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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