date for a market stability reserve and a plan to tackle surplus allowances will go some way to achieving this and should be put into operation as soon as possible.”

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