October 31, 2019 / 12:14 PM / 22 days ago

Europe’s carbon market emissions fell 4% in 2018

LONDON (Reuters) - Emissions regulated by Europe’s carbon market fell by 4% in 2018, the European Commission said on Thursday, as renewable power generation increased.

About 45 percent of the European Union’s output of greenhouse gases is regulated by the Emissions Trading System (ETS), the bloc’s flagship policy to tackle global warming by charging for the right to emit carbon dioxide (CO2).

The Commission said that emissions from power stations and industrial companies covered by the scheme fell 4.1% last year, representing about 73 million tonnes of CO2 equivalent.

“The decrease was mainly driven by the power sector, while emissions from industry decreased only slightly,” the Commission added.

The figure was in line with forecasts made earlier in the year by analysts at Refinitiv, examining provisional raw data.

The figure excluded airlines, which are also covered by the scheme. Emissions in this sector rose by 3.9%, or 2.6 million tonnes, from 2017 levels, the Commission said.

Prices in the ETS trebled during 2018, ahead of reforms that started this year to remove surplus credits and tighten the market.

This led to a near-doubling of revenue generated by member states auctioning credits under the scheme to 14 billion euros ($15.62 billion).

“Member States spent or planned to spend close to 70% of these revenues on advancing climate and energy objectives,” the Commission said.

In a separate notice, the Commission also said that rules governing the next trading phase of the ETS from 2021 had been adopted.

Under the scheme the Commission has handed out free ETS permits to help to avoid so-called carbon leakage, referring to the possibility that high EU compliance costs will drive manufacturing to cheaper parts of the world.

From 2021 companies will receive fewer free permits under the new rules.

Reporting by Susanna Twidale; Editing by David Goodman

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