Climate Action

Emissions trading: emissions fall in 2016

17/05/2017

Emissions of greenhouse gases from all operators covered by the EU Emissions Trading System (EU ETS) are estimated to have decreased by approximately 2.6%[1] in 2016.

Power plants, manufacturing installations emissions down

The EU ETS covers more than 11 000 power plants and manufacturing installations in the 28 EU Member States and Iceland, Norway and Liechtenstein, as well as emissions from airlines flying between European airports.

Verified emissions of greenhouse gases from stationary installations amounted to 1.75 billion ton of CO2-equivalent in 2016. These emissions were around 2.7%[2] below the 2015 level.

Companies' level of compliance with the EU ETS rules was again high. Less than 1% of the installations which reported emissions for 2016 did not surrender allowances covering all their emissions by the deadline of 30 April 2017. These installations are typically small and together account for approximately 0.4% of emissions covered by the EU ETS.

Surplus decrease

The Market Stability Reserve for the EU ETS will start operating as of January 2019 and will address the prevailing surplus of allowances. On 12 May 2017, the Commission published the total number of allowances currently in circulation on the European carbon market, roughly 1.693 billion allowances. The back-loading of 900 million allowances in the years 2014-2016 contributed to a further reduction in the supply of allowances on the carbon market. Without this measure, the total number of allowances in circulation in 2016 would have been more than 2.5 billion.

Airlines' emissions

Under the EU ETS Directive, all commercial and non-commercial aircraft operators with significant emissions are accountable for their emissions from flights within the European Economic Area (EEA)[3] in the period 2013-2016. Verified emissions from flights between airports located in the EEA amounted to 61 million ton of CO2 in 2016, an increase of 7.9%[2] compared to the 57 million ton recorded in 2015.

The level of compliance was very high: airlines responsible for more than 99% of aviation emissions covered by the EU ETS complied with the legislation in 2016. This included more than 240 commercial aircraft operators (100 operators last year) based outside the EEA but which operate flights within the EEA.

Background

Under the EU ETS, all installations (stationary and airlines) were required to report their verified 2016 emissions by 31 March 2017 and surrender corresponding allowances by 30 April 2017 The verified emissions data became publicly available on the European Union Transaction Log (EUTL) on 1 April 2017. The EUTL displays compliance data from 2 May 2017, with information on whether installations have complied with their obligation to surrender an amount of allowances equal to the previous year's verified emissions.

The third trading period of the EU ETS began on 1 January 2013 and will run until 31 December 2020. The legislation reforming the EU ETS, laying down revised rules until 2020 and beyond, was adopted as part of a wider EU climate and energy package on 23 April 2009 (see IP/09/628). The Commission presented a proposal for a revised EU ETS for the period 2021-2030 in July 2015. The European Parliament and Council are currently in the process of negotiating an agreement based on the proposal.

In May 2015, the EU co-legislators reached a political agreement to establish a Market Stability Reserve in 2018, to address the surplus of emission allowances that has built up in the European carbon market and improve the resilience of the EU ETS to shocks by adjusting the supply of allowances (see IP/14/54).

For more information:

 

[1] Comparing all emissions reported in 2016 and 2015 as recorded in the Union Registry on 1/05/2017

[2] Like-to-like comparison for operators having reported emissions both in 2015 and 2016 as recorded in the Union Registry on 1/05/2017

[3] The limitation of the EU ETS to flights within the EEA from 2013-2016 was agreed in Regulation No.421/2014, pending the agreement reached in 2016 in the International Civil Aviation Organization (ICAO) on a single global market-based measure, to apply from 2021.